Before applying for an auto loan, its a good idea to consider a credit check - but where do you start? The process is actually very simple, and can save you tons of money in the long run. So before you go to purchase a new or used vehicle, take time to learn about how you can check your credit report and FICO score.
Conducting a Credit Check
Checking how others have monitored your credit usage from the three bureaus (Equifax, Experian, and TransUnion) is important when applying for an auto loan. Luckily, you can pull a free copy of your report from each bureau once a year online. You can also quickly obtain a free online credit report from companies like Go Free Credit. Not only will they show you any negative items on your report, you'll also have an opportunity to clear up mistakes prior to applying for an auto loan.
By pulling your report, you can fix any incorrect information. You may find an account that was opened and defaulted under a persons name that is similar to yours, and you took the charge by accident. You certainly dont want to take the fall for another person's mistakes. This is why its a great idea to check over your record. You can settle disputes and clear up negative items so you will exactly what to expect when approaching the car dealership.
Your FICO Score
While the three bureaus offer their own form of a score that monitors how you are rated in comparison to others, they usually do not factor as heavily as the FICO score when determining your auto loan. Your FICO is considered the official score that agencies look at when determining your risk factor. A FICO score of around 680 is considered good. Anything under than and you can expect to pay a higher interest rate for your vehicle.
Repairing Your Credit
As mentioned previously, repairing the blemishes on your report is just as important as conducting a credit check. Youd be surprised at how paying off some of your debt can affect your score in a positive way. Also, keep in mind that if you have items on your report that have already been paid off, you can contact the agency responsible for the item to have it removed. You dont want any reason to have to pay more for your car. Remember, the better your report looks, the lower your interest auto loan rate will be.
Conducting a credit check is an important step to take before applying for an auto loan. So before putting your wallet on the line, take time to learn just whats being reported about you.
