1.  Search for lenders that cater to subprime borrowers.  True, many lending companies today strictly require good credit. So, if you have a less than average rating, your car loan application will most likely get declined. However, if you look for lenders that offer bad credit financing, you can boost your chances of receiving the loan you need.

2.  Use the internet to compare deals. Visit a loan broker’s website to compare bad credit car loan deals from different lenders. Pick your top two or three choices and check out the interest rate, fees, terms and conditions offered by each prospective lender. Remember to take your own credit report with you. You don’t want a lot of lenders pulling your credit and dropping your score.

3.  Check the lender’s background. To avoid being ripped off by scammers and predatory lenders, take the time to research about your prospective lender’s track record. You can do so by visiting the website of Better Business Bureau to find out more information about the company such as its rating and overall performance. Don’t forget about some of the great social networks that have cropped up over the last few years. For example, Yelp is a great site full of reviews from people in your community.

4.  Order the most recent copy of your credit report from the three major credit bureaus. See to it that your report does not contain any error or outdated information which could pull your credit score down. If you find any, you can ask the bureau to make the necessary corrections by sending a letter via registered post mail. The process can take up to 30 days so it’s best to check your report at least two months in advance before applying for a bad credit car loan.

5.  Get a co-signer. Ask a friend or a family member with good credit history to back-up your car loan application. However, please take note that a co-signer is held accountable to take over the repayment of the loan in case the primary borrower defaults on the

loan. So, when asking a person to co-sign, be honest and discuss the terms of the loan as well as your strategy to ensure that you can make on time payments. Remember every time you are late making your payment it will not only hurt your credit, but it will hurt your co-signer, as well. If for some reason you cannot make the payment on time, contact your co-signer and let him/her know.  He/She might be able to lend you some money in order to make the payment on time.

6.  Save up for your down payment. You can significantly reduce the amount of the loan payment of your bad credit car loan, by providing a large down payment.  It is recommended that you put down at least 20%. Submitting a higher down payment will not only improve your chances of getting approved, but it may also help you qualify you for a better rate.

7.  Speak with a prospective lender.  Meeting a potential lender in person will give you the chance to explain the circumstances that caused you to have poor credit. Moreover, you will have the chance to explain the steps you’ve already taken to improve your credit score. Tell the lender why you need to take out a car loan at this time and how it will help you regain your creditworthiness. A loan officer is more likely to grant approval of your car loan application if you can provide additional information, such as current pay stubs and additional security.

Apply for a credit card if you don’t have one.  Using a credit card regularly and paying off your monthly charges on time is a great way to boost your credit score.  This does not mean you should spend a fortune on credit card shopping.  You can use your credit card to pay for a small purchase so repayment can be easy.

Choose a credit card with a low rate and with features that matches your lifestyle.  Read and understand the fine print before submitting your application.  Make sure that your payments are reported to the three major credit bureaus.

Pay all your bills on time.  Whether it’s your credit card, car loan, mortgage, electricity, cable, or internet bill, you should strive to submit your payment on or before the due date.  Why is this important?

35% of your FICO score is based on payment history so how timely you are in paying your bills can make or break your credit score.  Of course, prompt payment will boost your credit rating while frequent late payments will pull down your score.

Do not max out your credit limit.  30% of your FICO score is based on credit utilization so how you manage your credit line can significantly affect your credit score.  Experts recommend not using more than 30% of your available credit to maintain a high score.  If you own a credit card or credit cards, check your balance first and plan your spending ahead to avoid maxing out your limit.

Manage different types of accounts.  It’s not enough to have a credit card or multiple credit cards in your name.  You can further improve your credit rating by acquiring different types of debt such as a personal loan, a student loan, a car loan, or if you possible, a mortgage loan.

Lenders who check credit history are interested in how capable you are of manage debt and credit.  If you have a credit card, and at least two different loans in your name, this will surely strengthen your credit standing.  Of course, it’s important for you to submit your monthly loan payments on time to protect your personal credit.

Check your credit report regularly.  Consumers are entitled to one free report from each bureau every 12 months or annually. You can visit www.annualcreditreport.com to order your free report for this year.  You may choose to request all your three reports from the three bureaus at once or you can order one report from one bureau throughout the year.  If you want to directly order from a credit bureau, there is a fee of $9 to $12 per report.

Checking your credit report will give you the chance to examine it for possible errors. In case you find an incorrect detail, you can send a dispute letter to the bureau that issued your report.  You must also ensure that all your account activities are accurately recorded.

Related Post

• How to Avoid Hurting Your Credit Score
• Credit Myths that You Should Not Believe
• What to Look for in Credit Card Programs

Do not max out your credit card.  Did you know that maxing out your credit limit can deduct anywhere from 10 points to 45 points from your credit score, depending on your current rating?  Credit utilization makes up 30% of the FICO score so this is not a surprising fact.

If you would like to maintain a score of at least 720 and above, you should be very careful with how you use your credit limit.  Experts recommend keeping credit usage minimal, as much as possible below 40% of your available limit.

Don’t be late.  This may be an obvious tip but many people are still guilty of late payment.  Missing your due date can slash off anywhere from 60 to more than 100 points from your credit score.  The highest percentage in the FICO scoring system is payment history at 35%.  Just imagine how much you will be hurting your credit score if you fail to pay a bill on time.       This is true not just for credit card and loan payments but for all types of debts (electricity, cable, internet, etc).

Cancelling a credit card.  You might be thinking about cancelling one of your credit cards because it has a high rate or because you already have new credit cards.  Before you pick up that phone and request to cancel, you should be aware that your credit score can suffer.

If it’s an old credit card you’ve been using for years, closing it now would mean erasing the old parts of your credit history.  The length of credit history takes up 10% of your FICO score so you could be penalized for losing those precious account activities.  Instead of cancelling, consider keeping the card, using it only for a small purchase.  Be sure to pay it off in full right away so you won’t need to pay the interest rate.

Not having a variation of credit accounts.  If you only have credit cards in your name, it would be hard to boost your score.  Types of credit used makes up 15% of your overall credit score so it is recommended to acquire different types of accounts in your name.  Of course, timely payment for each account is crucial to maintain excellent credit.

Seeking debt settlement as a solution.  Resolving a debt problem through settlement can be an option but you should be aware that such a move will damage your personal credit score.  If you have higher score, you could lose up to 125 points if you settle.  Thus, before taking a step forward, weigh the matter carefully and see if the advantages of debt settlement far outweigh the damage it can do to your credit score

MYTH:  You can’t have a bad credit score if you are financially responsible.

This is not necessarily true.  Some behaviors which might seem like a good strategy to manage your finances can be bad for your credit.  For example, not using a credit card at all will not help you in building your credit score.  To build a solid credit score, you must prove your capability to handle debt and credit.  Thus, not having any debt at all may seem like a safe way to avoid debt problems but you won’t have a credit score.

MYTH:  A lower credit limit is better because it discourages overspending.

In line with the first myth, this is an example of a behavior which might seem like good for your finances but bad for your credit.  30% of your credit score is based on credit utilization.  Ideally, you should have a low credit-to-debt ratio to keep your credit score in good standing.   However, if you have a low limit, it can be difficult to keep this ratio at a low-level especially if you only have one credit card.  A higher credit limit  will be an advantage as long as you know how to use it in control.

MYTH:  Checking your credit will pull down your score.

Not true! Hard inquiries or inquiries made creditors in response to your application can affect your score.  However, checking your own credit will not hurt your score at all.  In fact, consumers are advised to check their credit regularly to make sure that all information contained in their report is accurate.

MYTH:  Carrying a credit card balance improves your credit score.

This is a dangerous myth to believe in because it encourages credit cardholders to leave balances unpaid, increasing the risk of debt build-up.  The reality is that carrying a balance from month to month will not boost your credit score.  The only thing it does to a card holder is make you pay additional interest rate charges.  The best way to manage credit card debt is pay your monthly balance in full, leaving no balance at all.

MYTH:  All you need is a credit card or credit cards to build credit.

Aside from revolving credit, managing different types of credit in your name is a great way to prove credit-worthiness.  You do not need to own multiple credit cards to raise your score.  One or two credit cards should be enough, depending on your needs and lifestyle.

The types of credit used makes up 10% of the FICO score.  Therefore, having at least one or two types of loans (car loan, personal loan, or mortgage) in your name will strengthen your credit history and credit score, assuming that you are consistent in submitting with your monthly loan payments on time.

However, credit cardholders should be clearly aware of their duties as well as the risks involved if the account is not managed correctly.  What kind of dangers associated with credit card use should you avoid?  Consider this list:

Uncontrolled Debt.  It’s easy to charge a purchase to credit without considering repayment obligations.  Sadly, many credit cardholders have found themselves stuck in bad debt because of poor spending habits.  Don’t let yourself be caught up in this trap.

Before using your credit card to buy anything, ask yourself, “Can I afford to pay back the charges in full and on time?”; “Do I really need to make this purchase now?”; “Will it be safer if I use cash for payment instead of charging it to credit?”

ID theft and fraud.  Many cardholders prefer to shop online. While there can be advantages to buying online such as convenience and a lower price, shoppers should protect themselves against the threat of Identity Theft and Fraud.

Purchase only from a reputable online merchant.  Make sure that the website uses a secured server with at least 128-bit of encryption technology to make sure that credit card information you provide online will be safe.

A secured web page should begin with the URL “https”, instead of the normal “http”, used in unsecured sites.  You should be able to check this from your browser’s address bar.  You should also see a locked pad lock icon on the bottom right corner of your browser.

Maximizing limit.  Using your credit limit to the full also has its dangers.  First, it increases the risk of debt build-up.  Second, your credit score can significantly drop if you frequently max out your credit limit.  This is because 30% of the FICO score is based on credit utilization.

Providing supplementary credit cards.  If you are a parent, you may consider giving your child a supplementary credit card.  This means, your child can use the credit card to buy things or pay bills but all charges will reflect on your account.  While this might seem harmless, you want to make sure that your child clearly understands how to manage debt and credit responsibly.  If your child racks up a large bill to your account, your personal credit score can suffer.

If you are a business owner using a credit card for business, you also have the option to distribute supplementary credit cards to your employees.  This can make business operations run more smoothly but you want to make sure that you only hand out a credit card to your most trusted employees.  In addition, you should regularly monitor your account so you can be immediately alerted if your credit is being used on unofficial expenses.

A Variety of Reward Programs to Choose From

The most popular rewards for business credit cards are Gas Rewards, Cash Back and Travel Rewards.  If your business requires you to take frequent trips around the country and abroad, you should definitely take advantage of the benefits a travel reward business credit card offers.

On the other hand, if you own a number of vehicles used officially for business, acquiring a business credit card with gas rewards can enable you to save more from you gas expenses.  Keep in mind that you can distribute supplementary credit cards or employee credit cards so you can collect more points as your drivers use their credit cards each day.

If the nature of your business is buy and sell, a cash back reward business credit card can be your perfect partner.  As you use your business credit card to buy supplies or stocks on a regular basis, you can rack up more points at a much faster rate.

The number of points you can earn and the type of reward you can get will vary depending on the type of business reward credit card you choose and the issuer.  The rules tend to vary from one credit card company to the next so you want to take the time reading and understanding the fine print.

If you’re ready to apply for a business credit card with rewards, consider the following tips for you:

Choose a card that complements your business.  As mentioned above, not all reward credit card programs are the same so you want to look for a business credit card that will match your own business.

Check the requirements before signing up.  Some reward credit cards for business require excellent credit history so even if you have an average rating, your application may get declined.  To avoid unnecessary rejection, check the prerequisites first prior to submitting your reward credit card application.

Understand the reward system.  You should be well aware of the rules on collecting points and redeeming rewards.  Some business credit cards only give points on “qualified” purchases or on selected transactions so although the reward offered is quite bigger than what other credit cards offer, you want to make sure that you can follow the rules.

Use your reward business credit card for business only.  It might be tempting to use your business reward credit card on personal purchases to rack up more points but this isn’t encouraged.  A business credit card can help you keep track of your company’s spending for each period and if you’re going to combine personal transactions, you will be making things complicated for your business accounting.

Know where you stand.  Have you checked your personal credit report? If you have not yet requested your free credit report for this year, you can go to www.annualcreditreport.com to order.  You can order all your three reports from the three major credit bureaus at once so you can be sure that all versions of your report contain accurate information.

Checking your report will make you aware of your exact situation.  Perhaps your credit is not as bad as you think, or maybe it might need more serious work.  With a copy of your credit report on hand, you can evaluate each of your accounts and plan your strategy based on that.

Are there errors or unauthorized charges in your report?  If so, you should send a dispute letter to the credit bureau that issued your report right away.  Fixing an error can instantly boost your credit score.

Pay your credit cards in full and on time.  Contrary to what others think, you don’t need to carry a balance to boost your credit score.  You also don’t need to use your credit card for expensive purchases to achieve a high score.

What’s most important is how you pay off your credit card balance.  It’s best to pay off your full balance each month so you don’t incur interest rate fees.  Use your credit card for a small purchase so that repayment need not be a burden.

Avoid hard inquiries.  If you need to acquire a new credit card or a loan, do not submit multiple applications to different lenders at once.  Doing so will only damage your credit score even more.  What you want to do is spend time comparing your options and once you have the right lender, that’s the time you can submit an application.  Don’t forget to check the lender’s credit requirement to avoid unnecessary rejections as this will also pull down your score.

Keep credit usage minimal.  You want to use your credit regularly but you should keep it as minimal as possible.  In fact, you should not use more than 30% of your available credit if you want to see an improvement in your rating.

Apply for a small loan.  Aside from revolving credit, adding other types of debt to your name is a great way to improve your credit score.  An installment loan whether a personal loan, student loan or a car loan gives you the chance to prove your creditworthiness through timely submission of your monthly payments.

Acquire a small loan with just the right period of repayment.  Choose a lender that offers a reasonable deal.  Furthermore, make sure that the loan provider reports to the three major credit bureaus.  As you submit your monthly loan payments, you will strengthen your credit history and add points to your score.

Tried and Tested Tactics for Paying Off Credit Card Debt

• Come up with a credit management plan on your own. Many consumers have successfully retired their credit card obligations by making important changes in the manner by which they manage their personal finances. Some found it necessary to limit the use of their lines of credit, so that they can avoid incurring additional credit and interest charges. Others decided to cut down on unimportant expenses and allocate more funds to their monthly credit payments. Still others tried to come up with payment plans which enabled them to gradually settle their outstanding financial obligations.

These things only show that you can come up with your own strategy for paying off your credit card debt. You simply need to spend considerable amount of time thinking about an appropriate do-it-yourself-tactic, as well as a sufficient sum of money that you can allocate for your payment strategy. And soon enough, you can work on your plan to get rid off your debt, in the soonest time possible.

• Sign up for credit counseling services. You can also rely on the experience and expertise of financial advisers to free yourself from the bondage of credit card debt. To do this, you just need to sign up for credit repair services with a credible counseling firm. For sure, with the help of a certified financial adviser, you will discover effective techniques on how you can gradually settle your credit obligations and soon rehabilitate your credit profile. Your credit repair course can also help you gain insights on how you should manage your personal finances so that you can prevent yourself from falling into debt traps, which can once again inflict severe damage to your credit standing.

• Apply for a debt consolidation loan. In some cases, you must apply for another credit program to completely retire your outstanding financial obligation. After all, you need to have ample funds to pay off your credit card debt, once-and-for-all. Good thing there is a popular credit program these days called debt consolidation loan. Under this program, you will receive sufficient funds that will allow you to settle all your existing credit obligations – such as credit card debt, an unsettled secured or unsecured personal loan, and even unpaid utilities bills. In return, the lender will ask you to pay back what you borrowed in affordable monthly installments which will be based on your financial capability.

• File for bankruptcy. Bankruptcy is rarely considered as an option for retiring credit card debt. Rather, it is perceived as a last resort, most especially if all the efforts that you have invested to pay off your credit obligations proved to be in vain. After all, with this program, you can expect to have a clean slate once your credit accounts have been completely discharged.

Still, you need to remember that there are stringent requirements imposed on those who wish to apply for bankruptcy. So, before you process the paper works and apply for this program, we encourage you to seek professional assistance from a bankruptcy attorney. Through this professional, you can soon discover if indeed you are qualified to file for this quick-fix strategy, and at the same time, you can receive valuable information that you can use once you start with your court proceedings.

Helpful Pointers for Credit Consumers

• Pay off your debt. There is no better way for you to fully regain your creditworthiness other than paying off your credit obligations. So, to succeed in gradually paying down your debt, you need to closely examine your personal finances. Try to identify expenses that you can eliminate to free up more funds which you can allocate for your credit installments. And as much as possible, pay more than the minimum amount required by your lender or card issuer. This way, you can prevent your interest charges from ballooning out.

• Stick to the terms and conditions of your credit accounts. We encourage you to review the fine print of your credit program, once in a while. In so doing, you can easily remember the provisions and restrictions imposed on your credit program. And this information will in turn help you come up with measures on how you can abide by the terms and conditions of your lines of credit for you to avoid paying huge fines and penalties that are usually charged on delinquent borrowers and credit cardholders.

• Use your credit card wisely. Keep in mind that your credit card activities are being monitored and reported to the three credit bureaus. And the employees of the credit reporting agencies use your credit and payment transactions in computing for your credit rating. So, if you are serious about your desire to cause dramatic improvements to your credit history, then you need to use your credit card wisely. Make sure that you pay your credit charges on time and in full each month. And see to it that you don’t max out the spending limit set on your card account. In so doing, you can gradually push your credit score up, until such time that you can fully regain your credit reputation.

• Order copies of your credit report on a regular basis. In some cases, your poor credit standing can be attributed to the outdated and incorrect entries found in your credit report. After all, the system used for updating your credit and payment transactions is not perfect and prone to human error.

This is the reason why finance experts encourage consumers, like you to regularly order copies of their credit files from the three credit reporting agencies – Equifax, Experian and TransUnion. This way, you will have the chance to determine what your latest score or rating is, and to validate the accuracy of the transactions listed on your credit report.

• Read, read, and read. We also suggest that you look for excellent sources of information that can help you achieve your goal of attaining thorough bad credit repair. You can visit the professional blogs and websites of finance advisers where you can obtain expert opinion on how you should manage your lines of credit. You may also take financial literacy courses online so that you can receive practical suggestions not only on how you can regain your credibility as a borrower, but more importantly on how you can responsibly manage your personal finances.

Know your personal budget.  Deciding on the type of car and the loan package that fits you will depend on your financial capability.  Aside from the price of the car, you should not forget to take into account other costs such as insurance, taxes, and maintenance expenses.  Don’t forget to consider your budget and personal income before making your choices.  More than anything else, see to it that you can afford to submit your monthly car loan payments on time.

Check out all possible loan options.  Banks, lending companies, credit unions – these are all possible resources when in search of car financing.  You should be willing to spend time evaluating your options to make sure that you will find a reasonable deal.  The bottom line is that you should never sign up the first car loan offer that comes your way regardless of how attractive the deal seems to be.

Know your strengths and weaknesses.  Recognizing your strengths and weaknesses is important before negotiating with a potential car loan provider.  Car loan rates, terms and conditions may vary from one lender to another.  Furthermore, loan providers may consider a number of factors such as the borrower’s income, age, credit score, driving history, etc.

If you have an excellent credit history and rating, then you are most likely to get the best car loan offers from lenders.  On the contrary, having a poor credit score or a lack of credit history can be a major drawback.

Students and new car drivers might find also find it a challenge to get approved for a low-rate loan since many lenders make decisions based on income stability and driving record.  However, if you’re an honor student or included in the dean’s list, you might be able to win ask for a lower interest rate as an exemplary academic standing is usually regarded as a sign of maturity and dependability.

Watch out for car loan scams.  As with other industries, car loan scams are prevalent in the market.  You might come across car dealerships that offer quick loans and guaranteed bad credit car financing.  It might be tempting to sign up the contract right away especially when the dealer gives enticing promises. People with bad credit who cannot qualify for a regular car loan should be particularly cautious about bad credit loan offers.

However, a lot of consumers have fallen for these tactics and found themselves stuck in an expensive car loan because the dealer was obviously after one thing – to make money at their expense.  When visiting a car dealer’s, don’t sign anything at their location.  Go home, do more research, evaluate the deal, check the company’s reputation, before making a decision.