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Ways To Build Your Credit Score For Auto-loan

Good credit makes it easy to qualify and get approved for auto loans. 

However, this is not the case with bad credit. If your credit score is below the needed score which is 620, you are less likely to secure an auto loan with traditional lenders such as commercial banks and credit unions. The only way out to increase credit score for auto-loan is to find a car dealer that accepts bad credit.

Although there is no silver bullet for a good credit score, there are things you can do to build your credit score. 

Five ways to build your credit score for an auto loan:

Check your credit report 

A credit report is one of the most powerful tools that lenders use to decide whether or not to approve your auto loan. Request a copy your credit report on a regular basis to keep track of your credit history, and how it affects your credit score. 

Monitor your credit report for any inaccurate entries, errors, and other credit reporting mistakes that may affect your credit score. Check for overdue payments that have already been paid but were not updated, fraudulent transactions that you did not authorize, and old entries that should be deleted. 

You should dispute any erroneous entries on your credit report with the specific credit bureau, and allow them up to 30 days to act on the dispute. 

Get a credit-builder loan

A credit-builder loan is a loan product for people with limited or no credit history. With this type of loan, the lender does not release the funds until the borrower has paid the loan in full. As you make loan repayments, the lender reports your progress to credit bureaus, and the information is recorded on the credit report. 

When you take a credit-builder loan, ensure you pay the monthly dues on time since the lender uses this information to assess your report. Making payments on time and in the required amounts can help you build your credit score within a few months. 

Become an authorized user

You can also improve your credit score for auto-loans by becoming an authorized user on another person’s loan account or credit card. Make sure you are a fully authorized user in the account so that the account activity is considered when calculating your credit score. 

As long as the account holder makes payments on time, and they are in good credit standing, credit bureaus will include this information in your credit report and you will start building your credit scores. 

Use a co-signer

If you have bad credit, you can open a loan account with a co-signer with excellent credit scores. A lender is more likely to approve your loan if there is a co-signer with good credit standing on the application form. 

The co-signer provides some form of security by agreeing to take responsibility for the debt if you fail to make payments on time. However, if you delay or default in making loan payments, you risk hurting your (including the co-signer) credit scores. 

Take an auto installment loan

Auto loans are one of the common ways to build your credit score. If you have bad credit, you can find a bad credit car dealership that is willing to give you an auto loan. 

You can also find dealers offering no credit check car loans to help you get a car for your daily movements while building your credit score. On-time payments will boost your credit scores, and pave way for a bigger auto loan or mortgage. 

How we can help you..

Auto loans are tricky because of shady dealers, and finance companies that you have sometimes never heard of. We are a bit different, at CarXpress, we are both the lender and the dealer, you deal with us the entire time. As a local member of the local community, we believe in being a good community partner standing behind the vehicles we sell and service car loans for. At time of publication, we are the only buy here pay here dealer in Prescott. Our mission is helping people in Prescott buy a car with challenged credit. We offer car loans without a credit check, and can get you in a safe, reliable car quickly. 


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