How to improve your credit score
Knowing how to manage your finances is something they don't teach us in school. Imagine, most students graduating from High School or from college/university do not even know how to write a check! We think we can get by in life not knowing that the bird of Ontario is the Common Loon (although I do work with some). They don't bother to teach about finance management, credit cards, credit card debt, credit scores or budgets. So it's clear to us why we see so many cases were people have less than desirable credit.
TABLE OF CONTENTS:
1. If I’ve been discharged from or have recently filed for bankruptcy, can I still be approved?
If you are CURRENTLY involved in a bankruptcy or are currently in consumer proposal discharged or not - WE CAN HELP!
2. What is a credit score?
A credit score is sourced from a credit bureau report such as Equifax or Trans-union. The score on your report is designed to quickly assist financial institutions in predicting the amount of risk associated with loan request. The lower your credit score relates to a higher risk and a higher credit score shows the lender a lower risk.
3. Can I still get a loan, even though I have poor credit?
Most of us have experienced difficult times, however, that does not make us BAD people! Here at BetterWay Auto, we specialize in working with many lenders to obtain the best auto loan solution for you. We understand each customer’s situation is different and so do our lenders. Let our expertise with our lending partners work for you in obtaining the best auto loan approval.
4. How high will my rate be?
Your rate will only depend on your score and current credit bureau report. We can’t determine that until we sit down, take all the proper information and properly analyze your credit bureau.
5. What is a good credit score?
That's a question we get asked all the time. In Canada, rates can range from 300 to 900, but on average, we typically see them sitting somewhere around 650. We always tell our clients to try and keep their score above 650. If it falls below 650, it makes it a little more difficult to get approved at a quality interest rate.
6. New to Canada?
If your a newcomer to Canada and have no prior credit history, it would normally take 14-18 months of clean credit to be approved for an auto loan or house mortgage. The best thing would be to apply for an unsecured credit card and join the banks special program designed for the needs of Canadian Newcomers, this will certainly get the ball rolling.
7. How fast can I build credit?
Building your credit is a lot easier than most people think. A few great tips to building credit would be to:
- Get a co-signer
- Apply for a secured credit card
- Apply for a mobile phone
- Pay off your balance on time (monthly)
a. Secured Credit Card
One great tip is get yourself a secured credit card. You can easily obtain a secured credit card by applying online to companies such as: Capital One, MBNA or at your own personal bank. What is a secured credit card you ask? This is a type of credit card that is backed by a secured payment used as collateral on the account. For example, if you put $500 on the account, you can charge up to $500 maximum.
b. Pay off any collections
This one is very important!!!! In our experience We've seen many people come into our dealership with collections they claim they are not responsible for. Whether or not this is true, pay first and fight later. The longer it shows on your credit bureau unpaid, the more damage it cause and the more expensive the bill will get. Most of the time, we find it’s cell phone companies, utility bills and believe it or not, your dentist bill!
TIPS TO REBUILD
Stay below your limit
This one is simple, STAY BELOW YOUR LIMIT!
By doing this, it will report on your credit bureau that you are able to maintain an intermittent
payment schedule and low debt. This shows an ability to refrain from overspending in concordance to your budget.
Purchase a vehicle
This to us is the most important one!!!! Purchasing a vehicle is the second or for some people the biggest purchase that they will ever make in their lifetime. Not only will it allow you to gain more independence in your life, it will also allow you to improve your credit score by up 10 points per month.
Creep your credit
We live in a crazy time and our security is so vulnerable. It is good practice to check your credit score once or twice a year on a reputable website such as Equifax or Transunion. Staying on top of this is valuable for a few reasons :
- You're able to make sure nobody has stolen your identity.
- You know your credit rating, ensuring it’s accurate and always improving.
- You can make sure there is no unwanted billing being reported or collections being shown.
Set a goal for yourself
This one is a must and EASY!!!
Most people don’t take the time to write anything on paper. If you don’t change things about yourself, how can you change anything for yourself. Write down a realistic goal for where you would like to see yourself 1 year from now financially. Keep a daily log and you'd be surprised how fast a year arrives and you'll be even more surprised how quickly you conquered your goal. You might even be surprised how many more goals you write down.
Use a credit card for bills
You’re going to get bills, that is just a fact of life! If you are properly budgeting for these bills, the money will be available. By using your credit card to pay your bills, you will receive the benefits of the credit card (air miles, scene it, cash back etc), and simply just transfer the bill money to your credit card once paid. This will help pay off the balance and keeping your credit in good standing. The KEY here is to pay that balance OFF completely every month.
This requires DISCIPLINE and a GAME PLAN. Use credit on planned revolving expenses
This is an example of what bills you can pay with your credit card:
- Cell phone
- Rent (if applicable)
- Internet/ cable
1. DON’T shop around
A lot of people shop at many different dealerships, stores, money marts, etc. If at any point you try to open a credit line, it will be a hard hit to your credit report. If your goal is to be approved on a vehicle loan, be smart and look online, check reviews and do your due diligence before you “start shopping around”. You may think you are benefiting yourself by shopping for the "best" rate, but in fact, you're doing the opposite. It appears to creditors that you’ve shopping around for credit because you're having financial issues. In our industry, we call this "credit seekers"
2. DON'T miss payments
I've heard about people missing minimum payments on their credit card all the time. To me, that's crazy! They are usually only $10 payments to remain in good standing. 10 DOLLARS!! Take a minute and think how a bank would view that. It doesn't look good. In their eyes, it looks like you can't afford to make small payments on a credit card, so why would they lend you money for a car?
Pay now and argue later
This would fall under the DO's and DON'Ts.
DON’T ignore it and DO pay it!!
We've all had a cell phone bill that was more than we were expecting - whether you spent too much time on Instagram or your cell provider miscalculated your bill, pay NOW and argue LATER. Not paying for any bill - even for something as small as a $350 cell phone bill, can end up as an unpaid collection and be very detrimental to your credit score.
Try to avoid in house financing
The one problem I have with “in house” financing is that MOST places that offer this method do not report to the credit bureau. What does that mean? That means, you will be making
payments on a vehicle and it will not improve your credit at all!
Imagine that? Imagine paying for a vehicle for 4-5 years and your basically in the exact same situation were in when you started this 4-5 years earlier.
Try to use only 1 credit card
We see a lot of people using multiple credit cards. Some people find it very confusing to keep track of their spending. Debt can also rack up pretty quickly. Having more than 1 credit card, means, you have to be more diligent when managing them.
Limited Job Status??
Don't think we can't help!!!
This makes things a little more complicated but NOT impossible!
There are a few factors to remember:
- Same job field? Different company?
- Probationary period waived?
- Salary job?
- Are you in a union?
Most banks will recognize that you’re working in the same career field. It shows stability within your chosen career path. Some employers will waive the standard 3 month probationary period, thus guaranteeing your employment.
Don't obsess about the rate
We often hear people say "I won't take a rate higher than..."
First, let's be clear about something. Don't take this personally. If we were your friend, we would say this with the utmost respect, the rate is what the rate is because of your current CREDIT situation (whether it's your fault or not) But we're going to fix that! The reason not to get hung up on rate is simple. If the rate was 21% and the monthly payment was affordable, would you care? Or, what if the rate was 0% and the monthly payment was $1,000, would you care? See what we are saying?? If the payment is affordable, the rate can be sorted with two options.
Option 1 - choose the lowest payment we can find on the newest model vehicle. Bank rates go up every model year of the vehicle. If the payment is affordable, and the vehicle fits your needs, then that is the car for you for around 14 -16 months. Then after never missing a payment or being late - it's time to come in for the car of your dreams and a much
Option 2 - You choose a vehicle that you find afer driving for a while, you love!
After two years of never missing a payment, being late or adding any other negative credit, you might find you can go to the bank and open a new low interest loan and pay off the old one!
Our mission is simple. We want to HELP you. Here at Betterway our staff is trained to handle any circumstance involving credit. We would love the opportunity to meet everyone. We understand that all situations are different and that’s ok! That’s where we come in.
The process is simple:
- Call to book an appointment
- Come in (Feel free to visit our website)
- Bring in the proper documents (license, pay stubs ,etc)
- Sit down with one of our specialists
- Let the fun begin
- We make it extremely easy, pleasant and we’re extremely delicate.
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Call Us Today 1-855-200-5042