Some people can easily gauge whether they have a good, fair, poor, or bad credit standing just by taking a long, hard look at their personal accounts. However, learning your exact credit score is highly important because most finance-related institutions pretty much judge you by how high (or low) your credit rating is. A credit score determines whether you are deserving to apply for a loan, mortgage, or credit card.
Just How Bad Is a “Bad Credit” Score?
Though there are a number of credit score ratings that you can use to help compute your own, there is a general consensus that a credit score of below 600 is considered poor or bad. The lowest credit score that a person can get is 300.
The reason why lenders hesitate approving loans from borrowers with a score lower than 600 is because they pose the highest probability of being delinquent accounts or the highest potential of not being able to pay back what they owed. Fortunately, not all lenders shy away from people with bad credit. Particularly in the auto financing industry, it is not entirely impossible to get a loan for used cars on bad credit.
How to Get a Car Loan with Bad Credit
Like with everything else, preparation is the key. Get all your necessary documents in order, such as identification documents (government-issued IDs, passport, etc.), proof of residence, copies of billings, income verification, bank receipts, and other official documents.
Next, visit dealerships for the car you wish to take out a loan for. As much as you would like to get a brand-new car, it is not yet possible with your current credit rating. It helps your cause if you already have a cash down payment on hand even before you apply for a car loan. Since you have bad credit, you need to put your best foot forward and show that you at least have the capabilities to pay the first installment. You also must remember that the more money you can spend on the down payment, the lower your monthly installments will be.
Lastly, discuss your car choice and possible payment options with your chosen automobile financier. Depending on your current score and the official papers you’ve submitted, the auto financier will have an easier time deciding whether to grant the loan or not.
Having a bad credit score is not the end of everything. Some lenders will still give you a second chance because they understand there might be extenuating circumstances that led to your current credit rating. What matters to them is that you do whatever it takes to get your credit score up and keep up with the installment payments.
The In’s and Out’s of Bad Credit Car Loans, AutoFinanceNews.net
Credit Scores 101: What’s a Good Credit Score Range, MyFICO.com