How to Improve Your Credit: Establishing Credit History

woman applying for subprime financing in order to build credit history

Establishing credit as a first-time car buyer can be a doozy. Let’s say you just graduated from school and are in the beginning stages of adult life. You plan on purchasing a vehicle, but don’t have the credit history you think you need to qualify for it. On the one hand, buying a car helps you build credit. On the other hand, because you have no credit history established, most traditional auto lenders will consider you a higher risk, making it difficult for you to get approved for financing. Whew, talk about a Catch-22! So how, exactly, can you establish credit history with no credit? Let’s take a look at your options.

Apply for Subprime Auto Financing

Although it may be difficult to get approved for financing through traditional auto lenders, there are subprime auto finance programs available to people with bad credit or no credit history established. Credit Acceptance is an indirect subprime auto finance company that works with car dealers across the U.S. to help credit-challenged car buyers get approved for vehicle financing.

Once you’ve filled out the form on our website and been connected with a car dealer enrolled in our program, you can receive credit approval from that dealer for a new or used car. And, if financing is provided by Credit Acceptance, since we report to the three major credit bureaus you can build and improve your credit with on-time car payments.

Get a Secured Credit Card

Since having little to no credit history can also limit your ability to get approved for a regular credit card (again, because traditional lenders may consider you a higher risk), getting a secured credit card may be an option. A secured credit card requires a refundable deposit that serves as the credit card’s limit. Just like you would with a regular credit card, you can build a positive credit history with a secured credit card by spending within your limits, keeping your balance low and making on-time payments every month. However, according to Experian, not all lenders report secured credit card payments to the credit-reporting bureaus, so it may be wise to find out which ones do prior to getting one.

Get a Co-signer

Having someone with a positive, established credit history co-sign on your auto loan or financing is another way you can build credit as a first-time car buyer. Co-signing on a loan is basically the same concept as opening a joint credit card account with someone, in that you are both responsible for the loan. Failing to make payments on time puts your and the co-signer’s credit scores at risk, and the co-signer can be held responsible for your late or missed payments.

The good thing about getting approved for auto financing through Credit Acceptance is that you don’t need a co-signer to qualify for approval. Simply see if you pre-qualify on our website and we’ll connect you with a car dealership in your area that can help you get started. And, since we report to the three major credit bureaus, you can improve your credit with on-time car payments.

Start your auto financing pre-qualification today!