Car Loan Bad Credit History – Improve Credit Rating with an Auto Loan

04-01-2010 by admin

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.

Try using one of ABC Loan Guide’s
Recommended Bad Credit Auto Loan Companies.

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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Consumer Credit vs. Mortgage Credit

23-09-2009 by admin



Different companies have different criteria for evaluating good credit. An employer, for example, might consider having zero credit cards as good credit. A credit card company might consider having credit cards that are spent to the limit as good credit, as long as the payment history is perfect. A mortgage company, on the other hand, does not consider maxed credit cards as favorable.

How does mortgage credit differ from other types of credit?

You might hear about the conventional wisdom of good credit. For example, it’s good credit when you have paid off your credit cards in full. Don’t carry a balance on your credit cards. Close credit card accounts when you don’t need them anymore.

While this is good, solid advice for debt management and control, if you’re trying to get a mortgage, it can work against you.

When mortgage companies evaluate applications, they like to see consistency. If you have a credit card, mortgage lenders want to see at least 24-36 months of perfect payment history on it; that is, 24-36 months with no breaks in between. If you’re fortunate enough to be able to pay your credit card off every month, you might want to rethink this strategy if a mortgage is in your future.

If you allow a paid-off credit card to remain that way for at least 2 straight months, your credit report will show a break in your payment history. Over the past 12 months, it might look something like this on your credit report:

CCCC CC CCCC

Mortgage lenders want to see this on your report:

CCCCCCCCCCCC

If you already have perfect credit with high scores, this isn’t much of an issue. However, if your scores are lower, or if you’re trying to rebuild credit, it is very highly recommended that you maintain a consistent payment history with no breaks. How can you do this without getting yourself into a mess of debt? You can put an inexpensive magazine subscription on your credit card, for example. That way, you never need to carry the card around, and it’s automatically charged for your subscription amount. Just make sure that you pay it off every month on time.

Conventional wisdom tells you to keep a zero, or almost zero, balance on your card. When it comes to mortgage lending, however, it is a dangerous trap. If you have a very low balance on a card, mortgage lenders will look at the “potential” of you maxing out that card. If you were to do that, your debt ratio will increase, and you could default on your loan. The higher your credit limit, the more this becomes an issue. A $300 credit card with a $20 balance won’t matter as much as a $3000 credit card with a $200 balance. In the latter scenario, you have the potential to add $2800 to your current debt load.

Generally, lenders like to see around 25% to 50% of your credit line used up. That way, it lessens the hit on your debt ratio if you were to max the card out. While this criterion by itself might not be enough to approve or deny you, it is definitely a factor worth considering.

If you have no balances on your cards, why not close the account? Then the low balance issue is moot, right? Unfortunately, closing accounts will lower your credit score. As well, lenders like to see at least 3-6 revolving accounts on your credit, and at least 1-2 installment loans. If you have too many revolving accounts with no balances, then you might want to close some. But if you’re in that 3-6 range, keep them open.

Obtain a copy of your credit report and see how your credit history reads. Make sure there aren’t any breaks in your history, especially if you’re a borderline applicant. Even if you do have a break, a high credit score will offset any penalties your potential lender might invoke. Keep the score as high as you can, and keep your credit history consistent.

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3 Ways to Improve Your Credit Score by 50 Points In Less Than 30 Days

05-09-2009 by admin



In Less Than 30 Days.

“What can you do to increase that set of three numbers on your credit report that can be so important with your financing?”

I came across this question as I was surfing discussion groups the other day. Check out my answer:

Dear Friend,

Here are 3 steps I used to take my credit score from 592 (horrible credit) to 762 (perfect credit) almost overnight. If you’re interested in improving your credit rating quickly, you’ll find this story helpful:

In 1995 I made a decision that would ruin my perfect credit history. I quit my salary job to become an insurance salesman. The job paid commission only. Within a few months I lost everything – house, car, credit rating and my self respect.

By the end of 1996 I was living with my mom, all my credit accounts were severely past due, and I was paying 22% interest on a broke-down green Geo Storm…I was a real loser.

Then, in 1997, I became a banker. I didn’t know it at the time, but this would turn out to be the break I needed to eliminate my credit problems forever.

During my seven years as a banker, I came across several legal and highly effective ways to improve my credit rating. As a result, I was able to increase my credit scores by an average of 170 points.

Here’s what I did:

Step #1: After spending hundreds of dollars on credit repair services that didn’t work, I found out how to get negative accounts removed on my own.

Basically, I wrote letters to the collection agencies requesting proof that the accounts were mine. 89% of the time they had no proof that the bad accounts belonged to me. So I was able to get them deleted from my credit file.

Step #2: I opened new accounts with high credit limits and kept the balances low.

I discovered that if you keep your available credit limits high and only use 10% to 30% of the credit you have available, your credit score will improve dramatically.

Step #3: Next, I added accounts with years of perfect payment history to my credit file. This step took my credit score from 647 to 762.

While you can certainly add seasoned accounts to your credit file for free, there are companies that claim they can do it for a fee.

The problem is, they charge between $2,000 and $2,500 per account. If you want a 700+ credit score you’ll need 3 to 4 of these accounts. That equates to a cost of $6,000 to $10,000.

(You can conduct a search on your favorite search engine for companies that offer this service.)

While there are several highly effective steps you can take to increase your credit scores by as much as 200 points, these are the main ones…And here’s the good news: Each step can be completed in less than 30 days.

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Why Refinance Your Vehicle Loan?

29-08-2009 by admin



Many people never consider refinancing their auto loan. However, if you have a high interest rate, and have been paying on the auto loan for at least a year, refinancing may be a good option. Individuals who received a high interest rate on their automobile likely had bad credit at the time of purchase. Credit rating plays a huge role in deciding the interest rate given. Those who are successful in improving their credit may take advantage of the savings that accompany a refinance.

Switch to a Lower Interest Rate

The primary reason car buyers choose to refinance their automobile loan is to obtain a lower interest rate. A lower interest rate equals lower monthly payments. Credit applicants with good credit easily qualify for advertised low interest rates.

Good credit consists of paying bills on time and maintaining a good payment history with creditors. If your most recent car purchase came with a high interest rate, do your best to improve your credit over the next 6 months to one year. Avoid missed and late payments, and reduce your debt.

Refinance with Your Current Lender

When shopping for a lender to refinance your automobile loan, contact your current automobile lender. In most cases, lenders are eager to negotiate better rates with current customers. If you have a good payment history, and your credit score shows noticeable improvement, you may be able to obtain an interest rate reduction. The benefit of securing a refinance though your current lender is that prepayment penalty fees and title transfer fees may be waived.

Apply for Loans with Online Auto Brokers

If your current auto lender is unwilling to refinance your loan, shop around for another lender. Applying for a loan with several lenders is your best alternative. Complete an online quote request through an auto loan broker. Brokers have relationships with several lenders who grant loans to individuals with all types of credit.

Upon submitting your request, you will receive multiple offers from various lenders. Carefully compare rates, fees, and services. Choose the auto lender with the best rate and submit an official application.

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Buying A Home After Bankruptcy – Get A Mortgage Loan After Bankruptcy

06-07-2009 by admin



If you have a recent bankruptcy on your credit and are looking to get financing for a home, there is hope. Buying a home with bad credit will just put more emphasis on the other two factors needed to get a mortgage loan, which are; income verification and a down payment.

After bankruptcy most lenders want you to wait at least 2 years from the time of the bankruptcy discharge before they will consider you for a mortgage loan. After the two year waiting period is over, you should be able to get financing easily. You should also be able to get 100% financing as well. You can usually achieve this as long as at least most of your payments have been reported to the credit bureau as having been paid on time since the discharge of your bankruptcy.

If you are looking to get a mortgage loan after bankruptcy sooner than the 2 years from the time of discharge, you will need to have almost flawless payment history since your bankruptcy discharge. Also, you may need to have a down payment. If you have even 3-5% to use as a down payment, that may be enough to help you get approved.

There are ways to get a down payment for your mortgage besides having the money saved in the bank. Here are some ideas of ways to do that:

1. Borrow or ask for a gift from relatives. After you have financed the house, you can usually go and take out a 2nd or 3rd mortgage up to the full value of your house, and then you could repay the relatives. Keep in mind that if you intend the money to be as a loan only from the relatives, you would need to disclose that to the lender before you close. Lenders usually have regulations about where the down payment is coming from and if you are not honest, it could be considered defrauding a lender.

2. There are down payment assistance programs like Neighborhood Gold or the Nehemiah program. These programs basically aid the seller in helping you with a down payment. Receiving a down payment from the seller of the property is illegal, but through these programs, it is legal. There are also other down payment assistance programs which are grants and do not need to be repaid or paid for by anyone. To find out about these, do a search on “down payment assistance” with your favorite search engine.

3. You could cash out a 401K or another investment and like in the first example, repay yourself with a 2nd or 3rd mortgage after the loan has closed.

Mortgage loans after bankruptcy are getting to be much easier to obtain these days. If you would like to see a list of our preferred bad credit mortgage lenders, visit this page: After
Bankruptcy Mortgage Lenders.

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