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Here at Acura of Moncton, we believe that the better you understand the concept of credit, the better equipped you are to make smart decisions regarding it. We are all about you driving away feeling like you made the smartest decision possible.
Your ‘credit score’ is a number that serves as an indicator to lenders about the kind of risk you represent when it comes time to extend your credit. The score predicts, with a score from 300-880, how likely it is that a consumer, like yourself, will go 90 days past due within 12 months of being granted credit.
The break down of what makes up that number may seem complicated at first, but it makes a lot of sense when it’s laid out. It starts with repayment history and, with 35% of the score being made up by this factor, late payments are a serious blow to your credit score for the next seven years. So be sure you are getting those payments in promptly.
Not far behind it, sitting at 30% of what makes up your score, is how much you already owe. Owing too much for too long, as you might imagine, is a good indicator to the lender that this is a person who couldn’t possibly repay another loan. While the opposite indicates a person who is on top of their finances and represents less of a risk.
At 15%, how long your credit report stretches back, along with how often you use it, can be a good indicator of whether or not you can be trusted with an additional loan. Never using available credit or misuse of available credit are both taken into account during this step when determining future risk.
Applying for new credit frequently can be an indicator of financial difficulty and, in the industry, it is often referred to as “credit shopping”. While it only represents 10%, it’s an important consideration when lenders are deciding whether or not to add additional credit to your plate.
The remaining 10% goes to the types of credit you’ve used in the past, and it is generally the least significant part unless there is very little else to go on. Different types of credit can be a reflection on how you handle your finances in general.
How to Fix Bad Credit
Having bad credit isn’t the end of the world. For starters, the factors that affect your credit situation generally refreshes every seven years. So a bump in the road today isn’t necessarily ‘trouble’ forever. There are some things you can do, however, to boost that number up in the interim.
Let’s start with ways to keep things from getting worse. For starters, be sure to make your payments as soon as possible, and no matter what don’t be late with them. As mentioned above, this is the largest factor in your score, so get that money in as soon as the bill arrives.
Next, do your best to keep your credit cards available. A maxed credit card is an indicator, as clear as any, of financial troubles, and it will torpedo your score almost immediately. We know this isn’t always in your hands, but if you can, try to keep your balance under 50% of the limit you’ll be in an excellent spot.
Don’t cancel your old cards. It’s conventional wisdom to pay it off and then cancel or cut up the card, and while this might be cathartic it doesn’t do much for your credit score. If instead, you keep that card in a drawer or a few years after you pay it off it can show a history of available credit that will work in your favour.
Now that things are stable, it’s time to find ways to improve what you have. The best way, and this is true, is to take out an additional minor loan. The only way to establish credit is by borrowing and promptly paying off a loan to demonstrate your ability to do so. A modest loan, not unlike the one you would receive for a vehicle, is the best way to get that credit boost that you are looking for.
Finally, there is an old saying, the best time to plant a tree was 20 years ago, the second-best is right now. Having no credit at all is actually worse than having bad credit, so if you still don’t have a credit score, now is the time to get to a lending establishment and get started. There are programs in place to get you started on the right foot.
We hope this helped, and if you have any questions, get in touch with our financing team and we will set you on the right track and, hopefully, back on the right road!
Why Choose Us?
Here at Acura of Moncton, we believe that buying your next Acura should be as exciting and carefree as driving one, and that includes financing. Thanks to our fast, convenient, and secure online application, you will be well on your way to getting approved within minutes. Once you have applied, our experienced and friendly team is here to work with you to build your credit and maybe teach you a few helpful things along the way.
When it comes to vehicle selection, we are among the very best in the industry. We offer over 1500 used vehicles to choose from, so no matter what you are looking for in a new vehicle, we are almost certainly going to have the right one waiting here on the lot. We know that buying a previously owned vehicle can sometimes be nerve wracking, that’s why we hang our hats on the values of reliability, trust, and integrity for every vehicle we sell. We pride ourselves on being the very best place to find a car loan in the Maritimes, and that means earning that distinction with every customer we serve!
So, when you are ready, come and see us here at Acura of Moncton. We bring you financing options that other institutions simply can’t. In addition to our wealth of knowledge and legendary customer service, when you work with us you get access to the Steel Auto Reduced Interest Rate Programs and the very best interest rates available in the province. So, why wait? Come and see us today for the highest quality used car loans with the least hassle in the Maritimes!