Auto Loans to Improve Credit Scores

Taking out auto loans and paying them off will let you keep that car or truck that you just bought out of the hands of the repo man. But for those who need more of an incentive to be on time with auto loan payment checks, having a good track record on your auto loan will also likely help you increase your credit score. There are three national credit agencies that report your credit history to lenders and other parties, namely Experian, Equifax and Transunion. The Fair Isaac Company (FICO) handles your credit score or “fico rating.” Making your auto loan payments is a great way to improve your FICO score and get better interest rates on future loans. Below are some tips to help you make the most of this strategy.

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Ask Your Lender about Credit Reporting

In some cases, your lender might have restrictions on the way they report your auto loan payment history. This is especially true if you secured a loan from a small finance agency or other informal lender who may handle financing on their own. You need to ensure that your positive payment history transcribed to Experian and TransUnion to help you build your credit. If they do not, make enough noise that will make them do so, or choose a lender who will. You might also want to consider vehicle loans from a credit union, as they mostly offer the best auto loan rates.

Take a Look at Your Credit Timeline

There are some auto loans that will defer an impact to your credit score immediately. Today, vendors are offering some riskier types of auto loans, like long term repayment structures and no money down financing, which can actually lower your credit store initially. As you slowly pay them off successfully, your credit should rebound, but it is a good idea to research the exact timeline so you know just how the loan will affect your credit at any given time.

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Consider Your Refinancing Strategy

Making your payments on time should help build up to a critical mass point where your current loan history will make you eligible for refinancing or other loan consolidation solutions. Refinancing your auto loan allows you to lower your interest rate if another lender offers to buy your debt. The lender will see your current on-time payments as proof of ability to pay that will lower your overall credit risk and ultimately lead to credit score improvement.

Consider Down Payments Benefits

Another way to make loan payment strategies work for you is to consider choosing the “best buying strategy”. This may require a larger down payment in return for a more attractive repayment rate.

All of the strategies above can lead to credit score improvements. Keep in mind, though, that a vehicle loan from a credit union or a financing service is still a responsibility, and is something that you need to work into your household or personal budget. This includes pertinent sacrifices and potential gains, along with some startling risks. Make sure that you research your auto loan thoroughly for the best chance at getting more of the good and less of the bad.

Credit Unions Provide Members Financial Advice as a Benefit

Most people associate banks with trustworthiness, stability and longevity in the financial world. Recently, though, with the shake down of the financial markets and the collapse of  many financial institutions, some of us are starting to question if banks are the best way to store, transfer and save your money. Credit unions have been mistaken as a payday lender or an exclusive club that requires you to be a part of a union or work in a certain field to join. However, neither of these things is true. If you are considering a credit union instead of a bank, there are a few reasons to make the jump.

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Accessibility and Friendliness

Big banks can seem to formal, cold and even unreachable. Others assume that branch managers do not have the authority to make the decisions to help you, or the bank itself is so big that it does not care about having your business. Credit unions can offer a friendlier tone, atmosphere, and be more accessible on every level. Being smaller and local allows credit unions to be very connected to their neighborhoods and versatile to respond to community feedback.

A Co-Op, Not a Corporation

Credit unions usually consider themselves to be financial cooperatives, instead of financial institutions. The goal is not to make more money from customers through improving interest earned, but to address this common need through a jointly-owned and democratically-controlled enterprise. The only standard requirement for membership is that you are part of the affiliation is serves. Credit unions offer all the same services as banks, from checking to savings, loan administration and financial advice.

It is a Democracy

Perhaps the most outstanding feature of federal credit unions in Pennsylvania is that they are member-owned and member-run. Credit unions are free to make decisions to benefit their members, instead of seeking to please some removed group of stockholders somewhere.

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Better Rates

The ability to have a voice in decision making is a big step in the right financial direction, but something that is usually out of reach if you are a member of a corporate bank. Because profits to stockholders are not a part of the company vision, credit unions are encouraged to pass money earned on to members in the form of fewer fees, more services, lower interest loan rates and higher deposit dividends.

Free Education and Other Perks

There are some credit unions that offer fun and useful products like individual health and pet insurance and financial consultations for free. Most credit unions focus on community enrichment and financial education, with many offering free classes and advice from a finance expert, as well as other means of education to the community.

When it comes to banking services, credit unions offer the same menu of financial services that you will find in large banking corporations. If you are frustrated with unresponsive customer service and long lines, a credit union just might be the best place to put your money. It is tough to beat a place that it community- focused, friendly and offers better interest rates.

Qualifying for Loans is Easier if You Belong to Credit Unions

Most people do not realize that credit unions have several advantages over banks. It is less common for members to complain about interest rates, service fees, and other things the way that banks do. Remember that you are not trapped to use a typical community bank for the financial services you require. Credit unions have people who complain as well, but usually the complaints are far less. It boils down to the fact that there is a different business model that credit unions follow, which makes them more customer friendly than some banks. One evidence of this is that it is easier to qualify for loans in credit unions. Read on and learn many more benefits that they offer.

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  1. Customers are first. When you open an account with a credit union, you become a member of the credit union. It works to please its members or shareholders, and not stockholders, changing the focus from creating the biggest profits to creating the best customer service and support. Such a shift results in policies that are more customer-friendly.
  2. Lower fees. One of the ways banks make money is in the fees. The fees associated with a credit union tend to be lower than banks, and often there are no ATM charges. The overdraft policies less costly and these two elements tend to be a big money maker for banks. With lower fees, you can save money by banking at a credit union where you can avoid some of these larger fees.How-to-Apply-for-Personal-Loans
  3. Better interest rates. Credit unions offer higher savings rates and lower loan interest rates. Because they are not focused on making a profit, they instead want to cover operating costs, and pass on more favorable rates to their customers. The interest rates on a loan are often more attractive, and you may even qualify for further discounts if you have automatic payments set up. The interest rates on deposit accounts are higher than most national banks.
  4. Works with you. A credit union may be more willing to work with you if you have bad or poor credit, or have difficulty getting a loan. Loan officers make qualifying for a loan easier when they meet you directly and providing you are an active member, help find loan terms that meet your needs and don’t negatively impact other members. If you are interested in getting a loan with bad credit history, a credit union may be the best option for you to use. Credit Unions also offer programs to help you manage your budget or prepare for unexpected expenses in a “rainy day fund”.home_loan_with_bad_credit
  5. Qualifying to join. Credit unions have limitations on who can join them. It can be living in a specific geographical region, working at a certain employer or other types of affiliations like those associated with school systems. Once you join the credit union, you can stay a member for life, even when you stop meeting the initial member requirements. They may have a requirement that you have a savings or share account that remains open to keep your membership.

Indeed, credit unions offers so many advantages over banks. Over the years, these institutions have been identified to offer the best loans for home improvements, home equity loans, auto loans, and private educational funding. It is never too late to join a credit union and enjoy all these benefits that it has to offer.