You’re looking to buy a car and decide to pay a visit to your local dealership. You’ve already done the research and set a budget for the vehicle you’d like to purchase. You’re excited about buying a car until the dealer pulls your credit report for vehicle financing — you’re denied and unable to move forward in the car-buying process. Why? Well, there are a couple common reasons why your credit approval may have been denied, such as:
- You have bad credit, or
- You have no credit history established
But how do you know if you have bad credit or no credit? First, you should understand what having bad credit or no credit means.
Understanding Bad Credit and No Credit
When someone has bad credit, it either means they have a poor history of paying their bills on time or they owe too much money. There are many financial circumstances that can occur and result in a person having bad credit, including a job loss, a poor economy or mismanagement of funds (i.e. missed or late bill payments, maxing out credit cards, defaulting on a loan, filing bankruptcy, foreclosure on a home, etc.).
When someone has no credit history established, it simply means they don’t have a history of borrowing money within the last seven years. A first-time car buyer who recently graduated from college is an example of someone who may have no credit history.
Bad credit or no credit is oftentimes reflected in a low credit score which, according to Consumer Affairs, generally falls under 629 on a 300-850 scale. Traditional finance companies are typically wary of lending money to people with credit histories reflecting bad credit or no credit because they are considered less likely to make timely payments in the future.
In other words, people with bad credit or no credit are considered to be higher risk to lenders. Fortunately, there are finance companies like Credit Acceptance that offer credit approval for vehicle financing to everyone, regardless of their credit history.
How to Find Out If You Have Bad Credit or No Credit
Checking your credit report is the most effective way to determine whether you have bad credit or no credit. It includes your personal information, credit account history, credit inquiries and public records (including prior bankruptcies and accounts that have been sent to collections).
If you have bad credit, your credit report might show late bill payments, repossessions, delinquencies, bankruptcies and/or foreclosures. If you have no credit, your credit report won’t show any accounts because you have don’t have a credit history established. You are able to check your credit report for free once every 12 months through the three major credit bureaus — Equifax, Experian and TransUnion.
Are you someone with bad credit or no credit who is currently in the market to purchase a vehicle? If you need credit approval, one of our enrolled dealers can help. Simply fill out the Start Your Credit Approval form on our website to get connected with three enrolled dealers near you!
- Publish Date