Car Loan Tips: How To Check Your Credit Report

Credit has slowed considerably over the last year and because of that car dealersips

are paying more attention than ever to credit reports before extending credit. As a result, many people who thought they had decent enough credit no longer do and are very surprised when they're turned down for a loan.

The way to avoid that unpleasant scenario is to know beforehand what your credit score is likely to be. And to do that you need to have a copy of your credit report.

To get a copy of your credit report head over to one of the two major credit reporting agencies - Equifax or Transunion. From the homepage of their website it should be fairly easy to get a hold of your credit report. Or you can go to independent sites and get a copy there. Although you will pay a bit to get your credit report that expense will may be recouped with lower rates later.

Start by looking over your credit report. As these firsm collectively report on millions upon millions of transactions there may be some mistakes on you report. If you do see an error it it just a matter of contacting the company at fault having them correct it. Mistakes aren't exactly unheard of, and because of that there are systems already in place to correct them.

Next, you have to take that credit report to calculate your credit score. This is done with software at each of the different reporting companies, and because neither uses the exact same formula you credit score will vary a little bit depending on who reports it. For our purposes, we'll use the FICO score, a very widespread method used to determine credit scores. We do this by searching for a FICO score calculator and then putting the numbers off the credit report in it.

Now that you have your score, what are you going to do with it? If you have a copy of your credit report, you can go to dealerships and see what they can do for you. You want to have these items with you because every time a request is put it for your credit report from a potential lender it lowers your credit score a few points.

This counts against you because the people who are running around from place to place looking for credit are generally the least creditworthy. More than a few requests over a short time frame means that the individual applying for credit went all over the place trying to get it - but couldn't. Hopefully that makes sense.

But with your credit report you know what your credit score is, and you can then go to dealerships armed with both. Then you can talk to dealers and see what kinds of terms you will get based on those numbers. You can then shop around a bit to see who gets the best terms for you.

You should know that the final terms of the deal may not be precisely what was agreed upon. Because your credit report is interpreted differently by different lenders you credit score may be a little off what you calculated, and hence your rates may be as well. Rates also change, so if you wait a day or two before signing that can also play a role. But they won't be that far off.

Beyond simply applying for credit, knowing your credit situation is simply good financial housekeeping, so get in the habit of checking it regularly.

by: Noel Johnston

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