Car Loan Sense

There are ways you can improve your credit score and get a better interest rate on your car loan.

If you have checked your credit report recently, and gotten a copy of your credit score, you probably have a pretty good idea of where you are, credit-wise. And chances are, if you are like most of us, you wish that your credit were a little better. There are some things that you can do to boost your credit score and help you get a better interest rate on your auto loan:

• Make your payments on time. Pay your bills and other obligations on time. Your utility company may not be listed on your credit report, but after you miss a couple payments, it will be. Credit card payments that are late are often reported for each late payment. So give yourself plenty of time to get the payments in.
• Pay at least the minimum each time. Be sure that you are paying the minimum payment each month. Less than full payments are often reported.
• Try to reduce your credit card debt. Credit cards that show as being near the limit are negative items on your credit history. You can improve your credit score by paying down some of that debt.
• Live within your means. Having a high debt-to-income ratio can knock you down a few points, even if you make all of your payments on time. Make sure that you have plenty of breathing room between your debt and your income.

Practicing good credit and debt habits for three or four months can make a difference in your credit score and history. If you have a year to wait before getting a car loan, you can significantly impact your credit history. However, if you need the car now, you can get a car loan at a higher interest rate and then refinance to a lower interest rate a year or so later when your credit score has improved.