Anyone who’s ever tried to purchase a car, home or any other large ticket purchase knows how important your credit history and score are. You’re credit numbers and history are the biggest indicators that creditors use to determine whether or not you’re going to pay for your car, or if they’re going to have to repossess it and try to sell it at a depreciated price.
So what does your credit history tell prospective creditors about you? Several things actually. Your credit report not only tells how much credit you are using at the moment, but how much you’ve used in the past, and at what dept levels you had difficulty in the past repaying your obligations.
So how does one make themselves look better to potential creditors?
Debt To Income Ratio
To find this number take your total amount of monthly obligations, and divide it by your monthly income (net not gross please). This ratio is what percentage of your total income goes out to satisfy debts. This percentage is one of the leading indicators that lets lenders know who well you’ll be able to do at paying your debts. Shoot for 43 percent or less.
Your credit report shows more than just the active credit accounts you have going, it also shows any delinquent accounts you have out and accounts that have been closed for nonpayment. The black marks can add up fast, but luckily creditors will often work with you on payment plans that can get these accounts put back into good standing.
So How Can Buying a Car Help
Buying a new car helps by putting active credit on your report. Often times, if you have no active credit, lenders feel like this means that no one wants to work with you. So actually having an active line of credit going makes you look better to other creditors. Secondly, if you make your payments on time other creditors take this as a sign that you’ll do the same thing with their loans.
Whether you have perfect, or less than perfect credits, the professionals at Reedman-Toll of Jenkintown can help you put yourself in the car you want and put you on the road to getting your credit where you want to be.