Before Buying a New Car…

Reader question:

What should I do before buying a new car?

Hugh

There’s the one thing that is the most important.

Your credit report. There’s what controls everything. It controls your ability to get cheap rates on car insurance, it controls your ability to get credit cars, and your ability to get low interest rates. Knowing what is on your credit report is a very important part of living an informed and responsible life. You have to keep up with what you’ve done in the past, and what credit bureaus are saying you’ve done.

Equifax, Experian, and Transunion are the three credit bureaus that companies report to when you’re doing well or badly on your payments. Every year, you’re entitled to one free copy of your credit report from each of these bureaus. They all have websites where you can also pay a certain amount to view your credit report whenever you want it, year round. There are other situations in which you are entitled to a free copy of your report: for example, if you are turned down for credit or you think there is fraud going on. The free copy of your report usually will not come with your credit score, but you can view this for a low price.

So you want to start out by checking your score. Called the FICO score, after the Fair Isaacs company, which invented the scoring system for credit, it takes all of the stuff on your credit report and compares it to information on credit reports everywhere to see how you come out. The score is between three hundred and nine hundred, and if it’s high, it’s good; low is bad. That’s not necessarily true, actually–different lenders have different standards, but usually if you manage to get credit with a low score, you probably aren’t getting a good deal. A higher score means you’re less of a risk. For example, if a car lot doesn’t care what your score is, that’s because they’ll have higher costs and interest and will repossess in a flash.

Cheers,
Fashun Guadarrama.

About the Author:

Austin Davis, consumer car repair advocate. "Hi there! I love to help people solve their car repair problems and I hope my site was helpful to you today. Thank you for stopping by."