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Five Easy Steps To Rebuilding Your Credit


Source: Article published on MeetAuto Febuary 24th 2017

Buying a car can be an unpleasant experience especially when you have less than ideal credit. You may be in a situation where you need a vehicle due to life changes or your old car is about to kick the bucket, but you're worried nobody will give you the break you need. With a few tips from the experts. we have found a sure way to, not only get the car you want, but also rebuild your credit! Seem too good to be true?  We spoke with Pierre Caron, the President and Owner of Car-On Auto Sales, about all the mistakes and pitfalls to avoid and important things to know before you sign the dotted line. With almost 35 years running this very successful family auto dealership, Mr. Caron has a ton of experience with all types of buyers. He shared the five important tips buyers need to know to help rebuild their "bruised" credit.

1.    FIRST AND MOST IMPORTANT,  STOP jumping from place to place trying to get approved.

2.    Don't do a credit application in a dealership or online unless you feel confident they will get you approved.

Every time a credit manager, in a dealership or online, looks at your credit bureau or submits your application to a bank or credit company, your credit score drops. Canada's leading credit bureau databases, Equifax and TransUnion, unfavourably see repeat inquiries on your credit bureau and have built into their algorithms that each time you credit report is requested, the computer automatically drops your credit score. Many dealership credit managers will blindly send your applications to whatever banks or finance companies they have at their disposal and, without you even realizing it your credit score drops.. and drops.. and drops until you either, get approved at ridiculously high interest rate or even worse, pushes your score below the threshold of being able to get you approved . Mr. Caron recommends NOT GIVING YOUR FINANCIAL INFORMATION until you find a trustworthy dealership that specializes in credit rebuilding and that you trust will get you approved.

3.    Don't be fooled by ONLINE "guaranteed credit approvals".

Most often, marketing companies put out ads guaranteeing credit approvals. They make money off your data and not necessarily getting you approved. They are gathering names and numbers and then, turn around and sell your data to numerous dealerships in the hopes of selling you of one their cars. Every one of those dealerships, that has paid for the right to use your data, then searches your credit bureau which drives your score down …limiting your chances for approval at a decent rate. Again, Mr. Caron recommends finding a dealership credit manager you trust and let him or her them do what they are best at.

4.    Find a dealership offers lots of options. Wide selection of vehicles as well as wide selection of banking/financing options.

Why are options important? The more options are available, the more likely you are to find a vehicle, term and a rate that suits your needs. There is no worse situation than feeling backed in to a corner when it comes to your finances. Finding a dealer that has as many bank options and many vehicle options increases your odds of finding a deal that's right for you.  Too many dealerships have a small inventory of vehicles and even more limited options for banks, so they "lock" their customer in to the few options available to them.  They often look at what is best for their pocket books and not necessarily what is best for their customers. Mr. Caron recommends that one of the first things you should look for when visiting a dealership is how many banks they actually represent. If they only have two or three banks, this may not be the best place to rebuild your credit.

Once you have found the right dealership and what looks to be the right finance deal for you, DON'T SIGN THE DOCUMENTS until they have answered this simple question: "Do you report my payments to the credit bureau"

5.    Confirm they report your payments to the credit bureau.

This point is critical to rebuilding your credit and must be identified before signing the dotted line. Not all dealerships and not all financing companies report your payment to the credit bureau. Mr. Caron strongly recommends you specifically ask if they will report your car payments to the credit bureau. If the answer is not a clear YES,  then it WILL NOT improve your credit score and you will be in the same financial situation 2 years from now.
If everything checks out, you are well on your way to rebuilding your credit.
One last step.
Stay on Top of Your Personal Finances - Not only is it essential to maintain your car payments current but also maintain your personal finances in order, this includes credit cards, cell phones etc… While you may start with a higher interest rate initially, if you continue to make your regular payments on all financial fronts, you may be able to go back to the dealership and renegotiate your interest rate as early as within the first year. Once your credit score has improved, the banks may be open to reducing your interest rate for the remainder of the term. Of course, making all of your outstanding payments on time is imperative, not only your vehicle financing.

It is possible to rebuild your credit quickly by finding a trustworthy dealership that will, not only sell you a car but, will want to earn your business as a long term customer. They should help you rebuild your credit and treat you as a loyal customer forever. Dealerships like Car-On Auto understand the difficulties we face when trying to get our finances in order and they specialize in helping customers get back on their feet. With a selection of over 250 cars, SUV's and trucks, loan forgiveness protection standard on all their loans and full warranties to 200,000 km available, they are Eastern Ontario's leading credit rebuilders. You can check out Car-On Auto's inventory listed on MeetAuto here.