Clean Up Your Credit for the Best Deal

When you take out a car loan, you want to get the best interest rate. One of the ways to get a good interest rate is to shop around at different lenders. Even more important than getting multiple loan quotes is to get your credit score up. There are several things that you can do to raise your credit score. Although you won't raise your credit score overnight, if you concentrate on working on your credit score for several months, you should see an improvement.

Check for Errors

The first thing that you should do when you are trying to clean up your credit is check for errors. You can obtain a free copy of your credit once a year from the three major credit reporting agencies, Equifax, Eperian, and TransUnion. Companies sometimes fail to note on your credit report some of the bills you have paid in full. If you have another relative with the same name as you, occasionally the other relative's credit remarks might end up on your report. Another error that is found far too often on people's credit reports is fraudulent accounts that were opened due to identity theft. All of these errors should be disputed.

Pay Your Bills on Time

If you have a few months before you need to take out a car loan, pay extra attention to paying all of your bills on time. A large part of your credit score is determined by whether you pay your bills on time. Late payments, especially recent late payments, can really make your credit score take a nose dive. Concentrate on paying those bills on time, and put your last late payment in the past. While you're paying your bills on time, your credit score should start looking up.

Pay Down Your Credit Cards

Another factor that helps determine your credit score is the ratio of debt you have to your available credit. If you have a lot of maxed out credit cards, start paying them down. It is best if you can get to using less than 50 percent of your available credit.

Stay Away From New Credit

One factor that determines your credit score is whether you have taken out any new credit. If you don't need to go out and get a new credit card, don't. Don't go out and take out a loan for new furniture a month before you go shopping for a car loan. Don't make any inquiries on your credit either. All of this activity will temporarily lower your credit score. You want your credit score to be as high as possible when the big day comes where you shop for your auto loan quotes.

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