Three Steps to Cleaning Up Your Credit for Car Buying
Your credit history plays a huge role in how much you pay for the things you buy. This three digit number can mean thousands of dollars more or less spent on big purchases. It’s important to stay on top of it and know what’s in your credit report to ensure you always pay a fair amount on the goods you purchase. If your credit history is a little spotty, or if your score isn’t high enough to qualify for purchases, here are a few simple steps to cleaning up your credit, especially if buying a car is in your future.
The easiest way to positively impact your credit score is to pay your bills on time. This effort takes little more than organization and commitment. If it helps, chart your bill due dates on a calendar that you look at weekly. Send your payments the week before they are due to ensure they get to where they’re going on time. You can also set up bill paying reminders in your phone’s calendar system if you need a little more help remembering when things are due.
You also want to be sure that you pay off any old debts that you can. There is a cap to this philosophy. If seven years ago you had a small medical bill sent to a collection agency, it probably won’t impact your credit much to pay it off now and a lending institution probably won’t pay much attention to a debt that old. But, anything that has gone into collections in the last few years will have a negative impact on your ability to get a good loan.
If you have credit cards, be sure to keep the balances on those cards below 30 percent of the total credit available to you. Carrying a balance on a credit card is better than never using it. It shows potential creditors that you can responsibly handle credit. This means that if you have a $1,000 limit on your card, you should keep no more than $300 balance from month to month.
Once you’ve tidied up your credit, you’ll need to be realistic on the amount of car you can afford. You can research car makes and models at Cars.com. You can also access the site’s car pricing tool so that you will have a very good idea of how much you will need to borrow to afford the car.