What to remember when considering credit

Whether you are financing a new home, car, or an education, you want to make good credit choices. Typically, you need good credit to borrow money on the best available terms. Good credit means establishing a credit history that shows you have fulfilled agreements between you and your current and previous creditors/debtors.

 

Drive Wheaton finance representatives would be happy to help you better understand your credit situation and the options available to you. We can also help you evaluate whether paying cash vs financing a car is a superior financial decision.

 

Understanding credit reports

Your credit report shows new potential lenders how you manage your credit and lists what types of credit you have been applying for. Your credit report shows whether you have begun an account with any lenders, the length of time your account have been open, and whether you have paid your bills on time.

 

Potential creditors, such as automotive companies (like us), review your credit report to decide the potential risk of you failing to repay the credit. Your score is a number that summarizes your risk level. Credit scores help us determine your access to credit are:

·         Payment history

·         Amount of debt

·         Length of credit

·         New debt

·         Type of credit

 

Generally, items that are harmful to your credit will stay on your credit report for 6 years, depending on which credit agency is being used to check your credit profile. You should check your credit report at least once a year to make sure all of the information is accurate.

 

Establishing credit

The first step to financing a vehicle is establishing credit. When initially building credit, you need to determine if you can afford to make the payment now and for the full term as well. Good credit history makes obtaining financing at lower interest rates and better terms a lot easier. Two simple ways to establish credit are:

  1. Starting a savings or chequing account at your local bank
  2. Applying for a retail or bank credit card (or consider a secured credit card)

 

Maintaining credit

Once you have credit established, it is important to build a positive credit rating. To do this:

·         Pay on time

·         Do not go over your credit limit

·         Pay at least the minimum amount due

·         Notify creditors of address changes

 

You may be surprised at our options for new buyers including no-credit car financing as well as our options to help you overcome bad credit. See how we can get you on the Road to Better Credit