Car Loan Bad Credit History -
Improve Credit Rating with an |
By Carrie Reeder |
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If you have a low credit score, opening a new credit account and
maintaining a good payment history can help boost your rating. Bad
credit has several consequences. Those with a negative rating may
have trouble getting approved for a credit card. Moreover, bad
credit validates higher rates on auto and home loans. Because auto
loans can quickly raise credit scores, a bad credit auto loan can be
beneficial.
What Causes Bad Credit
Credit
histories are determined by how well we maintain our credit
accounts. If you pay bills on time and never miss a payment, you
likely have a high credit rating. On the other hand, paying
creditors late, bankruptcies, foreclosures, and repossessions will
result in a lower credit rating.
Bad credit is not permanent.
In fact, it is realistic to improve credit rating within twelve
months. After a bankruptcy, it is suggested that persons immediately
apply for new credit. This usually entails applying for a secured
line of credit.
How to Get an Auto Loan after Bankruptcy
Getting approved for an auto loan with a subprime lender is very
possible following a bankruptcy. Auto loans are secured, thus
lenders are more apt to offer money to individuals with a low credit
rating. Worst-case scenario, the lender simply reclaims the vehicle
and re-sells it to recoup their loss.
With an auto loan, the
ultimate goal should be to raise a low credit score. Hence, it is
important to maintain regular payments. Besides, an improved credit
score will make it possible to refinance for a low rate.
Tips for Getting Approved
When searching for an auto loan
lender, ask for quotes from multiple lenders. If possible, submit a
quote request through an online auto loan broker. Brokers work with
numerous lenders, and are capable of finding the best financing
package for your circumstances.
To improve approval odds and
chances of getting a reasonable rate, apply with a down payment or
co-signer. On average, down payments are about 10%. However, higher
amounts may knock a few extra points off the interest rate. If using
a co-borrower, select a person with a high credit rating. |
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