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The first thing you should do when in the market for a new vehicle is check your credit. Most people don't know what there credit score is, or what information is present on their credit report, only until they apply for financing.

The smart thing to do is check your credit at least a few months before you even consider stepping foot in the dealer's showroom. Why? If there are errors on your credit file that are going to affect your chances of approval or the auto loan rates you receive, it will take 60-90 days to remove them. Learn more about removing errors. Also, if you discover that your credit score is lower than you expected, you can use the few months to improve your score up by means of a few simple methods.

Ordering your credit report
The three major credit reporting agencies are Trans Union, Experian and Equifax. They all have there own profile of you and your credit. Therefore, it is important that you obtain a 3-in-1 credit report. This will allow you to view your info in an easy-to-read side-by-side analysis of your info as reported by all three bureaus. This type of credit report in relatively inexpensive and is even available for free when you utilize a free trial of the Credit Monitoring System. **If you are married, it is important that you obtain a copy of your spouse's credit report as well.

Once your report is obtained, determine what your FICO score is. Named after Fair Isaac Corp., the firm that developed the scoring model back in the 1950s, FICO evaluates the data in your credit report to what's on the credit reports of millions of other consumers.

Your FICO score can range from as little as 300, to as much as 900. You are considered a low credit risk the higher your score is. It is safe to say that is you have a score of 650-700, you have decent credit. Scores of 701-750 is very good and 751 and above is excellent. It is important to understand that these credit grades are generalized and that every lender is going to have their own standard when determining approvals and interest rates.

Understanding how credit scores are computed
There are five main variables that influence your score:
 - payment history
 - amount of debt you encompass
 - amount of time you have actually had credit
 - how many inquiries you have as a result of recent attempts of obtaining credit
 - kind of credit you have, i.e. credit cards, equity loans, etc.

Learn more about interpreting your credit report.

Correcting mistakes
It is very important that you identify any type of misinformation listed on your credit report. This can include accounts that do not belong to you or have been closed, resolved billing disputes, inaccurate credit limits and balances, etc.. Also look for outdated information. It is typical for negative marks to stay present on your credit file for seven years. A bankruptcy will remain listed for 10 years. Any information being reported must be supported by the reporting bureaus. If they can not support it, the item must be immediately removed. If the provided support is untrue, get in contact with the creditor and ask them to send you the correct info. Once received, send a dispute letter to the agency that is reporting the erroneous information. It may also be necessary for you to send a follow-up dispute letter.



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