How to turn bad credit car loans around

If you have bad credit there are a few things you can do to help your credit score to get a better car loan even if you have bad credit.  Even if you have good credit a few changes could give your FICO credit score a boost and that might get you a better car loan rate.

Obtain your FICO credit score and credit report

Some places will issue you a credit report for free.  Almost all charge a fee for the actual FICO score.  You are going to have to get your score as well as your report.  Your score, which does fluctuate a bit and that is normal, will let you know where you are at:

• Excellent  760 - 850
• Good        700 - 759
• Fair           620 - 699
• Poor          300 - 619

We have something to work with once we know the score.  From here you want to check the report. 

• Check over all the information
• Review all accounts for accuracy
• Correct mistakes

How to increase your FICO score

Pay bills on time.  Late pays hurt your score.  Payment of bills accounts for about 35% of your score.  There are several factors that go into how this part of your FICO score is calculated.

• How many times you are late
• How often you are late
• The last time you were late

If you are frequently late this hurts your score more then someone who has only been late once or twice and it was 9 month ago, as an example.

Pay of as much of the credit car and other debt as you can

Paying down your debt can increase your score.  This can account for as much as 30% of your credit score.  The more available credit you and you are using the lower your score will be.  This is onething alot of people do not know.  Say you have a card with a $10,000.00 limit and you have it maxed out at $9,750.00 this wil lower your score.  If you have the $10,000.00 limit and you carry say $2,000.00 on the card your credit score will be higher. 

The best thing to do is pay the bills when they come in.  If you do have to carry a balance because times are tough and we are all trying to get through these tough times do your best to keep the balance as low as possible.  You will save money by not carrying a balance as well.

How long you have had credit and the last time you applied for credit are a couple more factors that go into calculating this part of your FICO credit score.

Remember FICO credit scores and reports are for lenders and not for us.  It is in our best interest to review our FICO credit reports and also obtain copies of our credit scores.

This is a basic introduction to your credit.  If you can make this adjustments, which account for about 65% of your credit score:

• Paying your bills on time
• Paying your credit cards in full or at least keeping a low balance
• Apply for credit sparingly
• Review your FICO credit report and get your score
• Take care of mistakes on your FICO credit report