Bad Credit Car Buyers: Understanding Your Credit Report
If you’ve ever been faced with the hard reality of a bad credit score while trying to make a major purchase – especially something like taking out a loan or buying a car – you might know all too well the frustration that comes from denial after denial, thanks to your lousy credit history. While plenty of buy here, pay here dealers and bad credit lenders offer undeniably helpful loans to bad credit borrowers and buyers regardless of a bad credit history, this may not necessarily solve the problems that made your credit so bad in the first place. To do that, you have to understand your credit history and why your score is so low – and without understanding your credit report, pretty much none of that is going to make too much sense.
That’s because your credit report is a vital tool for assessing your credit and determining what steps you need to take to improve your financial situation. Think of your credit report as a helpful tool that can indicate how you appear in the eyes of lenders, and what you need to do to bolster your reputation for future loans. By understanding and managing your credit report, you can turn your credit history around and secure the perfect loan for your next big purchase, whether it’s a quality used car or something even more substantial.
What is a Credit Report?
Briefly, a credit report is a collected listing of your loan history and your current credit accounts – information that is compiled, analyzed, and then used to determine what kind of borrower you tend to be. If you regularly pay bills on time and have no outstanding balances due, your credit score will be higher; if you have bills piling up and a bankruptcy on your record, your credit score is likely to be much lower. While no score perfectly encapsulates a borrower’s habits and lifestyle, your credit report gives lenders a good look at how you behave financially and what kind of risks they can expect to encounter when lending to you.
Your credit score is tracked by three credit reporting agencies – Experian, Equifax, and TransUnion – and consumers can check their credit score for free from each of these companies once a year at www.annualcreditreport.com. It’s important to check it often to make sure there’s no incorrect information or fraudulent activity – but not too often, as every single time you check your score it is reflected on the report itself, and too many inquiries can actually look suspicious to a lender.
Consumers can also purchase their credit report at any time from a number of credit agencies, and in many cases a borrower who is turned down from a loan or credit may qualify for a free report through the credit bureau used by the company that denied you service. This can be a good way to find any unexpected or fraudulent activity, which should be reported online and disputed as soon as possible to prevent further inconsistencies and inconveniences.
Certainly, the credit report as we know it is not a perfect document and fails to take into account a borrower’s personal situation and extraneous circumstances. The fact remains, however, that your credit score can and will be used to determine what kind of borrower you are, so understanding it and having a handle on why your credit score looks the way it does could be the difference between you driving off in that used vehicle and walking off the lot with yet another rejection in hand. With the knowledge of what your score is and how to check it, you can be secure in your financial standing for years to come.