Getting a Car Loan with 400 Credit Score: How to Get Approved
Getting a Car Loan with 400 Credit Score: How to Get Approved
Posted on April 24, 2023
If you're looking for a car loan with a 400 credit score, you might want to consider our suggestions in order to get approved.
With such a low credit score, getting a car loan on your own is slim to none if you do not follow these tips. To be honest, it would be a much better idea to increase your credit score before financing a car loan, so were going to cover some quick ways to can increase your score, as well as how to get approved for a car loan with 400 credit score if you're running short on time. Let's dive in!
Understanding Your Credit Score
Credit scores range from 350 up to 900 depending on whether you are using Equifax or TransUnion scoring models, having a 400 credit score means your credit has been bad for quite some time.
To get to the bottom of this, you will want to subscribe to free services like Credit Karma, which give you real-time access to your credit report.
When you have access to these free services, you should start looking for accounts that are in collections.
With a 400 credit score, you will have some accounts that are in collections or will be very soon.
Having these negative items will make prospective lenders not want to give you a loan, so you must do everything you can to bring those accounts back in good standing.
Negative items inside your credit report will stay there for seven years or even longer, so this is not something you can ignore.
In Canada, our credit score impacts our lives in a variety of different ways; with a credit score in the 400’s you will not be able to rent an apartment or even work in certain types of jobs where you are in a position of authority.
Budgeting For Success
Most of us have no formal training when it comes to finances; you need to prepare a budget that itemizes all of your current income sources and obligations.
After you have listed all of your existing obligations, you should set aside some cash for an emergency fund.
While more than 50% of Canadians are $200 away from insolvency, you do not want to be part of that statistic.
Try to set aside 3-6 months' outgoings so you don't have to worry if there is an unexpected work stoppage.
The Simplest Way to Improve Your Credit Score
Once you have a grasp on what is weighing your credit score down, you can start taking some proactive steps to improve your credit.
How many trade-lines do you currently have? If you only have one account and it is in collections, you should consider signing up for a secured credit card.
This will give you more active trade-lines, which can create upward momentum on your credit score.
By opening up a secured credit card account, your credit score can improve while you work on bringing the other accounts up to date.
This process does take some time, but the benefits of having a good credit score are worth it!
How to Finance a Car Loan With 400 Credit Score
If you need to get a car soon and cannot wait for your credit score to improve, there are options available, but you will need expert help.
Contact dealerships in your area that offer bad credit car loans and begin exploring your options with them.
These dealerships know which lenders in Canada specialize in offering bad credit car loans and will identify those that have the most competitive terms.
The dealership will review your credit report and give you suggestions on how to improve your credit score quickly.
By using this approach, you can improve your credit score and still get a car today. Once your credit has improved, do everything you can to never let it go back down to the 400s.
If you're ready for a car loan in Southern Ontario, we'd love to help with that! simply fill in the form below to get started.
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