If you have less than perfect credit this is an option you should consider once you have reestablished your car credit

Understanding credit repair

If you’re currently financing a bad credit car, depending on how long you’ve had the loan it might be possible to refinance it for a lower monthly payment.

Although it isn’t very common, we have seen it happen here at Auto Credit Express where, based on over twenty years of directing people with poor credit to car dealers who understand a broad range of credit issues, we designed a website that contains information on issues from repossession to subprime auto lenders along with today’s topic: refinancing an auto loan if you have poor credit.

Auto loan refinancing

Refinancing your car loan can mean a number of things: lowering the interest rate, reducing interest expenses or even cutting the monthly payment down. It can sometimes even be done as you to continue to establish your auto credit.

A lower monthly payment can result from a lower interest rate that also reduces your interest expenses. If you are credit-challenged, you typically might qualify for a lower interest rate if you’ve made timely payments for the last 18 to 36 months, depending upon the loan term and your original credit situation.

A lower monthly payment can also be arranged by extending the loan term. If you currently have 36 to 48 months left on your payment schedule, an auto loan refinance can add an additional 12 months or more to the loan. Although this extends the payoff date (and might actually increase your interest expenses), a lower payment means more money in your budget for utility bills and other essentials. It also lessens the chance of late or even missed payments.

Credit score improvements

Refinancing can also improve your FICO scores. Think about it: If a high payment in the past caused any problems, the lower payment can help you boost your credit scores by improving your chances of making timely payments. That’s because lenders that offer auto loan refinancing also report your payments to the credit bureaus.

As we see it

If your current car payment is too high, one option you may have to lower your monthly payment (and possibly even your interest rate at the same time) is car loan refinancing.

If you haven’t yet applied for a loan, consider applying at Auto Credit Express, where we help people with car credit difficulties find a dealer for their best chance at an auto loan approval.

So if you really want to get your credit back on track, you can start now by filling out our online auto loans application.

People with less than perfect credit can increase their credit repair efforts by becoming an authorized user

What we know

Buyers with approved auto loans often ask us if there is something in addition to poor credit car loans they can do to improve their FICO scores.

We can help answer that question because here at Auto Credit Express we’ve spent the last two decades helping car buyers with bad credit. It’s also a reason our website includes information on tote the note dealers and credit disability insurance as well as today’s topic: improving your credit scores by becoming an authorized user.

Authorized user

An authorized user is someone other than the account holder who can be added to a credit card account in a legal practice called “piggybacking.”

If you have poor credit, having yourself added as an authorized user to the account of someone with a high credit score, low account balance and high credit limit, can improve your credit scores in a couple of ways.

To begin with, the positive credit activity will begin appearing on your credit reports, making a positive impact on your FICO scores.

Additionally, the new credit line will increase your available credit and, at the same time, lower your debt ratio which can further improve your credit scores.

How it’s done

Agencies that specialize in credit repair solicit credit card account holders with high credit scores, offering to pay them for the right to add authorized users to their accounts. The company then assigns a client to one or more these accounts.

These authorized users cannot use these credit accounts or gain access to any personal or financial information they contain. But by being tied to them, authorized users can take advantage of the payment histories to improve their FICO scores.

Credit bureau reaction

This practice attracted the attention of FICO as well as the three credit bureaus and resulted in the “FICO 08″ scoring model which was designed to ignore authorized user accounts when calculating credit scores.

But FICO 08 also caused a problem. According to FICO, the government informed them that ignoring authorized users would obstruct FICO’s compliance with the Equal Credit Opportunity Act, Regulation B – a rule that requires lenders to consider shared accounts of spouses when determining a married person’s credit risk. By ignoring these accounts, FICO 08 would be in violation of Regulation B.

According to FICO, it has since adjusted the formula of FICO 08 to include authorized users while reducing the impact of piggybacking. This means that as it now stands, authorized users continue to be included in FICO’s formula.

Piggybacking issues

There is a possible downside to becoming an authorized user. If the account holder continues to pay on time, the FICO scores of the authorized user will continue to reflect this positive activity. But if, for some reason, the account holder is either late or misses one or more payments, the credit scores of the authorized user will also be affected.

The Bottom Line

Only you can decide if becoming an authorized user is right for you. If you decide to go ahead, be sure you can handle the possible downside if the payment habits of the account holder suddenly worsen.

If you decide it’s time to establish your auto credit, we want you to know that at Auto Credit Express we will forward your application to a dealer that understands a broad range of credit issues and can offer you your best chance for approved auto loans.

So if you’re ready to reestablish your car credit, you can begin now by filling out our online car loans application.

Applying for a regular or secured credit card during bad credit auto loans can help in your credit repair efforts

Double up on credit repair

Credit-challenged people who already haven’t done so should apply for some type of credit card at the same time they’re financing a vehicle.

We know this can help because, for more than two decades, we’ve been helping car buyers with less than perfect credit, who apply online at Auto Credit Express, find a car dealer that can help them get them financed. It even drove us to create a website than enables applicants to learn about used cars and FICO scores as well as today’s topic, credit cards.

The types of credit

Individuals can apply for two types of credit – installment and revolving credit.

Installment credit

Installment credit requires a signed contract that stipulates paying a fixed amount for a fixed term (such as $300 per month for 48 months). The most common example of an installment credit contract is a car loan.

Revolving credit

A revolving credit contract requires no “fixed” monthly payment other than a minimum amount based on the balance owed. If you don’t pay the entire account balance each month, the lender will allow you to carry over (revolve) the remaining amount. A credit card is the most common example of revolving credit.

In addition, there are two types of revolving credit cards.

Secured credit cards

A secured credit card is the easiest type to qualify for – even for consumers with little or no credit. The first step is to set up a savings account with the lender. The credit limit on the card is then based on the balance in that account.

The advantage to a secured credit card is that it eliminates the need to carry around cash. When items are purchased with the card, the cash is withdrawn from the savings account to cover those purchases. Unlike a traditional debit card the Visa or MasterCard logo means you can use this card at most businesses.

The biggest advantage, however, is that, unlike a debit card, these lenders report your monthly payments to the credit bureaus – helping you to establish revolving credit.

Since a number of lenders offer these cards, you should shop around for the best deal including the lowest interest rate and the lowest fee structure. These cards sometimes have set-up, program and monthly servicing fees on top of an annual fee, so add these up to be sure you’ll be paying the lowest total fee amount.

Finally, check for a lender that will convert a secured card to an unsecured card once you’ve established a history of timely payments.

Unsecured credit cards

An unsecured credit card requires no savings account. As with the secured card, shop around to get the best deal on interest rates, set-up, monthly and yearly fees.

Credit score impact

Initially, you’ll notice a slight drop in your credit scores after applying for either type of card, so limit the number you apply for and accept.

For the best FICO score results, either pay the balances off each month or keep them below 30% of your credit limit. While on-time payments will raise your credit scores, balances over 30% tend to drop them slightly and raise flags with the credit bureaus.

The Bottom Line

Using either a secured or regular credit card while keeping the balance under control allows you to establish revolving credit while raising your credit scores – much like a loan from a subprime auto lender can establish installment auto credit.

If you’re still looking for an auto loan, Auto Credit Express sends applicants to dealers that work with of a broad range of credit issues and can offer you your best chance for approved auto loans.

So if you’re ready to reestablish your car credit, you can begin now by filling out our online car loans application.

Following the advice from the Federal Trade Commission could help you avoid a number of issues during a problem credit auto loan

Identity Theft

Even as you’re rebuilding your credit with a bad credit auto loan there’s always the chance the process could be set back if your identity is stolen.

We understand this issue because for the last decades Auto Credit Express has been helping credit-challenged applicants find a dealer that engages in bad credit car sales. To help them further, our website also makes sense of subjects from tote the note auto loans and income requirements to today’s topic, avoiding identity theft.

Reducing the risk of identity theft

At Auto Credit Express, we’re very concerned about protecting the identity of no credit auto loans applicants. For example, our application is SSL encrypted. But as an individual, what can you do to ensure that your personal information is secure?

According to the Federal Trade Commission, there are a number of things that can be done to minimize the risk of someone stealing your identity:

1.    Protect your social security number – Don’t carry your social security card with you. If a health insurer or your state driver’s license bureau uses your SSN for an identifier, request that they use another number. While your social security number is needed for tax and credit check purposes by employers and businesses, if your are asked to furnish it for any other reason, ask why and how it will be used, how they will protect your information and what will happen if you don’t give it to them.
2.    Be careful with your trash and mail – shred any credit-related documents, including offers of credit from credit card companies. Deposit mail containing sensitive information directly in collection boxes or at the post office. When going on vacation, have the post office hold your mail.
3.    Be cautious when using the internet – use only trusted sites and never submit your personal information over a non-encrypted connection.
4.    Use strong passwords – use a combination of letters (upper and lower case) and numbers as well as symbols. Never use your name, birth date or a portion of your SSN or consecutive letter/number combinations.
5.    Verify sources – never give information over the phone, through the mail or over the internet without first knowing exactly who you are dealing with.
6.    Safeguard your purse and wallet – only carry the information that you need and the credit cards that you need.
7.    Keep all your personal information in a safe place – In addition, ask those business that have access to your information how it will be handled, stored and the methods of disposal once it’s no longer needed.

As we see it

When it comes to protecting your personal information, you can never be too careful. Be cautious about sharing your information. Many businesses may only use your SSN for general record keeping – not a good idea. You should also verify the legitimacy of an organization before you share any information with them.

One more thing: Auto Credit Express specializes in placing applicants that have bad auto credit with dealers that can offer them their best chance at getting approved for a bad credit car.

So if you’re ready to begin rebuilding your car credit, you can begin now by filling out our online car loans bad credit application.

What to look for in the credit reports you should be checking prior to applying for poor credit car loans

Your credit report information

When checking your credit reports before you apply for bad credit car loans you’ll want an understanding of what you will and will not find in them.

We know because at Auto Credit Express, for over ten years, we’ve been helping our applicants find dealers that understand bad credit auto sales. Our website also presents information on issues from credit report errors to FICO scores along with today’s topic: what is and what isn’t in your credit reports

Credit reports

Credit reports from Equifax, TransUnion and Experian can be roughly divided into six different areas, as follows:

Personal Identification Information

In this section you find your name, any reported variations of your name, both your current as well as any former reported addresses. It also contains your date of birth and social security number. In many instances it will also show your current employer and even previous employers.

Credit Inquiries

This section contains a list of who pulled your credit report and on what date or dates this occurred.  The “consumer” version of the credit report is going to contain every inquiry (including soft inquiries from entities such as credit card marketing companies) while a report pulled by a “user” (such as a car dealer) is only going to have hard inquires.

Collection Accounts

This is the separate section for third party collections, not the internal departments that deal with collections at banks or credit card companies.  Collections land here when creditors either sell or consign delinquent debts to an outside agency for collection action.

Trade Lines

This section typically makes up the bulk of most credit reports.  This is where all of your “applied for” credit accounts are going to show up.

Public Records

In older credit report formats the Public Records’ section also contained third party collections despite the fact these accounts can hardly be considered public records (in newer consumer versions they are a separate item). Typically, the public record section is reserved for house liens and foreclosures, judgments and bankruptcies.

Consumer Statement Section

Consumers have the right to add a short statement to their credit reports, typically for the purpose of explaining negative information.  In most states this statement is limited to no more than 100 words so keep it brief and to the point.

What you won’t find

Public Utility Payments

For the most part, you won’t find your gas, electric, cable, landline or cellular telephone service accounts on your credit reports – provided you’re paying them on time. In most cases these types of accounts will only appear on credit reports if they’ve been sent to a third party for collection action and it’s being reported by the collector (see the “Collection Accounts” section, above).

Rental Payments

For the most part, rental payments will not appear on your credit reports primarily because most landlords aren’t set up with the credit reporting agencies.  If you default on your lease and it’s turned over to a collection agency, however, plan on seeing the account in the aforementioned “Collection Accounts” section.

Insurance Payments

Despite the fact that many insurance premiums are paid monthly (usually with a carrying charge added), insurance companies do not report these installment payments to the credit reporting agencies.

Now that you know

After you’ve viewed your credit report and determined that you have bad credit but you still need a car, the next step is to locate a

franchised new car dealer. But since many of these dealers don’t cater to bad credit customers, you might find yourself getting turned down for a loan. But there is something you can do to make the search easier.

That’s because here at Auto Credit Express we place applicants with bad car credit with dealers that can offer them their best chance at getting approved auto loans.

So if you’re ready to take that first step in rebuilding your auto credit, you can begin now by filling out our online auto loans application.

You can minimize the costs of horrible credit auto loans by following the tips from one credit counseling organization

Changes

Given enough lead time sometimes applying a few tweaks can make a big difference when you apply for a bad credit car loan.

We know this because for the last ten years here at Auto Credit Express we’ve been helping applicants locate new car dealers that know bad credit car sales inside and out. Our website can also help answer questions about repossession and credit repair as well as passing on the advice from others familiar with bad credit as it relates to individuals thinking of applying for no credit auto loans.

Check before you shop

A good credit score and “debt to credit ratio” can save you money and help you obtain better interest rates.

According to GreenPath credit counselor Dorothy Guzek, it’s important to understand that there are two very different pre-qualifiers to getting a better interest rate on an auto loan. “One is to have a good credit score,” said Guzek. “The second is to have a favorable ‘debt to credit ratio.’ Both of these components are equally important.”

How long before making an auto purchase should buyers start getting their credit in order?

Everyone should look at their credit report at least once a year.  You can get a free copy of your credit report at www.annualcreditreport.com, but you do have to pay for a score. Guzek recommends paying for the score and suggests pulling the report

at least six months before you start auto shopping.  “This will allow you ample time to correct any incorrect information that you might find.”

How high should auto buyers aim to get their credit score before buying a car?

Currently there are three major credit bureaus, Equifax, TransUnion and Experian, and each has a slightly different scoring system.  As a rule of thumb, a grade A score is between 680 and 719. “Credit scores are like your high school report cards. There was nothing wrong with a B or a B+, even though an A+ score may bring you a better interest rate,” said Guzek. “The bottom line is to make sure you work towards getting the best score possible under your current circumstances.”

Why shouldn’t consumers open or close credit cards before purchasing a car?

Guzek explains that if you close a card without a balance, you are raising your debt to credit limit ratio, which lowers your credit score. If you close your oldest card, your length of credit history becomes shorter and this lowers your score. If you open up new cards, it signals to the lender that you may need credit cards to pay your existing bills and this, in turn, lowers your score.

As we see it

While this advice applies to all buyers, it should be especially helpful to people applying for bad credit car loans.

Additionally you should know that at Auto Credit Express we specialize in matching applicants with bad auto credit to dealers that can offer them their best chance at financing a bad credit car.

So if you’re ready to take that first step to better car credit, you can start now by filling out our online car loans bad credit application.

How to better your chances of an approval for bad credit auto loans

Our experience

Managing your money is a good way of taking charge of your FICO scores before applying for no credit auto loans.

We know this to be the case because for the last two decades we’ve been involved with credit-challenged car buyers here at Auto Credit Express. We also place applicants with dealers that specialize in bad credit car sales and our website can help with questions regarding issues such as auto loan refinancing and tote the note dealers as well as today’s topic – beginning your credit repair efforts before applying for a problem credit auto loan.

AFSA credit repair tips

We recently came across an article from the AFSA Educational Foundation about starting a successful financial plan to help you manage your money, boost your credit rating and improve your credit scores.

Here are some excerpts:

•    Keep track of your spending for at least one month to realize where your money is going. This exercise will help you identify unnecessary spending. Use your findings to create a realistic budget and review your budget monthly.

•    Pay yourself. Designate a fixed amount of money from each paycheck to automatically transfer into a savings account or 401k.

•    Collect change. This tried and true practice can provide you with a significant amount of money that you can deposit into a savings account or use to pay off balances.

•    Obtain a copy of your credit report at annualcreditreport.com and review it to know where you stand.

•    Comparison shop. In today’s economy, it is more important than ever to compare offers and allow extra time to make the best decision possible.

•    Take advantage of automatic bill pay for loan payments, utilities, etc. to avoid missed payments and late fees.

•    Make a commitment to pay more than the minimum payment on your credit cards if you cannot pay in full. Whether you pay an additional $5 or $50 each month, this strategy will help you pay off balances more quickly.

•    Take advantage of free online financial education resources such as www.afsaef.org, www.ftc.gov/consumer, and www.mymoney.gov.

As we see it

Even if you have bad credit right now it’s never too late to start taking charge of your finances. This can be especially important if you are thinking of applying for a bad credit auto loan.

But no matter where you are in the rebuilding process, you should also know that Auto Credit Express specializes in matching applicants with bad auto credit to dealers that can offer them their best chance at getting approved for horrible credit car loans.

So if you’re ready to reestablish your car credit, you can start now by filling out our online car loans bad credit application.