Earning and keeping good credit is a goal for most people, but it’s not always easy to keep that score high enough to please creditors. From a lost payment to bankruptcy, life events directly impact your credit score, especially when a car purchase is in the near future. Follow a few tips to make your credit as exemplary as possible, and you’ll be ready to visit this website.
Avoid Big Purchases
Although it may seem to be common sense, avoid buying any large assets just before a car purchase. A jet ski or second home, for example, diverts most of your available income away from a car purchase. Your credit score drops slightly as well. Ideally, allow three to six months to pass since a large purchase before entertaining another investment. Car dealerships want your income to be earmarked for their sale.
Pay Down Balances
Your credit score is mainly derived from your open credit amounts. For instance, you owe $1,000 on a credit card with a limit of $20,000. Your credit looks good because you have a high limit compared to your balance. If you’re approaching your credit limit before purchasing a car, try to pay down the balance. Your score improves dramatically as the limit increases and the balance decreases.
Get Pre-Approved
Although car dealerships make it easy for you to use their financing company, you also have the option to get pre-approved from your bank. Visit a financing officer to see what your loan amount, interest rate and term could be. If you do secure financing from a bank, you’ll have more negotiation power with the dealership using money to back your needs. Any dealership can now be your ticket to a dream car.
Save up for a Down Payment
Even if your credit is less than spectacular, you do have the option to put a large down payment on the vehicle. A down payment is essentially a secure promise of repayment. You only need to finance some of the vehicle’s cost, making credit approvals slightly easier to obtain. It’s also possible to walk into a dealership with a pre-approved bank loan and a down payment. With financing taken care of, salespeople are happy to strike a deal.
Keep Those Old Accounts Open
If you still have two or three credit card accounts open on your report, allow them to remain open. There may be no balances on them, but they offer your score a large limit with no balance against it. If you close those accounts, you’re actually hurting your score before negotiating a car purchase. After your car purchase and before buying other large assets, you may want to close them to avoid any fraud issues.
You’re entitled to one free credit report each year. Take advantage of this right to look over your credit history. Any issues should be reported and corrected to improve the overall score. Your interest rate is directly affected by this score when negotiating a car purchase.
