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Simplest way to improve your credit score when shopping for a car

Simplest way to improve your credit score when shopping for a car

Canadians who are shopping for a new car will need to work on their credit score. Lenders have become more conservative due to rising interest rates and the potential of a recession impacting the economy in early 2023.

Even if you have great credit, it never hurts to follow these best practices, so your score is always in great shape.

Establishing a baseline

Before you can improve your credit score, you need to establish a baseline by accessing your credit reports from TransUnion and Equifax, there is no cost to access your credit score and report, so you have no reason not to sign up for these services.

Now that you have access to your credit report, you need to go through it with a fine tooth comb, well, not the actual comb.

What we mean is you need to pay close attention to all of the details inside the report to see if there are any mistakes.

Mistakes can and do happen inside credit reports, and these errors can stay on your credit report for seven years in some instances.

This will have a negative impact on your credit score and could prevent you from being able to buy a house or car or even rent an apartment.

You can have these errors removed from your credit report, but you must go through the proper dispute channels with the respective credit reporting agency.

Avoid credit repair snake oil salespeople

You will come across advertisements online where you can have your credit score increased dramatically in a matter of days for a small sum of cash upfront.

These modern-day snake oil salespeople are just trying to make a quick buck.

What they do is file a bunch of disputes with the credit reporting agencies.

When these items are being disputed, they are not factored into your credit score, so you will see a short-term increase, but your score will drop back down once it has been determined the information is correct.

Instead of giving away your money, you should prioritize working on your credit yourself.

Understanding credit utilization and how it impacts your score

While making your payments on time is crucial, something that people overlook is the need to limit the total amount of debt you are carrying.

To calculate your credit utilization rate, take the total amount of revolving credit you have available and divide it by the total amount of debt you are carrying, if the number is more than 40%, you need to start paying down your debt.

If your credit utilization rate is over 40%, it will bring down your credit score because you appear to be having financial challenges.

Benefits of managing your credit score

One of the immediate benefits of properly managing your credit score is being able to access credit facilities when you need them.

By following these suggestions, you will be able to get a car loan at the most competitive terms possible, so why not start working on your credit now?

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

Categories: Auto Loan

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