Refinancing car loans is a ‘must’ after 2 to 3 years of punctual repayments to a bad credit auto finance agreement. It is also a viable strategy if rates have recently fallen. In order to underwrite the risk of default or control inflation, the Annual Percentage Rate (APR) may have been a lot higher than is currently available. Choosing to refinance auto loans allows the customer to benefit from a lower rate of interest because the borrower now has a higher credit score. There are also a number of fast credit repair techniques that should be used to add valuable points to a score before refinancing an automobile loan.
Eliminate Credit Report Errors for Fast Credit Repair Help
Request a free credit report from each of the three major credit reference agencies – Experian, Equifax and TransUnion – and check these for evidence of erroneous information. It is important to inspect each report as each agency holds completely different information. Things to look for include:
- The social security number and name don’t match.
- Credit searches and active credit agreements that weren’t applied for.
- Debts that were eliminated as part of a bankruptcy agreement that still show as active.
- Any credit agreements that show as “paid derogatory”, “settled” or “paid charge-off” when they should be “paid as agreed.”
- Lapsed credit agreements – more than 7-years old – should no longer show as active. Should chapter 7 have been declared, it will be 10-years. Lapsed debts can be removed.
The Fair Credit Reporting Act gives the consumer or a credit repair attorney the right to perform credit report repair when the data held isn’t factually accurate. This could lead to a significantly higher credit score in just 2 to 3 months.
Refinance Auto Loans After Fast Credit Report Repair
- Avoid maxing-out a store or credit card as this causes a fall of about 30 points. Spread any revolving debt over several cards. Don’t use more than 30% – preferably 10% – of the allocated credit limit in any one month.
- Avoid closing down old accounts as it reduces the overall availability of credit and gives the impression that the borrower is more financially stretched than they actually are. Instead, consider using old cards occasionally and settling the full balance at month end.
- Use savings to reduce debt for a better credit score. Excessive debt is seen as a sign of money problems and likely default.
- Don’t make too many applications for low interest car loans as each search will show for the next 12-months. Use a comparison site to pinpoint the best deals when refinancing car loans and only apply when sure that the eligibility criteria are met.
Improve Credit Ratings to Get a Low Interest Car Loan
Before refinancing car loans, identifying ways to improve credit ratings can save money. Even modest credit improvements can save hundreds of dollars. Always allow 2 to 3 months for fast credit repair help to take effect as agencies take time to reflect any improvements. Making punctual repayments on a bad credit auto loan and other credit agreements are the time consuming part, but ensuring data accuracy and proper credit allocation ensures that the best credit score rating is achieved.