You have definitely heard of car loans but have you heard of the bad credit auto loans? These are typically for those whose financial situations or credit scores do not qualify for lending. We are not here to answer why actually you require bad credit car loan, but we are here to solve it. Irrespective of the situation that brought you to this scenario, you should be happy knowing that there is always a way out.
Now that you have known that auto loan can be done even with a bad credit, take some time to find out that actually brought you to this situation. Checking your credit score and knowing where it made a difference or went wrong can actually help you check your wrong moves and take correct steps.
Check the Credit:
There are several reasons that got you into this bad credit situation. Prior to jumping into the car loan, irrespective of the bad credit score or not, it is always a great idea to check the credit reports in a way in order to comprehend what is the reason for having such a bad credit score.
Making time to check the credit reports help in finding what the lenders are actually looking at while they consider your application. If you still don’t have ample of idea what actually makes the credit score and before filling the car loan application, check these five factors. Remember that you will find the various types of credit score models, but FICO is one of the most chosen one by the lenders.
Let’s check these five factors:
- 35% in Payment History: This is a crucial factor that helps to determine the credit. While opting for credit loans, the lenders will look for how well have you handled the credit in your past days. Take time in thinking how great have you been in making payments. If you were not that great in making payments on-time, you need to consider this prior to considering auto loans.
- 30% in Owed Amounts: This is the part of the credit which checks on how much debt you still have and maximum part of this has an impact on the credit utilization ratio. This is simply sum of all the balances of your credit card divided by the limits. When the credit utilization ratio is more than 30%, it affects your score.
- 15% in Credit history length: Since when are you making use of the credit is answered in this. Having credit card for a long time is definitely an added advantage. If you are thinking to throw away some of your cards, consider keeping the old ones which has good history. Use those credit cards and make sure to keep the pay off balances less than 30%.
- 10% in credit mix: If you are able to balance different installments like mortgages and auto loans, it has a lot to do in your credit score. This will let the lenders know how effective you are in handling the payments and will get the confidence in approving the loan.
- 10% in New Credit: If you wish to apply new credit, make sure you do it strategically and much responsibly. If you decide to apply new credit every month, then it I a big red flag for the lenders. Lenders are more intrigued to those who applied credit only when they need something particular and then again manage it responsibly.
How to Overcome Bad Credit?
There are definitely numerous ways of overcoming a bad credit. If you are from those who struggle to make on time payments, you need to solve it right away to get your car loans approved, Start practicing to pay bills on time.
If you are dreaming to buy the latest car, then all you need is to wait to make the credit score better. But if you are okay to buy any models, make sure you choose comfortably depending on the budget, as you don’t want to lose it. AfterBK is definitely there to consider the Bad Credit Auto Loans in NYC, but then again considering checking yourself will always proffer the best solution in future.