Building Credit without a Job

Since the Federal Credit Card Act of 2009, it has become ever moreSorting through your wallet difficult for those who do not have a job, such as stay-at-home parents, to get credit cards. This is because the law limits the access these people have to a credit line. In general, an independent income source is needed to get a credit card, which is important in building credit. Here are some smart ways to build a strong credit rating if you don’t have your own job.

 

Authorized Use

It is possible to become an authorized user on another credit card. If your spouse has a card, ask them to put you on the account as such an authorized user. When you are a user on another account, potential creditors can use those records to see if you have a strong payment history and if you have a low debt-to-credit ratio, which is one of the most important factors in building credit.

 

Branded Cards

Branded credit cards are great for building a strong credit rating. This means a card that is branded for a specific store: Torrid, Best Buy or Home Depot, for example. They have lower qualification terms in general and so tend to be easier to obtain. They also have lower limits, which means you will be less likely to get in over your head by overusing them, and will have an easier time paying them down. They are looked at in the same way as any other credit card when determining your credit rating, however, so they can be a great way to get your score up.

 

Secured Cards

Secured cards are sort of like prepaid cards. You put money into them — say, $1,000 — and you get a line of credit in that amount. This deposit is security against your failure to pay the card down. As you pay them down, you can sometimes raise the limit by increasing your deposit. They can be a great way to build your credit rating and then qualify for a normal credit card down the road.

 

Use and Pay

You need to use your card for it to build credit. A card that sits empty doesn’t help and can in some ways have a negative impact on your score. This means that to build your credit rating, you have to have activity on that card. Just as important, however, is paying down that balance regularly. Not only will this help to improve your credit score, fast payoff will ensure that you don’t build interest rates, which can be high on high-risk cards.

 

Buy Here Pay Here

Purchasing a vehicle with a buy here, pay here loan can also build your credit. This option allows you to finance directly through the dealer and pay at their site. The qualifications can be lower than for traditional car loans and can be a great way to build a strong credit rating.

If you think a buy here pay here car loan might be a good option for you, take a look at our resources and get in touch with us for more information today.

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Understanding Different Types of Credit

Understanding Different Types of Credit Master Lock on a Credit CardWhile credit at its most basic seems simple — borrow money from someone and make payments with interest until it’s paid back — there are different types of credit. Each kind of credit has different effects on your credit score and has its own benefits and pitfalls.

 

Installment Credit

Installment credit, or installment loans, are used to buy large ticket items — houses, cars and college tuition, among others. This kind of loan sees you receiving a fixed amount of money from a creditor which is usually a bank, credit union or financing company. You then have a set amount of time in which to pay back the loan. Car loans, for example, are usually for five or six years.

Installment loans can have either fixed or variable interest rates. A variable rate can rise and fall based on current federal interest rates, while a fixed rate stays the same for the life of the loan regardless of economic conditions. The two types of installment loans can be either secured, which uses collateral to insure the loan, or unsecured, which usually carries a higher interest rate and a higher risk of credit rating damage.

 

Installment Benefits

There are several benefits to this type of loan. First, if you can get a fixed rate, you will have an easy time budgeting payments as they will remain the same every month for the life of the loan. Installment loans also usually carry lower interest rates than other types of credits. Your balance is guaranteed to decrease over time so you will see your debt diminish. Finally, you only pay interest on the original cash borrowed.

 

Revolving Credit

Credit cards, lines of credit and the like are called revolving credit. This open-ended borrowing gives you a limit and you can use the credit as needed, paying it back over time. There is generally no collateral involved in revolving credit, and after you get the card or line of credit you don’t have to apply to use it every time. However, this type of credit carries higher interest rates and is almost entirely based upon your credit score.

The big risk with this kind of credit is that your interest rate alone can outstrip your minimum payment, meaning you are struggling to keep your debt even and may have difficulty reducing your debt. In addition, late payments can have a severe effect on your credit score.

 

Revolving Credit Benefits

When you receive a credit card or line of credit, you can use it as you like, whenever you need. There are no additional applications required. This makes it a supremely flexible means of covering emergency expenses. In addition, if you can afford to do so, you can alter your monthly payments to pay down the debt faster.

The different types of credit each have their own benefits and drawbacks. Understanding these will help you make the right choice when you need to make a purchase. If you need credit to buy a new car, we can help. Read about our buy here pay here financing and contact us today to get started!

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How to Get a Car Loan with Bad Credit

How to get a car loanOwning a car, for many people, is a necessity of life. It allows you to get and maintain jobs and can be a real asset in living a decent life. However, getting a car also means getting financing and for many in this economy, credit rating is a problem. Still, just because your credit is less than ideal, that does not mean you can’t buy a car. If you are diligent and prepared to make the effort, the dream of owning a vehicle is within your grasp. Let us show you how to get a car loan with bad credit.

Know Your Credit

The first step in getting a car loan is to know your credit. Everyone is entitled to a free credit report every year. This report can be obtained at annualcreditreport.com. It will cost a few dollars to get a copy of your FICO credit score, but the expense is worth it. Knowing the good, bad and ugly of your credit will help you to get in fighting shape.

When you have your report in hand, do what you can to remove black marks. Pay off old debts or look into options for having them cleared. The more you can do to clean up your credit, the better you will be.

Do Your Homework

Two different lenders will look at the same credit score in different ways. This is because each lender values different things. While one may see a poor credit score and take that as gospel, another might look at payment history and your efforts to improve your score. Do not take one refusal or offer of bad terms as the final word. Research and talk to different lenders.

Car Finance Lenders

Lenders that specialize in car loans can be a boon to those with low credit. These sources know how to view your credit and often can work with you even if your credit score is low. Where a bank may offer you terms at a very high rate, a car lender might be willing to cut you a better deal.

Get a Partner

Having a partner on board can be a major boon. Not only can they help you to review the contract and terms, if they have good credit they may be willing to co-sign. A co-signer with strong credit can significantly reduce the interest rate on your new loan. Be sure that your partner understands that by co-signing they are taking on some of the responsibility for the loan.

Loan Terms vs. Monthly Payments

Too many people look at their monthly payment as the sole indicator of their auto loan. The overall terms are just as important, if not more so. If you reduce your payment by $150 a month but are going to be paying off the car for ten years, that’s not ideal. Not only will you pay far more interest in the long run, you may still be paying on the car after the time for repairs begins. If you need a ten-year auto loan, chances are you are aiming too high.

If you are looking to refinance your current auto loan, we are here to help. Drop us a line today! 800-258-3759 We can help you get a car loan with bad credit.

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How Buying a Car Can Help Improve Bad Credit

Not only are cars useful for taking you to your job or on vital errands, but purchasing one can be an important first step towards building credit.

Not only are cars useful for taking you to your job or on vital errands, but purchasing one can be an important first step towards building credit.

How Credit Scores Work

When you have a poor credit history, you may feel reluctant to take on a large amount of debt such as an auto loan. Debt is crucial to building credit. Those who have never borrowed money will have a very limited credit history, with almost as low of a score as someone who has had a troubled borrowing past.

A line of credit such as an auto loan will allow you to demonstrate borrowing power. Making payments on time and paying off your loan in the predetermined time frame will show to lenders and credit reporters that you are financially responsible. Your credit score will likely increase as a result.

Other Ways Auto Loans Help Build Credit

Auto loans have some of the most flexible options available. A car is a middle step between something much more expensive like a house and something easy to get credit for but ultimately unnecessary, such as a couch or HDTV.

Your auto loan will also add to your credit history. Financial actions you have taken recently are large factors in credit score calculations; so are the ones you have taken in the past. Buying a car and successfully paying off your loan will be carried around with you forever, providing a bright spot on your credit record.

Not just any car loan will help you, though. One should always exercise diligence before jumping into a significant amount of debt. Here are some of the best strategies for finding a car loan that will help you build credit.

Shop Around

With bad credit, you are more likely to get a high interest rate. To try and avoid getting stuck with an unreasonable rate, always shop around for the best loan possible. Consider sources such as:

Pay Off Your Loan as Quickly as Possible

Never fail to make your payment on time. Also, if you have extra cash then put it towards and larger amount for your monthly payment. More of the money you spend will go to your principal and your loan will get paid off faster.

Get a Cosigner

If you have truly bad credit and you are unable to get a loan, find someone with better credit who would be willing to cosign a loan with you. They will get you a more favorable rate and you will be helping their credit once the loan is paid off.

Start a Savings Account

Put any emergency funds you may have into a savings account that yields high interest. This will help you build credit even further. You could always use the reserve cash to make a monthly payment when money is tight.

With these smart practices, you will be able to secure a car loan that will help redeem your past credit blemishes. Your car loan could just be the single most important factor in getting you to your destination: a better financial standing.

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How Buying a Car Can Help Improve Bad Credit

how buying a car improves bad creditNot only are cars useful for taking you to your job or on vital errands, but purchasing one can be an important first step towards building credit.

How Credit Scores Work

When you have a poor credit history, you may feel reluctant to take on a large amount of debt such as an auto loan. Debt is crucial to building credit. Those who have never borrowed money will have a very limited credit history, with almost as low of a score as someone who has had a troubled borrowing past.

A line of credit such as an auto loan will allow you to demonstrate borrowing power. Making payments on time and paying off your loan in the predetermined time frame will show to lenders and credit reporters that you are financially responsible. Your credit score will likely increase as a result.

Other Ways Auto Loans Help Build Credit

Auto loans have some of the most flexible options available. A car is a middle step between something much more expensive like a house and something easy to get credit for but ultimately unnecessary, such as a couch or HDTV.

Your auto loan will also add to your credit history. Financial actions you have taken recently are large factors in credit score calculations; so are the ones you have taken in the past. Buying a car and successfully paying off your loan will be carried around with you forever, providing a bright spot on your credit record.

Not just any car loan will help you, though. One should always exercise diligence before jumping into a significant amount of debt. Here are some of the best strategies for finding a car loan that will help you build credit.

Shop Around

With bad credit, you are more likely to get a high interest rate. To try and avoid getting stuck with an unreasonable rate, always shop around for the best loan possible. Consider sources such as:

  • Dealership financing
  • Private banks
  • Credit unions
  • Auto loan specialists
  • Online auto loan services

Pay Off Your Loan as Quickly as Possible

Never fail to make your payment on time. Also, if you have extra cash then put it towards and larger amount for your monthly payment. More of the money you spend will go to your principal and your loan will get paid off faster.

Get a Cosigner

If you have truly bad credit and you are unable to get a loan, find someone with better credit who would be willing to cosign a loan with you. They will get you a more favorable rate and you will be helping their credit once the loan is paid off.

Start a Savings Account

Put any emergency funds you may have into a savings account that yields high interest. This will help you build credit even further. You could always use the reserve cash to make a monthly payment when money is tight.

With these smart practices, you will be able to secure a car loan that will help redeem your past credit blemishes. Your car loan could just be the single most important factor in getting you to your destination: a better financial standing.

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Why Auto Lenders Say No – and Where to Turn Afterward

why autuo lenders say noHave you ever wondered why auto lenders say no? You found the perfect car, but now you cannot buy it. Every auto loan financer has denied your application, and you still have yet to figure out why. Delving into the specifics of the loan evaluation process takes some time. Here are some of the chief reasons that auto lending requests get turned down.

Bad Credit

A credit score below 660 makes it tough to find an auto loan. Similarly, so can:

  • Having 30 day or more delinquent payments
  • Declaring bankruptcy within the last five years
  • Causing a foreclosure or charge-off in the past two years
  • Having a debt-to-income ratio of 50 percent or higher

Any of these factors can cause a lender to consider you to have a “subprime” credit status. Two or more of these circumstances can create a really low chance of being able to get a loan. Banks and lenders will assume that you are a bad risk given your financial past.

No Credit

Avoiding debt should be a good thing. Unfortunately, our society wants people to be able to prove that they can handle debt. Never taking out a credit line and having limited bank-based assets will leave credit reporters and lenders with little information to go on.

Without a solid demonstration of financial responsibility, they will make you wait until you have enough credit to form an appreciable score before agreeing to any kind of loan arrangement.

Improper or Inadequate Loan Documents

Loans require a huge pile of forms to be filled out. Making one mistake on those forms could be enough to shut you out of a loan with that lender.

You may also not have access to all the required documentation. Maybe your tax returns are inaccurate, or you cannot prove your income levels to their satisfaction. Lenders want to know that you can afford a loan payment after covering all monthly living expenses. Without being able to prove these numbers, the bank may get nervous and reject you.

Not the Right Lender for You

Many lenders have different expectations and priorities when it comes to giving out car loans. Some are tighter with their purse strings than others.

You should always shop around to see what other lending institutions might say, even after you have been turned down repeatedly. For instance, local credit unions are more willing than large banks to give out loans they think will benefit the community.

What to Do After You Have Been Told “No”

Even if you have tried as hard as you could to fix the above problems, you could still end up being refused a car loan by everyone on the block. If this sounds like you, there may be another option.

Lots that say “Buy Here Pay Here” offer on-site financing for their own vehicles. They may have stricter terms than most typical lenders, but they are much more forgiving when it comes to a tarnished credit history.  If you have tried everyone you can think of but still heard “no,” you can approach a dealer-financed business that will most likely say “yes.”

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Do Buy Here Pay Here Lots Deserve the Bad Rap?

Buy Here Pay Here CarsSome consumers have many anecdotes full of bad experiences with a used car lot that offered their own financing. Many of these people made mistakes and failed to comply with the terms of their auto loans. Others simply had unfortunate run-ins with unscrupulous business owners.

The truth is that these experiences are not universal. Buy Here Pay Here lots are, in fact, trying to assist a section of the car market that would otherwise not have access to their own vehicle.

What is “Buy Here Pay Here”?

Buy Here Pay Here” refers to car lots that offer their own in-house financing. They provide their own loans, and are typically underwritten or backed by another financial institution. Other indications that the lot is Buy Here Pay Here (BHPH) are signs posted visibly that advertise “We Finance!” or “No Credit Needed!”

BHPH lots typically service customers with poor credit who cannot secure a car loan from more traditional means, such as a bank. Since they cannot afford normal financing terms, BHPH lots are willing to trust people who do not have any other available means of purchasing a vehicle.

What Are the Advantages of BHPH?

First, if you do not have enough credit to purchase a vehicle through normal loans, this is the most obvious boon.

Second, BHPH lots differ in their sales approach from other car dealerships. At a typical dealership, a salesman will try to talk a customer into a car they cannot afford, only to be denied a loan or financing after all the work of deciding which car to buy. Even if the customer can secure a loan for the vehicle, the terms will often require that person to be paying off the loan for years to come.

BHPH lots, on the other hand, will usually take the time to review your financial situation up front. They will see your proof of income and offer you a selection of vehicles that can match your needs and means.

You will be able to secure a loan that very day without waiting to hear from a financing department or credit bureau. In fact, most BHPH lots don’t even bother with a credit check.

A third advantage to BHPH is that making a large purchase such as a vehicle and paying it off will allow customers to build credit that they otherwise wouldn’t be able to. A BHPH car can be a great first step towards securing more credit in the future that can be used to buy another car or even a home. 

Finally, BHPH lots often don’t require a very large down payment for their vehicles. Some may have special deals or events that require no money down for specific cars.

What Do I Need to Be Aware of When Using BHPH?

Always review the terms of your loan carefully, especially the penalties for not repaying. Every car lot is different and will have different consequences.

Make sure that you are fully aware of your responsibilities. Many BHPH lots require you to bring the money directly to the office according to a set schedule.

If you adhere to the terms and pay off your loan as quickly as you are able, BHPH can be an easy way to get a vehicle and help improve your credit.

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Car Shopping 101: Your Credit Report

Car Shopping 101: Things to do BEFORE going to the dealership

Before-the-dealershipMany car buyers often end up failing because they fail to check their credit reports first. After you have budgeted the money to purchase your new car, you need to take a look into your credit file. Don’t leave it until the very last minute. Can you imagine the devastation you would feel if you were denied the loan at the very end of the entire process? Think about it: you spend the time going through the cars at the dealership, test driving the ones you like, hammering out a fair price with the dealer, only to apply for credit and get the big no because of your credit score. Is that what you want to deal with?

Why not do things the smart way right from the start? Look into your credit beforehand, before you ever head to your first dealership. Begin the process months in advance. If you happen to have any inaccurate information on your credit report that is causing your score to drop and raising the amount you are going to spend on interest, you have time to get it taken care of. Expect to spend two to three months getting your credit report cleared of any inaccuracies.

Get a Copy of Your Credit Report

Since there are three main credit reporting agencies, you need to get copies of your report from all three. Most of the time, you can get your credit report for less than $10. However, you are entitled to a copy of your credit report for free from each one of the agencies once per 12 months. Make sure to check into this beforehand and see about getting your report for free. If you were recently turned down for credit or you think you might be the victim of fraud, you can also get a copy of your credit report for free. If married, be sure to get one for your spouse also.

What Determines Your Actual Credit Score?

Credit scores are determined based on the following:

  • Any outstanding debts you might have.
  • Your previous payment history on your debts.
  • The length of time you have had credit.
  • What type of credit you currently have.
  • The amount of new credit you have been trying to get recently.

By taking a look at your credit report, you can easily get an estimate of what your credit score is with the free estimator. Many people fall into the 600-700 credit score range. Most of the time, the best rates are reserved for those who have scores above 700.

Correcting Any Inaccuracies

Take a look at your report to see if there is any inaccurate information that needs to be corrected. Check for accounts that you closed but are still reporting as being open, accounts that aren’t yours, incorrect credit balances or limits and disputes that have already been resolved. See if there is any information that is outdated. Generally speaking, a negative record is going to remain on your report for at least seven years, while bankruptcies remain for 10 years.

Credit reporting agencies are going to have to support anything they have on your record. If they don’t have anything to support the record, they have to remove it. Ask to see proof of the debt. Send letters to companies asking them to correct inaccurate information with the credit bureaus.

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Buy Here Pay Here | Your Job is Your Credit

Buy Here Pay Here | Your Job is Your Credit

Have you gone into a car dealership only to be told you were denied for bad credit? They told you to come back when your credit is better. You end up trying to figure out how you are going to make it to your job, school, the doctor’s office, grocery store, or anywhere else. Instead of being frustrated and depressed, you can do something about it with the help of CarLotLoans. Thanks to the “buy here pay here” program, your job is your credit. If you are working, you could get a car. Long gone are the days of having to worry about having a perfect credit report.

Fulfilling the Transportation Needs of Your Customers

Regardless of whether you have good credit or not, you still need a quality vehicle to get you from one place to another. Today, you almost have to have a reliable source of transportation just to survive. Many customers who use “buy here pay here” do so because they cannot get the auto financing they need anywhere else. Without these dealerships, many people wouldn’t be able to purchase a vehicle.

Helping Customers Rebuild Their Credit

Instead of being stuck in a vicious cycle, you can get the financing you need to secure the automobile of your dreams. How many times have you been told you need to improve your credit, yet no one is willing to give you credit? It defeats the purpose. At a buy here pay here, your information can be reported to the credit bureaus to help you repair blemished credit. Be sure to find a dealer who does report to the credit bureaus. Since an auto loan is a form of an installment loan, it is one of the best methods for improving your credit rating. As your credit improves, you are able to qualify for better vehicles and larger loan amounts.

Reliable Transportation at Your Fingertips

We all understand how important it is to be able to have a vehicle to go back and forth to work and provide for loved ones. Can you imagine what the alternative would be if there weren’t any buy here pay here lots? Most individuals who come into these lots only have between $500 and $1,000 to use as a down payment, and some don’t even have that much.

If there weren’t any buy here pay here lots available, they would be forced to use that cash to try to buy a vehicle outright. By going to a lot, they may be able to get a vehicle that gets them where they need to be for a small payment out of every paycheck. Having a stable job is the first step to get into a vehicle and begin rebuilding your credit.

Now that you have an understanding of the many benefits that come with a buy here pay here loan from CarLotLoans, you can be on your way in the car. It may not be your dream car, but it’s the first step to rebuilding your credit so that you eventually you can buy that dream car. To get an idea of how much money you are going to spend on your auto loan every month, you can use the loan calculator found on the website. Knowing what you can afford beforehand can make the buying process simpler by saving you time and hassle. Before you know it, you will be driving off in your vehicle all thanks to a buy here pay here dealership.

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In-House Financing: What is it?

In-House Financing: What is it?

So you’d like to buy a car, but your credit score isn’t the greatest. Maybe you had a period of financial hardship that resulted in some late or missed payment. Perhaps a bad split-up with a significant other took an equally significant toll on your credit score. There are a lot of good people out there who, due to a run of bad fortune, ended up with bad credit. There are still options available for financing a car.

One of these options is in-house financing. Have you ever driven past a used car dealership and seen a prominent sign that advertises, “Buy Here Pay Here?” This sort of option is in-house financing, and can provide an attractive for people with less-than-optimal credit scores. It does, however, work differently than traditional financing options.

In an in-house financing model, the dealer provides the financing to buyers directly. There is no third-party, no bank directly involved. Because the dealer assumes the lion’s share of risk on these sorts of deals, they want to make sure that these “tote the note” deals see regular, on-time payments. Some dealers may require on-site payment and/or install a computer in your car that will de-activate the vehicle if you are late on payments, requiring you to make your monthly payments with little flexibility.

However, far less weight is placed on the buyer’s credit score to finalize the purchase, with more placed on the income and potential ability to pay back the loan. In this case it is even more important to ensure that you can afford your monthly payments on time every month.

In addition, this sort of loan can be a great option for improving your credit score, enabling you to refinance your car at a lower rate through more traditional channels, later on. Sometimes, an in-house financing deal can offer other options beyond the traditional 36- or 48-month financing, and can extend payments out further, enabling lower monthly payments (but sometimes significantly higher interest paid when all is said and done). In addition, since the dealer does not have to borrow money from a bank, and is selling you a car that the dealer owns outright, you might be able to negotiate a lower interest rate than with a traditional deal. This varies from dealer-to-dealer, however, and some dealers have higher interest rates due to the risk involved with this sort of model.

Perhaps the biggest advantage of in-house financing is that the purchase process can be significantly easier than with traditional loan options. Since your dealer might offer a number of options and incentives based on the fact that the money is coming directly from them, you might have an easier time negotiating a favorable payment rate. Options and incentives of this nature can include rebates, flexible interest rates, extended warranties, increased customer services, and more. The process can be much faster and more efficient, with fewer hoops through which you have to jump. If you’re looking to get a car with a minimum of hassle and quickly, in-house financing can be a good option.

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