When it comes to getting any type of loan, having a good credit score can help you get approved and secure a lower interest rate. On the contrary, bad credit can prevent you from getting a loan at all, and if you do get approved, your rate may be higher than you expected. Semi truck financing with bad credit can be a challenge. But there are ways to improve your credit so that you can get a better rate.
Make Payments on Time
This can prove challenging, but missing payments or paying late can be detrimental to your credit. When a payment is late, not only will you be charged a late fee, but your late payment will be reported to the credit bureaus. Each late payment brings down your credit score and a history of slow payment doesn’t look good to future creditors. You’re less likely to get approved for your loan and if you do, your rate will be higher than someone with better credit.
Do your best to make payments on time and your past slow payment history will eventually fall off your report. If you are experiencing a financial hardship that may make it difficult for you to make your payments on time or in full, call your lender and explain the situation. They may be willing to make separate arrangements and avoid reporting to the credit bureaus.
Review Your Credit Reports
Did you know that you can request free copies of your credit report from all 3 credit bureaus? Get in touch with Experian, Equifax, and TransUnion and ask for a free copy. Review each and compare them to make sure that everything listed is accurate. There are often mistakes on credit reports that the individual is not aware of, from reporting mistakes to fraud. There could be something on your report that is negatively affecting your credit without your knowledge. Do your research and report any mistakes to the credit bureau.
Rebuild Your Credit
If you have bad credit, the only way to improve it is to build a positive credit history. But it can be difficult to do this when lenders won’t extend credit to you because of your poor credit. This is when you need a secured loan of some kind. A secured loan requires some type of collateral to lessen the lender’s risk if they extend you credit.
One type is a secured credit card. In this case you pay a certain amount up front to the lender who then offers you that much credit. For example, you pay $500 up front to receive $500 of credit limit on a card. Whenever you use the card, you make sure to pay the balance in full on time each month. This reports positive credit use and payment to the credit bureaus to start rebuilding your credit.
Pay on Your Loans More Frequently
Did you know that you can make payments to your loans more often than your lender requires? You may only receive a monthly bill, but you can pay twice a month and increase your credit score. When you pay more often it reflects on your credit report that more of your credit limit is available to you, which has a positive impact on your score.
Ask Lenders to Raise Your Limits
Lines of credit, such as credit cards, typically have a limit. You can only spend so much before you have reached your limit and must pay some of the balance to get more available credit. It improves your credit score to have more credit extended to you than what you are currently using. The lower your balances on high limit lines of credit, the better your credit score.
Contact your creditors and ask them to raise your limit. They may be able to do this with just a soft credit check, which will not bring down your credit score much. However, if raising your limit will require a hard credit check, it will do more harm than good to your credit score. Be sure to ask which type of credit check is required before you authorize it.