It's very important to know what's on your credit report and what your credit score is. If the dealer knows more about your credit than you do...You Lose!
Of course, if you are paying cash for your next vehicle, then this step of the car buying guide can be skipped.
However, if you are financing you must know how you will look to a lender and what credit tier you will fall into.
I've seen it many, many times where a customer thinks they have a 750 credit score and that they'll qualify for top tier interest rates, but numerous factors, such as:
- Small collections (medical is the most common)
- High balances on credit cards (balances over 35% of the limit hurt)
- Incorrect information reporting (very common for a Jr./Sr. and people with very common names)
cause unforeseen problems.
The difference between A+ tier finance rates and let's say a B tier can be 5% or more. A 5% difference on a $20,000 loan at 72 months equals over $3,500 in additional finance charges. What if that 5% was 8% or even higher?
Check your credit and score, settle small collections, pay down credit cards and dispute inaccurate information. You'll save a ton of dough in the long run.