When you apply for a loan such as one for a car for example, your credit score is the first thing banks ask for. This number helps them determine whether you are an eligible candidate and which interest rate would suit you. However, all is not lost if you have bad credit. The following are some ways you can recover from it and get that loan easily.
Reduce your credit utilisation ratio
Your credit utilisation is an important factor in your score. As a rule of thumb the more credit you have each month, the worse your credit score will be. The ratio can be improved via 2 ways. You can start paying off your highest level of credit which means keeping balances lower. Pay multiple times a month if it is allowed, to bring your credit score up to the mark.
The second thing you can do is get a higher credit limit. This will reduce the ratio but only if you don’t indulge. That means you need to cut down on your expenditure significantly. If the limit is raised, only use it if you know you will not be spending as much. However, if your issuer does not offer this and you ask for it, you might find yourself at the end of an enquiry which might damage your chances.
Catch up on pending payments
Your credit score is mostly affected by your payment history so if you are behind on payments, it will show on your score. To remedy this, you need to update all of your accounts or work out a payment plan with your creditors if you cannot afford to make those payments yet. If you choose the second course, be completely honest about your finances with your creditors.
This includes letting them know how much you can pay and come to an understanding that satisfies you and the other party. That is the best way to improve your standing with them and reassure them you are going to deliver on your promises.
Pay bills on time
Once you have your credit situation sorted out, start by paying all of your bills on time. This includes utility bills you might have delayed too long, or rent payments. Since your payment history will be judged, ensuring that it creates a reliable pattern is essential for future stability. The worst thing you can do when you have worked out a way of improving your circumstances is to miss more payments or pay late. Automatic withdrawals are an excellent idea as they prevent late payments. Even if you forget to make the payment, the money will be paid on time for you.
If you have had your car loan rejected just because you got into a spot of trouble with your finances, come to us at Driveaway Autos. We are one of the UK’s sub-prime car dealers and it only takes 60 seconds to apply for a car with us. We help clients with poor credit ratings buy the car they want with the finances they need to buy it in full. Apply today and get a decision from our financial analysts within 24 hours. Or call us on 01733 367727.
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