How to Boost Your Credit Score in 2010 to Help Get a Car Loan

By Liz Opsitnik
Thursday, Jan 07 2010 13:36

It’s a well-known fact that getting approved for a car loan or lease is extremely dependent on your credit score. If it’s too low, you’ll pay high interest rates over the life of the auto loan. If it’s high, you can take advantage of 0% APR car loans and even get approved for a lease.

If one of your New Year’s resolutions is to improve your credit score, it can be accomplished by following these tips from FICO’s Web site, myFICO.com. FICO’s experts remind consumers that improving your credit score takes time, but by following the tips and advice, over time, consumers will be able to boost their scores.

Here’s a sample of FICO’s tips. Click here to see the full list of tips to improve your score.

• Pay your bills on time.
• If you have missed payments, get current and stay current.
• The longer you pay your bills on time, the better your credit score.
• Paying off a collection account will not remove it from your credit report. It will stay on your report for seven years.
• Keep balances low on credit cards and other revolving credit.
• Pay off debt rather than moving it around.
• Don't close unused credit cards as a short-term strategy to raise your score.
• If you don’t have a long credit history, don't open a lot of new accounts too fast.
• Rebuild your credit if you have had problems in the past.
• Opening new accounts responsibly and paying them off on time will raise your credit score in the long term.
• If you request and check your own credit report it won’t lower your credit score.
• Don't open accounts just to have a better credit mix because it probably won't raise your credit score.
• In general, having credit cards and installment loans (and paying timely payments) will raise your credit score. Someone with no credit cards, for example, tends to be higher risk than someone who has managed credit cards responsibly.
• Closing an account doesn't make it go away. A closed account will still show up on your credit report, and may be considered by the score.

 

Confused or unsure about some of the car loan terms used in the article? Click here for our Auto Loan Glossary.