Credit Repair

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.

As distinct from credit counselors or debt management programs, which offer guidance on improving your credit through better financial management, credit repair organizations offer to remove negative information from your credit report. You may have seen advertisements from a credit repair company claiming that they can wipe away your bad credit record and give you a new credit identity; or, they promise to remove negative items from your credit report and boost your credit score.

The truth is, if you simply contact the credit bureaus yourself, you will likely accomplish more on your own than you can with these types of credit repair companies. As an educated consumer, you should be aware that the way some credit repair companies operate is not only ineffective but it can get you in a lot of trouble.

For example, one common tactic employed by these credit repair companies involves disputing every negative item on your credit report. These credit repair scam companies will assure you that, while you dispute these items, the item will be temporarily removed while the credit bureaus verify its accuracy. Credit fixing tactics like this were fairly common twenty years ago, but with computers these days it doesn't usually work that way. Accurate information can be verified within minutes. If you dispute accurate items, you run the risk of your dispute being flagged as frivolous. Even in the unlikely event that your credit is fixed and the item is dropped, if the negative item is accurate your creditor can simply report the same item to the credit bureaus again next month after you've already paid the credit report company for repairing your credit.

Some companies will suggest that you set up a new credit identity for yourself by applying for an EIN (Employee Identification Number) and using that number in your credit application instead of your social security number. If you follow this advice, you are committing fraud and can be prosecuted under federal law. Also, it is not hard for a bank to spot this sort of fraud immediately if for instance you are 40 years old and your credit report was opened a week ago.

While some credit repair clinics may be legitimate, the FTC have received enough complaints about most of them that they felt it necessary to enact laws to protect consumers from predatory or deceptive advertising and business practices on the part of these organizations. For more information, you may consult the Federal Trade Commission website.

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