Before going outside and shopping for your next car, you should know some facts about your credit report first. Your credit report plays a huge role on your car purchase. All aspects of your loan (i.e., approval, amount, annual interest rate, and duration) rest on how good or terrible your credit score is.
1. What your Credit Report Relays
In a nutshell, your credit report is used as an objective means of determining whether you’re a good borrower or not (a.k.a. creditworthiness). Needless to say, a lot of lenders base their approval mainly on what it says.
The first thing that they will look at is, of course, your credits score. Credit scores range from 300 to 900 with the latter being the highest. Your credit score is determined by your payment history (35%), total debt remaining (30%), history of credit (15%), acquisition of new credit account (10%), and credit mix/types of credit (10%).
Aside from your score, lenders tend to be particularly interested with your credit history. Your lender will assess your credit history to find out your habits as a borrower. Through it, they will learn whether or not you pay your debts on-time, what your recent transactions are, and the like.
2. Protection Against Identity Theft and Scams
Nowadays, the government (i.e., Federal Consumer Protection) strictly mandates car dealerships to check their clients’ credit reports before allowing them to pay full in cash and to do drive away with a new car. This is to prevent thieves and shady characters to launder the money that they have acquired through illegal means. Do not feel anxious when asked for your credit report because if you’ve got nothing to hide, there’s no reason for you to encounter any problem during the process.
3. Car Dealerships Are Not Allowed to Check Credit Without Permission
Even though submitting a copy of your credit report is a requirement that is strictly imposed, lenders and car dealerships are not allowed to acquire one without your consent. As you may have noticed, a car dealer usually starts the process by asking you to fill-out a credit application form which involves giving them permission to check your credit. If you’ve already secured a pre-approved auto loan from a different lender, there’s no reason for you to become too concerned. Most of the time, this is just a standard operating procedure since most car dealerships are familiar with authorized lending institutions that may have given you the loan. If you’re acquiring a car loan from online auto financing providers, typically you’ll have to send them an e-copy of your credit report. Bear in mind to observe due caution and vigilance to avoid falling victim to auto loan scams and identity theft.
4. How Inquiries Affect My Credit Score
It is normal to shop around if you’re looking to buy a new car. Credit bureaus recognize this fact so they clump up inquiries that have occurred within two weeks. Your first request for a copy of your credit is considered a hard inquiry and will, therefore, negatively impact your score but only in a minimal manner. The key is to do your research in advance and when you’re ready, make sure to do your inquiries as quick and short as possible. Too much “hard inquiries” could pile up and hurt your credit unnecessarily.
5. Closely Monitor Your Credit Before Car Shopping
The most popular advice that you will get from experts is to check your credit report personally before going out to shop for your next car. Despite how automated our system is, human error is still possible. There might be some mistakes that somehow lowered your credit score. As soon as you notice any erroneous data, have it rechecked by the credit bureau right away. Paying close attention just might save you time and a lot of money.
Simply put, your credit report reflects who you are as a borrower and will, therefore, influence your loan applications. Such is the case if you choose to work with traditional lenders. Nowadays, there are lenders that specialize in bad credit and no credit financing. However, many of them impose high interest rates that results to even lower credit scores to bad credit borrowers. This is where New Car Canada comes in. We cater to all types of credit no matter how horrible your report looks. What sets us apart is that we provide auto loan options that are designed to help bad credit borrowers to rebuilt their credit. We offer pre-approval to make sure that they acquire the best car for their budget and loan reconsolidation to help them settle their existing credit card debts through our auto loan. Our interest rates are competitively low so that our borrowers can afford to pay monthly amortization on time and, consequently, improve their credit score in the process.
With New Car Canada, you are guaranteed of a car loan no matter what your credit situation is. We provide instant approval (within 24 hours) for up to $40,000 on any vehicle you want. You won’t regret sparing us a few seconds of your time to fill out our 1-minute online application form. Approval is absolutely FREE and no down payment is needed. As long as you are earning $1,800 per month, you’ll be approved for a new vehicle right away! Apply now and get approved for a affordable car financing.
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