Bad Credit Blog

Wanted to take a break from normal posts about credit and debt to just pause and be thankful for this great country of ours. And to think about how WE as individuals can make a difference in the lives of people around us.

Regardless of what’s happening to you financially right now there is always someone just a little worse off that you can help. Even if it’s just a sick friend or neighbor that you cook a meal for. Thinking of others first, sacrificing of ourselves, even just a little, is what has made this country so great. And that’s what sets our country apart from so many others. WE as individuals take responsibility for ourselves, our neighbors, our community, our country.

So we wanted to pause and give you a little post we found yesterday on Fox.  RealAmericanStories.com.

We hope you enjoy being inspired and may you have a wonderful 4th of July. God Bless America

As a car salesperson I saw it time and again. People coming onto the lot with that “defeated” look. The one that says, “I know my credit sucks and that I can’t get a car loan, but I’m desperate.”

The sad thing was, about 50% of these people were right. The major banks wouldn’t loan them the money. Which begs the question, “If my local dealership couldn’t get me financed for a bad credit car loan, how can an internet company do it?”

Simple. They SPECIALIZE. What’s that mean . . . specialize? It means that they are set up to “take risks.” In other words. They already know you have bad credit, but these car lenders either have access to lenders that are willing to work with you, or better yet, they ARE the lender.

These bad credit auto lenders know you have a bankruptcy. They know you’re behind on a few credit cards. They understand that life gets ahead of you occasionally. And they are ready, willing and prepared to give you a car loan!

When you are pre-qualified it will be the easiest car shopping you have ever experienced. With pre-qualified shopping you know exactly how much you are approved for and all you have to do is find the right vehicle, sign some papers and drive out! Well maybe I have over-simplified it a bit - but not by much. You don’t have to wonder if you got the best interest rate or anything else. Just be sure to leave room for tax and license and of course gap insurance and that’s it.

Is it hard to qualify for a bad credit car loan from one of our lenders? Absolutely NOT! Go for it! Fill out the credit application from one of our lenders and see how pleasant and easy it is. You will never buy a car any other way!

For a complete list of our bad credit car loan lenders click here.

It sounds silly, I know. Pre-approved car loans for people whose credit is tanked. But there are several good reasons for pre-approval - especially if your credit isn’t that great.

As a car salesperson in Phoenix I dealt with a wide range of people with bad credit. The worst ones were the ones with the sense of “entitlement.” Strolling onto a lot as if they were millionaires and picking out a vehicle that was obviously outside their price range based on their credit history and/or their current income.

The second type came on the lot meek and mild and wanted to buy a car “under $5,000″ and finance it. They knew they had bad credit and thought they were “thinking like the bank.” In other words, lending them just enough to get a car, but not enough for a new or newer model.

Both of these types had the potential to be completely ripped off by the wrong dealership. Why? Because they really had no understanding of how credit and financing works in the car business.

So how does getting pre-approved for a car loan this benefit you if you have bad credit?

When you have bad credit often you can’t negotiate for the best price on a car. Or pick out the exact car you want for that matter. Why? Because what most people don’t know is that when you have bad credit lenders “charge” the dealership a fee for the risk they are taking on you.

What does this mean? The charge is usually a percentage of the car’s value - for instance 5%. So if you’re buying a $10,000 car and the fee is 5% then that’s $500 the dealership WON’T take off the price of the car! Not only that, the $500 is part of the amount you’re financing so you are actually paying the bank to assume the loan. I’ve seen charges as high as $2,000 because of a person’s credit!

The difference between pre-approved car loans and getting a loan at the dealership is that you avoid paying this fee!

When you are pre-approved the bank loans you a “fixed amount” of money and it’s your job to go out and find the vehicle you want and then negotiate the price down. This guarantees you the best price on the vehicle of your choice because you’re not paying the bank to assume the loan.

Getting a pre-approved car loan also means you can pick the vehicle YOU want. On the lot I worked at we often had 3 or 4 vehicles (usually the same models) that we knew would “fit” the banks parameters for people with bad credit. So when a person with bad credit came on the lot we would try to steer them to one of these cars. Not necessarily to make more money in OUR pockets, but because we knew that the buyer had the best chance of getting approved on one of those models because they would fit the banks guidelines and had enough markup to absorb the fees without losing money on the vehicle.

Getting a pre-approved car loan also keeps you from looking at vehicles that you won’t get financing for. If you are pre-approved for $15,000 then you won’t be out looking at vehicles that cost $22,000, wasting your time, and having your credit pulled multiple times by the car dealerships. Once you know how much you’re approved for you can find the best vehicle in that price range and negotiate with the dealership for it.

Bottom line - Being pre-approved for car loan a vehicle loan gives you more options and puts you in the drivers seat. You can negotiate for a good car deal and get the vehicle YOU want. So if you’re credit challenged and need a vehicle don’t go out looking for a car without applying for pre-approval first!

In perusing Yahoo questions doing research for an interesting Blog article, I noted several questions from 18 & 19 year olds anxious to establish credit but wanting to “get it right.” Several people asked the same question, “Is it better to have several credit cards rather than just one?”

The answer is a resounding YES it is better to have two or three - provided you are disciplined enough to handle it.

The reason it’s better is because you have more companies contributing to your credit report. Of course that works both ways. If you are not a responsible person and pay just the minimum amount each month, or max your cards to the limit, or pay late regardless of the reason, your credit score will be damaged. But of course you already know that - right?

To increase your credit score and get the maximum benefit with a credit card keep your credit usage to around 30% of your credit limit. Whenever possible pay your credit card in full each month. If that’s not possible double or triple the payment they request. In other words if they only want $20 minimum you should pay $40 to $60 to keep the total amount owed as low as possible.

Finally. Keep your credit clean! A person in their 50’s can have a few negative things on their credit and still be OK. This is because they have a LOT of history on their report. And if the good outweighs the bad then they can usually be alright. But when you are just starting out you don’t have much good credit to cancel the bad. So every bad thing hits your score a lot harder. So keep your credit clean and don’t go crazy with the credit cards! Use them to BUILD credit, not buy toys you don’t need with money you don’t have!

Good luck to you!

“I thought the website was a great help for me! I did have one question that I am hoping you can answer for me… I am just now 18 and I was trying to figure out some good ways to try to build up some credit to get a new car. Everything else I have found was not as helpful as this site, so I was hoping there was a way that you guys could give me a good honest answer to this question. Any help would be a great addition to what I have already learned here on your site. Thank you”

That’s a note from a young man who emailed us recently. I emailed him and answered his questions, but after thinking about it we decided it would make a good post for people who are looking to finance their first car.

Banks look at a few different things when deciding if you’re “trustworthy” enough finance a first time car through them. Credit score is definitely one of them. Other factors though are:

• Time on the credit bureau (how long have you actually had credit)
• Job history (At least 2 years of steady employement (even if you’re only 18)
• Income (must be $1200 a month gross, but $1500 to $1800 is better. That’s about $9.40 to $11.25 per hour, full time)
• Down payment (when you’re a first time buyer a down payment goes a long way towards showing the banks that you are a responsible person)
• How much do you want to borrow? (Even with $4,000 to $5,000 down it’s always best to try to buy a $10,000 or less car)

These things are true no matter how old you are. If you don’t have credit cards, and never finance anything, then you too can have a zero score, even if you’re 50+.

Now - the above list is just the “getting started” list for financing a car for the first time. Lenders look at a couple other things too:

• Can you prove where you live? (do you have legitimate mail coming to you. Preferably a utility bill - like your cell phone - with YOUR name and address. Not your parents)
• Can you afford the payments? You may earn $1800 a month, and live at home, and not pay rent or utilities. But over the next 5 years you MIGHT move out (at least I’m sure your parents are hoping you will). Then you’ll have rent, utilities, groceries, clothing, etc. etc. etc. So the bank is only going to want to you have a payment that equals MAX 25% of your paycheck. ($400).

Now - that’s the bank. But do you really want to shell out $400 of your hard earned money for the next FIVE YEARS? That’s a long, long time. Consider that when vehicle shopping and keep your payments as low as possible by not buying the “biggest, baddest” truck on the lot.

Another thing to consider is INSURANCE. If you’re a guy under the age of 25 your insurance is gonna be sky high on a newer vehicle. So price around for insurance FIRST before financing. Make sure that you can afford the payments AND the insurance - and that you won’t be eating canned tuna for the next 5 years to afford them!

Even if you earn enough money, have a down payment and a steady job the bank may still turn you down. Especially if you have NO credit history. So be prepared with a co-signer if at all possible.

A co-signer should be someone whose older (30+ years) and has established credit. The better the score the better the interest rate. If their credit is very, very bad then the bank probably won’t finance a car with them so try to find someone with a decent credit score (650 and above).

Once the loan is established remember this - Every on-time (or late) payment is recorded on BOTH your reports. So be kind! NEVER, EVER make a late payment. This person is going out on a limb for you and guaranteeing to pay the loan if something happens to you. So return the favor and keep their credit report clean.

The best way to get a car loan is still through pre-approval. Think about it this way. With cars and trucks going for $10,000 all the way to $25,000 isn’t it better to know how much you can afford before shopping? What happens if you find the “truck of your dreams” but it’s $20,000. That’s probably not a vehicle you can afford.

When you’re pre-approved you can shop with confidence. Find the ONE BEST vehicle that you like, negotiate the price, and go home with a smile on your face!

We hope this information is helpful. If you have questions like the one from this young man give us an email. Contactus@1-800badcredit.com

Good luck to you!

Are you in trouble with your car insurance company? If so and are wondering how this could happen to such a sweet person as yourself, let’s see if we can make sense of it and give some direction for the future.

There are lots of reasons why people have their car insurance cancelled but let me give you the top three reasons. And let me assure they aren’t just picking on you, this happens to thousands of people every year. Here are the top three:

1. Insurance companies HATE to pay out claims, I wonder why? Insurance is like gambling. YOU are gambling that you will have an accident and need their money, THEY are gambling that you won’t have an accident and they’ll get to keep your money. This being said, gamblers typically are sore losers! So if your cancellation was because of too many accidents in a short period you are in trouble. It’s very hard to explain that kind of bad luck; no one’s going to buy it.
2. Being consistently late on your payments. This is the worse reason for being cancelled. You have to come up with some way to pay your insurance on time. If you are going to be late call your agent and give them the date you will pay. Getting a 10-day extension is easy if you let them know. However if this happens on every payment you run a big risk being cancelled. The easiest way to fix this is to get set up on a direct withdrawal each month. That’s what my daughter does. This way she doesn’t have to worry about it.
3. Excessive moving violations. This will probably cause your premiums to increase and if you continue driving this way you may be cancelled. Besides it’s expensive. A friend of mine got a ticket for doing almost 50 in a 35-mile zone - the excuse was she was talking on the cell phone and didn’t notice how fast she was going. The fine $125 - OUCH!

Now for the solution: it’s simple start shopping. Insurance companies are just like any other business - they require new customers to stay in business. There’s bound to be one that can give you a good rate, no matter what your driving history is.

We recommend you use an insurance broker that has access to multiple companies. Each insurance company offers rates based on their own criteria. Some companies will ding you if you live “on the wrong side of the tracks.” Some companies don’t want to insure newer cars (too expensive to repair). Others don’t like it if you drive too far to work. Some companies will give you a discount if you’re a student, etc. etc. etc. The point is, a broker can plug in all the “positives” and “negatives” about you and come up with the one best company that fits your unique situation.

Contact one of our insurance companies and explain what happened and they will get you reinsured promptly. DO NOT drive uninsured. The risk is just too great. Getting insured is just one contact away!