When applying for an auto loan from independent lenders or dealership financing, the contents of the credit report influence your approval chances. You must ensure that there are no mistakes. Furthermore, make sure that no one has stolen your identity.
Your Credit Report
Your credit report contains all your personal financial data such as the details of every loan you have ever taken for the past six years. Consider it as a snapshot of your credit history. The information includes the amount you still owe, how regularly you pay, the limit on each line of credit (accounts), and all the credit grantors who have previously accessed the credit file.
Credit Reports Also Contain:
· Banking information such as the accounts, you have. Any non-sufficient funds or bad checks you have written are included.
· Public records such as bankruptcy or credit-related judgments.
· Collection information that shows any debt referred to a collection agency
· Any statements you have made in response to disputes with financial institutions or to fraud warnings
Characteristically, when you sign a loan or credit card application, you are authorizing the organization to check your credit history. They will go to Equifax or the TransUnion, the top credit reporting bureaus in Canada.
Terms Used in the Credit Reports
Credit-reporting agencies take your financial history and describe it in various ways. They use letters to represent the type of credit you are using:
· “R” represents a revolving credit such as a credit card.
· “O” stands for open credit such as student loans, where you borrow the money you require until you reach a certain limit. After the end of a certain period such as after graduation, you start paying the money you owe.
· “I” refers to installment lines of credit such as car loans, which require repayments in fixed amounts and on a regular basis.
The credit-reporting agencies rate your history using a scale of 1 to 9. If you have a rating of R1, you have to pay your bills within 30 days or as agreed. However, a rating of R9 means you are never paying your bills. Similarly, it indicates you have made a proposal of repayment to the lender.
Is the Credit Score Part of the Credit Report?
Your credit report does not have the credit score. Think of it as a judgment made by lenders about your financial health. Equifax, TransUnion, and banks have formulas to calculate your credit score. Each lender may have their independent way of arriving at this score. Simply put the formula translates the information in the credit report to a three-digit number that ranges from 300 to 900. The higher your score, the better your financial health, and the less risk you pose to the lender.
People with scores of 650 may have trouble receiving a new credit. Most mortgage lenders prefer seeing a minimum of 680. If you are searching for the best loan providers, find a Smarter.Loans provider at the following link.
Bad Credit Lenders
You can still obtain a loan even with a low credit score. However, you may have to deal with high-interest rates. You can pre-apply online for a car loan with bad credit here.Updated Date: 16 January 2018, 23:51