How To Fix Your Credit So You Can Refinance Your Car

Do you want to refinance your car but have shaky credit? There are several ways you can improve your credit that we will outline below. After following these tips, you should be able to increase your credit score so you can get a good rate. 

Get Your Credit Score And Credit Report

You can quickly learn what your new payment could be if you use an online auto refinance calculator. But to qualify for the best rate, it’s important to get a copy of your credit report. 

Each of the three credit bureaus is required to provide a free report every year. The credit reports give a summary of your credit history going back several years. If you analyze your reports, you can quickly see if anything is causing damage to your credit score. 

However, there are many fraudulent websites out there. Order your free credit reports from a credible site like AnnualCreditReport.com. 

Check Your Credit Report

If you see anything on your credit report that’s lowering your score, try to address it as soon as possible. For example, did you miss a credit card payment last month? Make that payment on time for several months to reduce the impact the late payment has on your score. 

If you make on-time payments for a few months, you can reach out to that creditor to check if they will remove the negative mark. They may not, but it never hurts to ask. 

Open Disputes On Any Credit Report Errors

Many people have mistakes on their credit reports. Your creditor could say you paid a credit card late when you paid it on time. You can submit a rebuttal and try to get the credit agency to remove the mistake. 

You will need to prove the mistake, such as with a proof of payment for that credit line. It’s possible to challenge those mistakes on the phone, online, or through the mail. 

Don’t Close Old Accounts

If you have old credit cards with open credit lines, you should leave them open. This gives you a larger unused credit line and that will raise your score. 

Pay Anything That Is Past Due

If you have a payment that is 30 days late or more, there will be a negative mark on your report. The longer you don’t make that payment, the more damaging the negative item will be. 

Even though the damage has already been done, you are better served to pay the late item before it goes to collections. If that happens, the creditor may charge it off. 

Pay Off High-Interest Debt

High-interest consumer debt, such as credit cards, usually damages your credit the most and costs the most in terms of interest payments. 

When deciding which accounts to pay down first, go for the high-interest credit cards. This will quickly improve your score as you pay them down and may result in a better interest rate on your auto loan refinance. 

Pay Down Credit Cards

Having high credit balances can damage your credit score. While it may be difficult, you can quickly increase your FICO score by paying down credit card balances. 

If you have a $5000 balance, it could easily damage your credit score by 50 points or more. But you can increase your score in a month or less if you pay it down by several thousand dollars. 

Getting a better interest rate on your car loan can save a lot in interest. Try these credit improvement tips and you’ll see how quickly it’s possible to boost your score for the best rate.