Life has a tendency to throw curve balls that can place a financial strain on even the most fiscally responsible of people. Bills can pile up and loans can go into collection as you try to get back on your feet. While your financial troubles are temporary, blemishes on your credit report can continue to affect you for years to come. There is some good news for those who are interested in buying a car, but may have a charge-off on their record. Here are some steps you can take to improve your credit and get into a new, reliable Nissan.
1) Contact the credit bureaus and ask them to remove the negative charge
If the charge-off is older than seven years, be sure to contact the credit bureaus and ask them to remove the negative charge. After seven years, you are absolved of the debt and can no longer be penalized for it. However, it is quite common for credit agencies to make mistakes. It is important that you are vigilant about making sure that your credit report is accurate so that clerical mistakes don't get in the way of securing a loan and buying a car.
2) Pay off the debt
A charge-off essentially means that the lender has decided that it is highly unlikely that you will actually pay off the debt, however, that doesn't mean that you can't still make a payment. Keep in mind that you will have to pay off the entire debt because making a partial payment will reset the clock and extend the amount of time before the charge-off is automatically removed.
For example, if you make a partial payment on a charge-off that is six years old, you will now have to wait an additional 7 years for the blemish to be removed. What could have taken 7 years, has been extended to 13.
3) Rebuild your credit
There are ways to build your credit so that you can work towards buying a car. The first step is to improve your debt to income ratio. Lenders want to see that you make more money that you owe and that you are financially positioned to take on more debt.
While it may take time to pay down your debt, you can help the situation by always paying your bills on time and opening a credit card. If your credit score is too low to get a card, you can apply for a secured credit card, which is especially designed to help people bounce back from bad credit. These cards are either fully or partially prepaid so that there is less risk to the lender, but you also have the opportunity to show that you can handle debt by paying off your balance each month.
4) Work with a trusted dealer who knows the ropes
Any time you are buying a car, it is important to partner with a reputable dealer who can work with financial institutions to help you secure a loan. We work with drivers from around the Elgin, St. Charles and Hanover Park areas to make buying a car as easy and affordable as possible
As a well-established and respected dealer, we have close working relationships with local and national lenders. We make it our business to be aware of lending opportunities that can benefit those who might not have the best credit.
Although a charge-off will inevitably lower your credit and make buying a car more difficult, it isn't a deal breakers. By taking the right steps to repairing your credit and working with McGrath Nissan of Elgin, you can bounce back from financial hardship and purchase a new car.