One myth about credit repair is that a simple letter to the credit reporting agency will fix all problems. A letter can help you dispute an error or a false claim against your credit, but it will not fix accurate reporting of bad credit. If you have negative information on your credit report that is accurate then the only thing that can fix that is the passage of time.
Most credit information remains on your credit report for a period of seven. The exception to this rule is bankruptcy, which can remain on your report for ten years. If you have unpaid judgments against you then the statute of limitations on those judgments can exceed seven years.
The best way to remove negative information from your credit report is to go back to your creditors and request that the information be removed in exchange for your payment. This is usually very effective. Creditors just want their money.
However, after you remove negative information from your credit report, if you have no new credit then you all you’ll have is a blank credit history. That doesn’t do you much good either. It’s time then to begin building credit to increase your credit score and improve your credit rating. Financing an automobile purchase can be a good step in that direction
If the purpose of purchasing an automobile is to restore your credit, don’t buy a new car. Buy a used car instead. Work your way to the large purchase by improving your credit score first.
Follow these steps to repairing your credit with auto financing:
- Find a good, trustworthy tote-the-note auto dealer
- Locate the vehicle you want to purchase (Try to stay within a reasonable range based on your income and credit repair goals; a good rule of thumb is to purchase a vehicle between $1,000 and $2,500 on credit.)
- Apply for a line of credit for auto financing.
- Faithfully make your monthly payments on time (Late payments will work against you and decrease your credit score rating.)
- After making monthly payments for at least six months, you can go ahead and pay off your car loan. The six months of good credit history will improve your credit score. Now you can make larger purchases on credit and get better terms.
- When you are ready to purchase another automobile, take the vehicle you are currently driving and trade it in on another vehicle. Again, make sure you pick a vehicle in the price range of your budget and credit goals. Don’t get in over your head. That’s how bad credit develops.