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Updated: Oct 19, 2022

By Stephen Leifer Education Articles Buying a car is a major purchase. Most people will need to borrow in order to make this purchase. A lender is going to look at your credit report to see if you qualify for the loan that you seek and at the same time, determine the interest rate and term of the loan.They want to make sure that you are a good credit risk. What happens if your credit is less than stellar? It can mean your loan request is denied and you do not get the vehicle you need and or you get approved but the interest rate that you will have to pay makes the car more expensive and unaffordable. How can you clean up your credit report before you head to the car dealership? Here are a few tips: Know What’s On Your Credit Report First, you need to know what is on your credit reports. Everyone is entitled to free copies of their reports from the three main credit bureaus, once a year. If there is anything reporting that does not look right to you or you do not recognize as yours, either contact the credit bureau or hire a professional to dispute all incorrect, unverifiable or misleading information. You should view all of three versions of your credit report because errors can be on one and not on the others – and you can never be sure which of the three a lender will use. Avoid Applying for Other Credit If a new car purchase is on the horizon, avoid applying for any other type of credit, like credit cards, in the weeks leading up to your purchase. Your primary focus should be on securing your car loan. Even if you have no intention of using a credit card, resist applying for any when offers are made. Pay Down Current Debts If possible, pay down the open balances you currently carry on revolving debts like credit cards, to below 30% of their limits. The lower the amount of money you owe, the better your credit usage ratio. Make sure that the pay down is done at least 30 days before applying for your car loan. Pay Your Bills on Time Finally, make sure you pay all your bills on time. If you have missed some payments recently, focus on getting caught up. Your recent payment history is the most important factor in determining your credit rating.

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