Credit Myths that Make it Hard to Qualify for a Car Loan

Credit Myths that Make it Hard to Qualify for a Car Loan

Posted on August 9, 2021

Time for our favourite type of blog post. One where we bust a few myths about credit that make it hard to qualify for a car loan. We like doing this as it helps us cover a few subjects at once and hopefully make life easier for you, our beloved readers.

We asked our Hagersville car loans team to collect a few myths around credit that make it hard to qualify for a car loan and bust them all at once. This is what they came up with.

Every Canadian begins with a good credit score

Not true. Your credit score comes from your credit report. Your credit report is an overview of your history of handling credit. If you have no history of handling credit, how will you have a good credit score?

We all begin with a minimal credit score. Scores are made up of our record for handling credit and to work, they need to see how we handle that credit.

So, we begin with a minimum score and build it up over time.

Keeping a high balance on credit cards helps your credit score

Not true. This is a very common myth and something we really want to bust. You don’t need to carry any balance on a card, let alone a high balance.

It’s true that having money outstanding on a credit card means a minimum monthly payment, which contributes to your payment history.

But, carrying high balances is expensive and will count against you as it uses your credit utilization ratio.

Maintaining minimum payments on credit cards is enough to manage them

Not true in most cases. If you have $100 or so outstanding on a credit card, just paying the minimum each month will eventually pay it off. It will take far longer than you might think and will cost money in interest though.

We regularly recommend clearing credit card balances each month to avoid depending on minimum payments. We use that minimum payment to help maintain a positive payment history, it isn’t for managing the card.

If you depend on just the minimum payment, you could be paying that $100 for years!

If you don’t own a home, you don’t need savings

Not true. If you live in an apartment or somewhere the landlord takes care of all repairs and maintenance, you’ll still need savings, just not for property maintenance.

The idea of savings is to have an emergency fund available for anything. That could be medical bills, college money, deposit on a first home or a down payment on a car.

Everyone, regardless of their housing status, earnings or financial position can benefit from having savings. Life has a tendency to surprise us sometimes and not having to go into debt to handle it is a real bonus.

Do you have any Hagersville car loan or credit myths you want busted? Tell us about them in the comments below!

Contact Unique Chrysler for help, advice and competitive Hagersville car finance and leasing.

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