How to Build Credit and Repair Your Score
Once it starts to get away from you, it can be tricky to repair credit.
Whether you’re wondering how to build credit or thinking about buying a car with low credit, it’s important to understand the steps you can take to improve your credit score.
Our finance team explains a number of reasons Kearney car dealers run your credit report:
– They need to know you’re able to pay for the car.
– It helps determine what loan rates and terms you can receive.
– It verifies your identity before you buy, which is legally required.
If you’re thinking about financing a new Midway vehicle, here are some facts you should know about your credit score.
How to Build Credit
1. Start Small
If you are just starting on your credit score, get a small loan from your bank. This can be for a very low amount, and you don’t have to spend the money.
Simply pay it back month after month to start building a good credit score.
2. Ask to be a Co-buyer
A lot of folks who come into our store with a low credit score haven’t made bad credit decisions – they just don’t have a credit history.
If that’s your case, ask someone if you can be a co-buyer on a loan or be authorized on a credit card they hold. Even if you aren’t actively using a card or making the payments yourself, being on a positive account will boost your credit score.
3. Avoid Opening Too Many Cards
First off, it’s easy to lose track of several cards and build up a debt. As if that wasn’t bad enough, you’ll also have trouble doing things like buying a car with low credit when that debt drags down your score.
When you open a card, the institution checks your score to determine what spending amount they can approve. Too many credit “hits” in one year can lower your score.
Maintaining Good Credit
1. Always Make Payments on Time
Simply put, being reliable pays off.
Every time you miss a payment on a utility bill, credit card, or loan, you’re damaging your credit score. Don’t let that happen to you. Use whatever trick you have to so you make every payment on time.
Payment history is the largest factor in your credit score, determining about 35% of the total.
2. Pay at Least the Minimum Payment
When making a payment, at least do the minimum amount. Better yet, when you can, just pay off in full what you owe.
Credit scores will account for the current amount you owe on a debt owe. Keeping zero to a 30% of your maximum limit on your cards is best.
3. Don’t Close Old Cards
When analyzing your credit, the length of time you have held a credit card plays a factor. If you are regularly paying off your card and have no late payments the score weighs in favor of good credit.
Understand Your Credit Score
There are other factors to consider in how your credit is scored. Since credit is important not only in buying a car, it’s smart to know and understand your credit score.
By law, you are entitled to one free credit report from each of the three national credit reporting agencies (Equifax, Experian, and TransUnion) every year. While you’re at it, be sure to check your spouse’s credit as well.
When You’re Ready to Buy
When you feel ready to apply for your auto loan, reach out to our Finance Center. They can also help consult you on how to build credit and repair a low credit score.
At Kearney Midway we can find the best options available to you and usually can offer better financing than most banks. You can always stop into Kearney Midway and talk with our great staff about credit concerns.