How Your Credit Report Impacts Car Financing

Buying a car is one the most exciting and even nerve-racking undertakings. There is a lot involved in the process including researching different models, shopping for the best deals and test driving. In addition, a credit report is something you must take into account when purchasing a vehicle. Before you meet with a dealer, you need to know what is in this document because it has a direct impact on your car's financing.

What Is a Credit Report?

A credit report is a history of your personal finances. It includes information such as outstanding debt, credit card accounts and credit inquiries. It also shows any missed or late bill payments, loan defaults and bankruptcies. Based on this data, you are assigned a credit score between 300 and 900.

Why You Need a Copy

Credit reporting bureaus compile this information. Despite the best efforts, there may be inaccuracies on the report that could lower you credit score. If you know beforehand what is on your report, you can correct it before sitting down to discuss car financing options. This way there will be no unexpected issues that could hinder your loan application.

Why the Dealership Needs Your Credit Report

Your credit score plays a major role in the type of financing you receive for your car. Generally speaking, a higher score means better loan terms, such as lower interest rate or no money down. On the other hand, a low credit score may require a co-signer, for instance. Regardless of whether your credit is perfect, average or bad credit, the dealership can find a way to get you into a car.

You can make the car buying experience easier by getting a copy of your credit report from one of the major credit reporting agencies. Once you have the report, review it for accuracy. If there are any discrepancies have the companies correct it. After that is done, you can sign the loan papers and receive the keys to your car.

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