How to rebuild your credit with a car loan after bankruptcy?
Have you filed for bankruptcy and are looking for the best ways to rebuild your credit? It may be tough but there are things you can do, and one of them is a bankruptcy car loan.
Before we get into how a the bankruptcy loan and how a car loan can help, let’s look at what your credit score is made up of.
Payment history = 35%: one of the biggest factor that makes up your credit score is whether you pay your bills on time and the amount of the bill paid.
Credit utilization = 30%: This is the amount of credit you are using on your credit cards. If you are using more than 75% of your card, your score is going to be lower than if you are using less than 50%.
Length of credit history = 15%: Your credit score actually takes into account the amount of time in your life that you have been paying bills. If you are younger or are just entering the country, you may have very little, or no credit history at all.
New loans or applications = 10%: Your score actually gets negatively impacted if you have applied for numerous cards or loans. So make sure to only apply when you really need it.
Varied credit = 10%: The amount and types of credit you have is the last piece of the puzzle. If you have many types of credit such as student loans, credit carts, etc. Then your rating will be higher than someone who has not.
Now let’s look at how a car loan after bankruptcy can help build your credit and what you need to do.
Make a down payment. Making a down payment can lower the amount owed on the car and can help lower your monthly amount due.
Be aware of your budget. As exciting as getting a new car can be, you need to be smart. Only choose a car you know you can afford within your current budget.
Paying bills on time. Make sure you pay your monthly bill on time. This accounts for 35% of your credit score, so you don’t want to miss this step.
Minimum payments. Some loans come out of your account at a fixed rate, whether it’s biweekly or monthly. But if you’re able to, try to make more than the fixed monthly payment.
Try to pay it off fast. This one is simple, as the faster you pay off your loan, the faster your score will improve.
Payment extensions. If you have the option of a payment extension or grace period, try not to take it. Using them will not help to improve your score.
In conclusion, getting a car loan after bankruptcy can definitely help improve your credit score. For more information contact TransCan Leasing today!