Many people at all ages do not have a clear understanding of what credit is and how it can impact their lives for decades. In a nutshell, a credit history is a basic report that outlines an individuals financial investments, risks, and loans. Many items show up and remain on a credit history, including credit card account openings, mortgages, loans, and even other credit checks.
If you are looking for ways to improve your credit so that you can get a lower interest rate on a car loan and a higher loan amount, there are some strategies that you can and should take. However, there are also some things that you should avoid. Here are the top 3 things people do that can hurt their credit:
1. Change jobs. Many people are forced to change jobs due to economic circumstances, such as a lay-off or company closure. However, if you are able to limit the amount of times you change jobs, you will have a better credit history. This, of course, may not be possible for all people.
Lenders like to know that their borrowers have some degree of stability in their jobs so that they can project that the borrower will be able to pay back the loan as long as the borrower continues to earn a steady income. However, if you have a history of frequently changing jobs, lenders may wonder how you will pay off a loan in the interim while you’re between jobs. Lenders may also have questions about your income stability and your lifestyle stability that could potentially cause them to wonder if you are a high risk loan candidate.
Of course, it is possible to get a loan if you change jobs frequently. Simply be prepared to explain your job changes to the lender. You’ll also want to tell the lender your plan for being able to pay off the loan even in the event of a future job change.
2. Open store credit cards. Store credit cards are great, right? They help you save money on purchases that you make at a store and they offer additional special benefits. However, each open credit account that you have, including store credit cards, can hurt your credit score and your credit history. A lender’s typical view on multiple open credit card accounts is: the more open accounts you have, the more chances you will fall into debt with those other lenders.
3. Move residencies. Moving alone will not hurt your credit. However, if you are trying to improve your credit, then staying in one place for a lengthy amount of time can help to show lenders that you have a degree of stability. They will also be more likely to trust that you will be easy to contact if they need to reach you after they extend the car loan.
Contact us today for more information about improving your credit or to speak with one of our finance experts about getting a car loan today. We have access to a huge inventory of used cars and trucks.