You’re heading to work in the morning. You’ve grabbed your lunch, kissed your significant other, hugged your kids, and marched confidently to the car. You put the keys in the ignition, turn them and…nothing. This is, perhaps, the worst feeling: helplessness. You pointlessly try again and again to no avail. This should be no surprise. You’ve known you needed a new car. There’s only one problem. Your credit is not good.
The concept of our credit rating is intimidating. All of us are boiled down to a number. Our name means nothing. All of our accomplishments are for naught. All that matters is that number. Years old mistakes, medical bills, divorce, and identity theft can all trash your credit rating leaving you with little to no options when it comes to getting a car. So what can you do?
Fix it before it’s a problem
In the above scenario it’s already too late for this step. If you know your car is nearing the grave, take a look at your credit report. G.I. Joe wasn’t wrong when he told us knowing is half the battle. There are numerous websites that will give you your scores for free and each of the three credit reporting agencies will give you your entire credit report for free once a year.
Review your report. If the score is bad, look for smaller accounts that you can easily wipe out to raise your score. If you don’t have any credit history, take out a secured credit card for 6 months to a year. The balances are low and secured by a deposit you make in order to open them so they’re low risk. Keeping one of these in good standing can quickly give you a positive credit history and leverage when negotiating for a car.
Know your situation before you shop
If you’re in the situation like described above, you’re already at zero hour. You don’t have time to fix your credit. You need a car now. That’s ok. You’re not out of luck. You just need to be smart.
First don’t assume your credit is horrible. Different lenders have different thresholds that they’ll work with. Going to the table with a salesman talking about your horrible credit will only give them an opening to tack points to your interest rate that may not have been necessary.
Second, shop used. With new cars, you’re paying for a sticker and some manufactured new car smell. Used cars can be just as reliable for thousands of dollars less. That doesn’t mean you should be naïve, however. Do your research on how to evaluate a used car. Many dealers now offer vehicle history reports. Take them up on it. Even if a car has high mileage, if the mileage was easy going, it could still be a good car.
Few things can adversely affect you more than a poor credit rating. It can be the difference between feeling like you’re walking the balance beam with a safety net vs. without. Keep up on your score if possible. As they say, the best defense is a good offense. It’s only cliché because it’s true.