When you first start building your credit score it can be hard to know where to start and even harder to get people to trust you with a zero credit rating. While it may feel like you’re being punished before you’ve committed a crime, don’t worry. You can begin building towards a great credit score and not to mention finance a vehicle even if it may seem impossible.
Creditors and lenders use your credit history to establish whether or not you’re trustworthy. If you hope to take out a loan in the future, or buy a house, you need to establish a good credit rating early on and nurture that relationship over the years. We have a few tips to help you build up your credit.
1) Check out your credit score
I know you think you have a zero credit rating, but are you sure? Make sure you have a clean slate before you begin to move forward. Sometimes things you would not expect can show up on a credit report such as an unpaid library fine and a forgetten medical bill etc. Doing a credit report check will help you know exactly where you stand so when you have a discussion with lenders, they won’t blindside you! It will also give you the opportunity to pay off any of the sneaky debts you may have accumulated.
2) Apply for an auto loan and/or credit card.
You are more than capable of securing an auto loan with zero credit. It you are new to the country you start with a blank slate and creditors will often give you a chance, merely at a higher rate. While the rate may be higher than if you had already esablished an impeccable credit score, with the right team working for you, you can find yourself an affordable payment plan that works with your budget and still find a high quality vehicle.
If you are not in the market for a vehicle, credit cards are also a great way to establish trust with creditors. Talk to your local financial institution about what card may work for you. If you are in the position, you could get both. It you’re looking for a card and are able to secure a low-limit credit card, go for it! Taking loans and paying them back is how you establish credit.
3) Make your payments in full and on time
When you enter into a loan agreement, make sure that you are signing up for affordable payments. When you take out a loan, you are expected to make timely payments and if you fail to do so your credit score will fall. No if’s and’s or but’s. When discussing your financing options with the financial services department, make sure you are open and honest about what you can afford and don’t feel pressured to commit to something that is out of reach. If you feel the agent is pushing you, move on to work with someone more trustworthy.
If you have gone the credit card route, make small payments on your card that you are able to pay in full. It is not enough to pay the minimum payments so be aware of your spending and know that the creditors are watching!
While it may seem overwhelming, especially if you’ve been turned down, to get your first loan and build your credit score with zero credit, it is possible! An auto loan is a great way to start building towards a great future credit rating if you are in the financial position to do so. Everyone needs reliable transportation regardless of credit ratings. Working with a reputable lender and team of financial professionals like the staff at Frank Myers Auto Maxx in Winston-Salem is a great way to work towards your financial future.