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How You Can Improve Your Credit Score

How Much Can You Borrow?

Preparing for an Auto Purchase

How You Can Improve Your Credit Score

Your credit score is what lenders use to assess their risk in loaning you money. Your credit score is based on the information in your credit report, so first analyze your credit report and look for errors that could be affecting your score. Improving your score can help you get approved for lines of credit easier with lower interest rates, thereby saving you money.

Once you know your score, follow these easy tips to improve your rating:

Pay your bills on time consistently. Late and missed payments, especially accounts that have been sent to collections, have major impacts on your score.
Keep balances low on all of your credit cards. Maxing out your credit cards will lower your score, possibly by as much as 70 points.
Avoid opening or closing a lot of new credit cards at once. It may seem like a quick fix, however a significant amount of new credit will harm your score, and closed accounts can still have an impact.
Use the credit you have wisely. Manage your current accounts, by making payments on time and being aware of balances and limits, to prove to lenders you are responsible with your credit.
Moving debt around (e.g. consolidating the debt on your cards) without paying any of it off can lower your score. Keep your debt where it is and focus on paying it off.
Check your credit report often to spot errors quickly and track progress.
Avoid credit repair agencies that promise an instant fix. Rebuilding your credit takes time, and any agency that guarantees instant credit repair is only looking to exploit people in need.

How Much Can You Borrow?

The amount of a loan that you are eligible to borrow depends on different factors including: your credit score, down payment amount and the specific vehicle you are buying. Knowing what these factors are ahead of time can help you get the loan you want.

The first and most important factor is your credit score. The higher your score, the more you usually can borrow and the lower your interest rates will be. Lenders presume that the better your credit score the more likelihood of you paying the loans back as scheduled.

It is also important to take into account on how much down payment you have. If you have a significant down payment, you may receive a larger loan amount.

The specifics of the vehicle you want to purchase also determine loan amount. Specifics include whether the car is new or used, if used what is the age and condition, blue book value, make and model, etc. All of the specifics factor into how much you will receive in a loan.

Preparing for an Auto Purchase

For most people, purchasing a new vehicle is a huge hassle. It can seem overwhelming, leaving buyers feeling lost and confused. The whole process will go much smoother if you prepare ahead of time.

The first step when planning to purchase a new vehicle is to check your credit report and score. Verify the information in your report and check for errors that can lessen your score. Financing companies will look at your report and score, so you need to be aware of what they will see.

Knowing your credit score will help you in the next step, budgeting. Look at your current expenses and decide how much you can afford to spend on a new vehicle. How much you can afford combined with your credit score will help determine how much will be eligible to borrow in an auto loan. Knowing what you are able to spend before going to the car lot will not only save you time, but can also save you money because you won't spend more than you have available.

The next step is to research your next vehicle. Look for vehicles within your price range. Think about the features you are looking for, whether you want new or used, what type of vehicle (car, truck, van, SUV), model, safety features, etc. Contact insurance companies and get rate quotes on vehicles you are considering. Don't forget to figure out the cost of the vehicle, so you don't get taken advantage of once you decide to purchase. If you plan on trading in a vehicle, do research to figure out its value.

Once you have all of this information, visit dealerships or car lots to physically look at and test drive the vehicle(s) you have chosen. Look at warrantees and any extras that seller may be offering to find the best deal. Financing options are available at the lot or elsewhere, so look around for a loan that will fit your needs.

Once you find the right vehicle, price and financing, you are ready to purchase. Doing research early will make purchasing much easier.