Is your credit rating good enough for a car loan?

When you are searching for a new car, you will consider factors such as fuel economy, cost of repairs and other general features, to select the right vehicle. However, if you are intending to purchase the new car using finance you will also need to consider your credit rating.

We may all be aware that we have a credit rating, but do we know how this credit rating is calculated? Our credit rating determines how large a loan we can get, or indeed if we can get a loan at all. To complicate matters further, different lenders will be looking for different credit scores, with some demanding a far higher credit score than others. Your credit rating can even vary from month to month. A credit rating is simply a measure of the risk a lender is taking when they lend you money. Your credit rating will be good if you have a good record of paying bills on time and not defaulting on or delaying loan repayments. Individuals with the worst credit ratings will be those who have not paid their bills on time or have defaulted on loan repayments.

It is important to check your credit rating, as it is possible that there may be information that is not correct, and this could prevent you from getting a loan. Closing old accounts that are still open but not used can boost your credit score. Identity theft is a big problem and if someone has opened an account in your name this can negatively affect your credit score. Make sure that you check your credit report at least 60 days before you intend to purchase your car, as it can take this long to settle disputes.

If you have checked your credit rating and disputed any incorrect information, you can look at other ways of boosting your credit score. One way of boosting your score is to ensure that you have no money outstanding on your credit card, even if you have always paid your credit card bills on time. Paying off any debts will increase your credit score, as you will be paying less interest. If you have a number of different cards, try reducing the number without reducing your overall credit.

Many lenders will share information with short-term loan companies. If you take out a short-term loan, it could improve your credit rating, but choose the right lender, such as Amscot Financial, which was rated as the Top Employer in Tampa and is a member of several trade organizations, such as the Consumer Financial Services Association of America. Amscot’s Ian Mackechnie is a businessman and entrepreneur who has experience in building and expanding companies. Originally, he ran a bakery business, but sold this to create a small check-cashing company when he realized that there was a demand for such services.

Remember a short-term loan can improve your credit rating, but it is very important that you pay back these loans in full and on time, otherwise it will damage your credit rating. What lenders are looking for is evidence of responsible financial behavior, so a short-term loan that is paid in full and on time will indicate that you can manage your money.