You’ve been experiencing challenges with your credit for a while now, and after months of trying to get approved for financing, you finally received approval to purchase a vehicle.
Although having a poor credit history can make the car buying process a bit more challenging for subprime borrowers, there are a number of ways to improve your credit score so that you can qualify for prime financing, which is generally given to customers with a credit score of 670 or higher. So what do you need to do in order to qualify for prime auto financing?
The main thing is to improve your credit score, which can be accomplished by:
1. Paying your bills on time, every time.
One way to ensure your payments are on time is to set up automatic payments and/or electronic reminders. If you have any missed payments, get current and stay current.
2. Keeping your credit card balances low.
Some credit scoring models look at how close you are to being "maxed out," so try to keep your balances low in proportion to your overall credit limit. Experts advise keeping your use of credit at no more than 30 percent of your total credit limit.
3. Building your credit history.
Since credit scores are based on experience over time, your score will likely improve the longer you have credit, open different types of accounts and pay back what you owe on time.
4. Applying for and opening new credit accounts only as needed.
Credit scores may consider your recent credit activity, which is an indicator of your need for credit. If you apply for a lot of credit over a short period of time, it may appear that your economic circumstances have changed for the worse.
5. Being careful when closing accounts.
If you close some credit card accounts and put most or all of your credit card balances onto one card, it could hurt your credit score if you are using a high percentage of your total credit limit. Frequently opening accounts and transferring balances can hurt your score as well.
If you would like to get started on your credit approval for your next vehicle and improve your credit score (with on-time payments), get connected with a dealer enrolled on the Credit Acceptance program.