Financing a car can be a double-edged sword. You need a good credit history to get credit, but you can’t get credit without a good credit history.
There are strategies you can use, however, to build your credit. If you don’t have a credit card, get one, and use it regularly, but only in small increments, without using too much of your credit line, according to Creditcard.com. Ideally, you should use less than 30 percent of your total credit line to achieve a good credit score, which is what you need to get car loan approval. FICO and VantageScore are the two most common scoring companies, and the scores range from 300 to 850.
It’s crucial that you make your credit card payments on time, either by the due date or before. This information is used by the credit card agencies to determine whether you are a good credit risk. The longer you go without missing a payment, the higher your credit score goes. It’s also important to pay off your credit cards every month. Not only will you avoid paying interest, but you’ll also raise your credit score.
Check your credit card bills monthly to make sure your not charging more than your 30 percent credit limit. If you are, cut back. After six months or so you can check your credit reports, advises Creditcard.com. The three credit reporting agencies are TransUnion, Equifax and Experian, from whom you can obtain a free credit report once a year. If you find an error, you can dispute it and have it corrected.
If you don’t already have a second credit card, obtain one and be as diligent in paying it off as with the first. A good score for applying for a car loan is around the mid 700s, notes Creditcard.com.
Douglas Automotive : 123 E. Virginia, Crystal Lake, IL 815.356.0440 : 417 W. Main Street, Barrington, IL : 847.381.0454 : 416 Northwest Highway, Fox River Grove, IL : 847.639.4552 : www.douglasautomotive.com