A bad credit history can have many negative consequences on your financial planning. And it’s not the same for everyone. Some of us may be maxing out our credit cards and ignoring your bills, while others are going through a rough patch (an illness which can lead to temporary unemployment, divorce or any type of unfortunate event in your family that leads to the impossibility of making credit payments on time). However the situation, all these actions lead to a bad credit reputation and attract other negative aspects:
1. Higher interest rates on future loans and credit cards
There is no fooling lenders. They have full access you your credit history and can consider you a risk. In this situation there are two options: either you don’t get a loan at all or the lenders offer you high interest rates.
There are a lot of companies, especially those in the finance industry, that look at your credit history when considering you for employment. Needless to say, that your chances at getting a job diminish.
3. Higher insurance rates
Insurance is something we all should consider, no matter the age or the number of properties. Bad credit can get you insurance, but be prepared to pay more than others do.
4. Higher chances of not getting approved for a car loan
Like we said before, banks have full access to your credit history and they will check it when you apply for a car loan. This means you might not get approved of offered really high interest rates (from those lenders who mention “no credit check”), making it difficult to deal with monthly car payments.
Check your credit today, to see if you can apply for a car loan!
The first most important thing you can do in financing a new car is to check your credit report. Lenders report to three different agencies, so you need the report from each of them. Don’t be surprised that all three don’t say the same thing. This depends on whether you had a delinquency with the lender in the past, making your credit rating worse than with the other two agencies, or there me be some errors. Nonetheless, you need to check all three agencies.
TransUnion, Equifax and Experian are the agencies you need to contact and you can get an annual free report from each of them.
After getting these reports, comes the tricky part: you need to check them individually for accurate credit ratings.
Information is power, so the moment you know your credit ratings, you will be able to talk to car lenders and get their advice on how to improve them in order to meet the standard.
Try to get a loan with the credit rating you currently have. It is possible you might get one, but you will have to pay higher interest, fees and even a down payment. Don’t take “no” for an answer and talk to other lenders or even dealerships.
Research the market in terms of manufacturers and units sold. When it comes to models or brands that don’t sell very fast, dealers are willing to do just about anything to sell them. However, make sure you choose a safe car. Don’t forget that dealerships have their own financing options, but be careful, because many people have fallen prey to some of their less honest methods of negotiation. If the dealer asks you about credit ratings, make sure you tell the truth and express doubts, if you have any.
Remember that the dealer is supposed to pitch a car sale, so let him do his job. When it comes to cars, it is usually easier to buy than lease. And since we’re talking about cars that don’t sell very fast, the salesman will look at all possibilities to make the sale.
About Author :
SB is a finance writer who like to write on various issues related to risk management, PI insurance, and various other ways in which people can protect their business and get out of this kind of mess.