At our no credit score car dealership, we can finance pre-owned cars even with bad credit, or no credit at all. Perhaps your credit score continues to go down and you’ve paid your bills every month. Bad credit can affect your eligibility for a loan or mortgage, and leave you paying higher interest rates. People often feel like they have no control over the situation. However, being careless is not going to help. Nor is not fully understanding how credit works.
The reasons your credit score may fall include:
Missing a Payment
One missed payment can drop your credit score dramatically; after all, your payment history is 35% of your FICO credit score. Pay all your bills, including parking tickets, to avoid being the target of collections. Even make sure you return library books on time. Creditors want to know that you are a dependable borrower.
Not Using Credit Enough
Improving your credit score is possible only through using your credit cards. By borrowing money and paying it back responsibly, even by putting a recurring bill on a card, you can raise your score. Not using your credit cards doesn’t prove your creditworthiness and can get you turned down for a loan.
Having Only One Type of Credit
A lack of variety in your debt can reduce your credit score. Perhaps you use only credit cards and haven’t applied for a personal loan in your name. Your best bet is to have credit cards along with a personal loan, car loan, or mortgage and manage your expenses responsibly since 10% of your credit score relies on variety in your debt.
Overusing Your Cards
If all your credit lines are maxed out, your credit utilization ratio will increase. Not only will you have no available credit, but a lower credit score. Also, you’d think closing out an account you don’t use can help—but think again. Closing even a zero-balance credit card will lower your score. Utilization is a factor here, as eliminating this card affects your credit utilization ratio, of which 30% of your FICO credit score is based on.
Paying Off Old Debt
Whether you find an old unpaid bill or finally have the cash to pay off an old collections account, think twice before paying it. Debt collectors may decide to treat old debt as new once you start paying again. Resumed collections activity can reduce your credit score. Always request proof of what you owe in writing; if a collections agency can’t, then you can open a dispute with the credit bureau.
Not Tracking Your Credit Report
Fraud, identity theft, and even common errors can affect your credit report and drop your score. Someone else’s mistakes can impact your finances, even if they weren’t intentional. Credit reports are generated by Experian, TransUnion, and Equifax; you can get your report from each of these once a year, for free. If you suspect you’re a victim of fraud or identity theft, contact one of these agencies to freeze your credit.
Find the Best Deals on Used Cars at Hawthorne Auto Square
We are the most reliable source of used cars in Hawthorne. If you have no credit or bad credit, we can help you finance a used car that has been carefully inspected and can provide years of trouble-free performance. Visit our buy here, pay here dealership at 11646 Prairie Avenue in Hawthorne or call our sales team at 866-707-7664 for information on the best deals, our latest inventory, and financing options.