What happens to my credit score after a car loan refusal?
Have you applied for one or more car loans, only to have your applications denied? It’s undoubtedly frustrating, but what you may not know is making various enquiries can have negative effects on your credit score.
Keeping a healthy credit score is important, and there are actions you can take to keep your credit intact. Speak to a Loans For People With Bad Credit specialist to learn how you can regain borrowing power, even if previous car loans were denied.
Understanding your credit score
To understand the effects of having a car loan denied, you’ll need to understand how your credit score works and why lenders will use it when considering your loan application.
A credit score is a numerical score between 0-1200 which represents the information contained in your credit report. It tells a lender information such as how likely you are to default on a loan payment or whether your financial history has been strong or weak in recent years.
Want to know your credit score? We offer free credit checks. Complete our online form and you’ll receive your latest credit report with your credit score within 24 hours.
Having a car loan denied
Although default loans or overdue payments have the greatest effect on your credit score, loan refusals can also negatively impact your record.
If you make multiple credit applications for a car loan, be aware that each application is logged on your credit record for any future lenders to see. It raises red flags for those reluctant to lend to previously refused customers, and it worsens with the number of applications you make.
How to avoid rejection
There are a number of ways you can reduce your chances of having a refused loan when you are searching for a car loan.
- Find the right lender for you – this is really important and by asking Loans For People With Bad Credit for expert help then you could be saving yourself time, money and stress.
- Budget sensibly – be aware of what you can realistically spend on your car loan. Don’t apply for a loan that you won’t be able to pay back and always budget appropriately so you won’t stretch yourself financially if your car loan is approved.
- Make sure your application is correct – this sounds simple but many people fail to supply documents required or don’t fill in the application correctly. Take the time to make sure all the information you submit is accurate and up to date.
- Time your application – if you have had bad credit in the past or have recently changed jobs and can not supply proof of regular income, you may want to time your car loan application until you are financially more stable to reduce the risk of a denied car loan.
Keeping your credit score healthy
Having a good credit score does really reduce the chances of having denied car loans or car loans that are rejected by lenders.
There are some steps you can take to make sure that your credit score is as healthy as possible when you start the car loan process:
- Ask for a copy of your credit report: this is something that you are entitled to do and by checking through your credit report, you can make sure there are no errors or inaccuracies which could result in you being refused a car loan.
- If you do find incorrect information on your credit report, you can request for this to be taken off. If the information is correct, you generally won’t be able to remove enquiries from your credit report until 5 years have passed.
- Don’t make multiple applications: it can be really tempting to make lots of applications- especially when they’re quick and easy to do online. Just remember that this can lead to multiple rejections with each one effecting your credit score. Avoid making any unnecessary applications and always ask for expert help before you do if you’re unsure.
- Pay all bills and loans on time: make sure that you don’t miss payments, make late payments or default on any current loans that you have. Showing evidence of responsible borrowing and an ability to pay back loans will help you to keep your credit score healthy.
Ask for expert help
Asking for expert help from Loans For People With Bad Credit is a necessary step toward your financial free. Call 1300 769 384 today.
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