Whether your first encounter with finance was in primary school, or studying it in college or it was mentioned in a conversation with your bank accountant, you could hear that maintaining a good credit score is necessary if you want to apply for loans or credit cards. Maybe the most encouraging reason why you should care about the good credit score is simple: money. It means lower interest rates, more cash in the bank and getting loans easier. On a scale from bad credit (meaning no one will lend you money) to outstanding credit (credit companies are fighting to have you as a client) most people stand somewhere between those two extremes.
When you are getting a new car loan, it usually has two effects on your credit:

  1. If you pay on time, it has a positive effect on your credit history
  2. It will trigger hard inquiry to your credit card report but the points you lose during the process will be acquired for the ones you receive for the future on-time payments

What does that mean? Let’s dig into a two examples of two friends: John and Peter. John has a high credit score (above 760) which means he can be approved for interest rates as low as 2 or 3%. Peter on the other hand, who has a lower score (below 580) is a riskier investment for lenders and thus he pays much higher interest rates. Sometimes, when it comes to used cars or longer term loans, it means 5 to 10 times higher interest rates. For the car lenders this is also a question of extending a loan to an applicant. There are companies like ARCCT that provides bad credit car loans for people that have subprime credit. Credit scores, overall ability to repay, liquid capital are some factors that include the decision about receiving loans.

Building and moreover maintaining your auto credit can make your life much easier and qualify you for loans and credit cards. To put it more visually: If Peter, from our story above, could reach the lowest of the ‘’excellent’’ range, lenders would see him quite differently from now. Think as a lender: maybe you will loan some money to your friend or relative one time, maybe you will lend them some money for the second time (even if they return the money late) but you will not lend them money for the third time if they still haven’t return you the first sum of money (or you will tell them to return it with interest it happens).

Maybe it feels like an abstract concept: how can a few points make me a better person. Not a better person, but a better client. It is all about the money when it comes to loans. Even if you have some score, the insurers won’t risk with a client like you because you are not solid, reliable and there is a big chance you will fall behind on any new loan.

But that can change! Even a small leap, that of 50 or 100 points, can make you fitter for the auto loans. Making consistent payments toward a car loan or other financial obligations like personal loans is a great way to repair your credit points. If you fall high on a scale for loan qualification congratulations! This is a great article for you to make you proud of yourself.
If you are like all of us mortals who are trying to pay all the debts on time (and sometimes fail), this article is a great source of ways that will help you with building and maintaining your auto credit:

1. Know Your Credit Score
The same thing as your ideal weight: to get the one you want, you need to know your current one, your zero start. You can request a free copy of your credit report from three major credit reporting agencies Equifax, Experian and TransUnion. Knowing how you score will help you with the plan of further building your credit score. It is also important to research about some key things to have in mind while negotiating for loans.

2. Don’t Settle For the First Choice
Google is your friend! Read and investigate different insurers across your country. There are varieties of lenders who offer auto loans so don’t limit yourself for some narrow choice. Services provided by companies like ARCCT have specialized in cases of clients with bad or poor credit score and we have years of experience of finding reliable financial car loan resource.

3. Familiarize More about Auto Loans and How They Work
You don’t need to be an expert in the field but knowing your finances and how can you be better bills and debts in time is a crucial life trait. For example, maybe it will look like lower monthly payments are the logical choice but they usually come with higher APRs while the short period of time for returning the money comes with lower APRs. You don’t know what APR is? Google it! Kidding, we will tell you, but know your finance first! APR stands for annual percentage rate how much it costs to borrow for one year. Basically, that is the final price of a loan. Higher APRs means you will end up paying more for the car by the end of the loan.

4. Treat Your Debts Equally
Even if you have loans with the lowest interest rate, don’t neglect them to prioritize for example a mortgage. When it comes to your credit score, all equals as the same importance. Having balance on your credit card constantly can result in lower score and big NO from the car insurers.

5. One to Rule Them All
You are watching movies and series where characters have ten different cards and paying different things with different cards and you think it looks smart: having a number of small balances on different cards but it can actually lower your score if you overuse them. Smarter choice is to have one or two cards which will integrate all of your balances and loans into one place. It will also be easier for you to check your progress while building and maintaining your auto credit. To say it short, it will help you to keep an eye on you.

6. Your payment history contributes approximately 35 percent of your credit score!
Pay all your bills on time and if you have trouble with keeping up with your payments, get an app, cheap accountant or free and easy Google Excel Sheet. Where there is a will, there is a way.