Are you trying to buy a new vehicle? Buying a new vehicle often requires a better credit score than buying a used vehicle. Even if you can already qualify for a loan, getting better interest rates requires better credit. Here are a few things you can do to improve your credit situation now.
Pay off Your Debts
Paying off your existing debts is one of the easiest ways you can improve your credit. Your credit card use has a significant impact on how high or low your credit score is. If you're using more than 50% of your existing credit lines, you're likely to have a fairly bad credit score. If you're using lower than 10% of your credit lines, your credit score will improve dramatically.
Avoid Getting More Credit
Every time you get a new credit line, you lower the average age of your credit accounts, thereby lowering your credit score. You also put a hard credit inquiry on your report, which can make lenders wary of opening another credit line in your name. However, there's a caveat. If you have high balances on your existing credit cards and can't currently pay them off, you may want to consider getting a new credit line. Why? It will lower your utilization score. If you're using 100% of a $1,000 credit line and you get a second $1,000 credit line, then your utilization percentage will immediately drop to 50%. This is going to improve your credit score as long as you don't begin to use up that line of credit.
Your Automobile Score Matters
Few people are aware that it isn't your credit score alone that's used when you purchase a car. It's a modified type of credit score that puts greater weight on your automobile lending habits. Though your regular credit score may be 640, your automobile credit score could be 580, due to a car loan that you never paid back. You should think about getting credit repair for new vehicle before you go and purchase one. If you currently owe debt on a car loan or you haven't been paying your car bills, this is going to have a disproportionate amount of impact on your credit score. The time to get that fixed is now.
Improving your credit score as much as possible is always advisable when taking on new debt. Though you may only get a few percentage points of difference off of a car, this is going to add up to a lot of interest over time.
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