Having bad credit can be detrimental to many aspects of a person's financial life.   It not only causes the individual to be turned down for credit and loan applications, but also creates other problems for them in renting an apartment or even obtaining utilities.

Getting a Car Loan with Bad Credit

Perhaps buying a new vehicle is an absolute must right now, but when looking over your credit rating, you wonder if this is even possible.  Attaining a car loan with bad credit is possible, but you must be prepared to pay the higher interest rates and strict down payment terms that come with it. 

When considering getting a car loan, you'll find that you can save time and money by applying for a pre-approved auto loan that you can afford at your local bank or credit union.  If you are planning to purchase a new car, you should always try to avoid the extremely high interest rates from salespeople who offer "no credit check" deals.  You'll find that you can get much lower interest rates for your car loan from financial institutions...especially if you have bad credit.

Credit Score for Approval on Car Loans

Keep in mind that a high credit score doesn't guarantee approval for a car loan.  But if you are approved and your credit score is above 680, you should get a good interest rate on your car loan.  If it's below 680, you'll pay a higher APR on your loan and below 540, your chances of getting a car loan are very slim unless you have a large down payment.

Prepare beforehand when shopping at car dealerships.  Take a copy of your credit report with you.  This empowers you with knowledge, and you'll know exactly what your score is in case the salesman comes up with a different number.  If your credit rating is good, use this to leverage your negotiations for a better deal. 

How Credit Score Affects Getting a Home Loan

As a consumer, did you know that your credit score is not only a major factor in determining whether or not you get a home loan, but also in determining your interest rate?  Anything below 600 is considered to be bad credit, which can keep you from securing a home loan.

With 35 percent of the score being based on payment history, 30 percent on outstanding debt, 15 percent on the length of time a borrower had credit, ten percent on new credit and ten percent on the types of credit a borrower now has, lenders can use these credit scores to determine if a borrower is worth the risk.  Keep in mind that your credit score may not be the same next month as it is this month because your file information is constantly changing.

Perhaps your banker just told you that a loan for your dream house has just been approved, but because of your credit score the interest rate and premiums will be very high.  If you're willing and able to pay the premium with the higher interest rate, you can possibly refinance later at a lower rate after your credit score goes up.  Otherwise, you might decide to wait a year or so.  During your wait, be sure to avoid bad debt, reduce or add types of credit as needed to improve your credit score, and save more on your down payment.

Whether you're looking for a car loan, house loan, school loan or just want to clear up your bad credit, you can improve your credit score by paying your bills on time, paying off delinquent accounts, correcting any errors on your credit report and make sure all negative information is taken off your credit report after seven years (ten years for bankruptcy).