It is important to maintain a reasonably good credit to obtain a loan when needed. If you are not careful with your credit score and let it go bad, you may have your finance application rejected. Everyone knows that plastic money is in vogue today and cash transactions are diminishing, hence obtaining credit for any commodity is becoming the way of life. On the other hand paying it back must be an important part of your financial management to maintain a good credit score.
Bad credit is reflected when you have taken too many loans for too many needs and are unable to pay within deadlines. This also affects your future loan requirements where you may need low-interest car loans to meet your requirements.
Let us take a look at the factors you need to take care of when you are seeking best car loan rates.
THE CREDIT FILE
Your credit file is your credit profile or your credit history which is maintained by the relevant organizations when you are using any type of credit. It could be a loan from the bank, a credit card you are using, a store card or even if you have a bought a gadget on instalments. Your credit file maintains the record of your credits and repayments, irrespective of the credit amount. Your house mortgage or a car loan/personal loan is also recorded on your profile. This report includes details of your entire credit history for as long as five years. It also includes the overdue amounts and bankruptcy details, if any.
THE ASSESSMENT OF CREDIT FILE
When you are looking for the best car loan rates, you would require browsing through the list of lenders offering loans. These lenders, be it banks, or finance companies would like to check your credit file to determine your creditworthiness. The owner’s permission is always sought to access the file. If the access is denied for any given reasons (could be bad credit) the credit provider may disapprove any credit in view of non-availability of credit details. The risk-taking capacity of the individual is often determined by the credit file and existing credit history.
CREDIT FILE MAINTENANCE COMPANIES
There are credit reporting agencies in Australia who maintain your credit history such as Veda Advantage and Dun & Bradstreet who provide the information to the lenders when needed. They may or may not determine the credit score of the individuals as the credit providers or lenders have their own parameters to check out the credit score and worthiness of the people applying for credit. They simply scrutinize the credit file and reach their own conclusion on whether to approve your car loan or any other type of finance. The credit file information providers only offer the records and the credit providers rate each item as per their own guidelines which differ from lender to lender. Hence, the chances of obtaining the credit depends on the rules and guidelines of the Bank/ lending company.
BAD CREDIT HISTORY
A credit provider may refuse to extend credit if there is a glimpse of bad credit. This could be a payment default as old as five years or a non-repayment of a small loan. A car loan can also be put in default bracket if not paid back in time. A default is recorded on the file if three consecutive monthly loan repayments have been missed and arrangements have not been made with the loan provider to rectify the situation. All this adds to your bad credit and affects your finances in the future with serious consequences in store. Good or bad credit score remains a part of the credit file for five years.
CREDIT REPAIR COSTS A LOT
Fixing bad credit can be hard and it does take time. Once you have had any sort of bad credit on your credit file the lenders usually will ask for any comparable credit for a year before they give you a second chance.
This is where New Choice Car Loans will help you out. As we specialize in bad credit car loans we have access to lenders who will give you a second chance in obtaining car finance and help you build up your credit rating again.
If you are a working professional, but have a bad credit and in need of a new or used car get a bad credit car loan quote or call us on 1300 853 450