The most important factor when it comes to shopping for a new or pre-owned vehicle is your credit score. In Canada there are two major credit reporting agencies – Equifax and Transunion. All of the lenders in Canada will reference one or both of these agencies when determining your eligibility to finance. The lower your score, the higher the interest rate the lenders will offer.
Your credit report may contain the following financial information:
Non-sufficient funds payments, or bad cheques
Chequing and savings accounts closed “for cause” due to money owing or fraud committed
Credit you use, including credit cards, retail or store cards, lines of credit and loans
Bankruptcy or a court decision against you that relates to credit
Debts sent to collection agencies
Inquiries from lenders and others who have requested your credit report in the past three years
Registered items, such as a lien on a car that allows the lender to seize it if you don’t make payments
Remarks, including consumer statements, fraud alerts and identity verification alerts
Your credit report contains factual information about your credit cards and loans, such as:
When you opened your account
How much you owe
If you made your payments on time
If you missed payments
If your debt has been transferred to a collection agency
If you went over your credit limit
Personal information that’s available in public records, such as a bankruptcy
We often receive applications from individuals with less than excellent credit and occasionally they have no credit at all. Unfortunately no credit is worse than bad credit when it comes to getting approved for a car loan. If you have never had credit and have a cell phone that is pay as you go or under someone else's account, then you will need to establish your credit for a period of no less than 3 months.
Credit can be established by applying for a secured credit card. Secured credit cards are offered by many Canadian financial institutions. Secured credit cards are not the same as pre-paid credit cards – pre-paid credit cards do not report to the credit reporting agencies. A secured credit card will require you to give the lender a pre-determined amount ($300-$1000) and the credit card company will then issue you a credit card with a limit of that amount.
The top ways to rebuild your credit:
Never let your balance exceed half of your credit limit. If you have a $300 limit, never let your balance go above $150.
Make your monthly payments on or before the due date.
Don't apply for multiple credit cards at the same time – secured or unsecured.
Use your card and pay it off in full monthly. After 3 full months you will have an established credit file and can then proceed to look for a vehicle loan.
Don't apply at multiple places, car dealers or approval agencies at the same time – pick one place and go through the whole process with them. Applying with multiple dealers in a short period of time will actually bring your score down.
コメント