Tag Archives: subprime

Building Good Credit at Any Age

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ID-10086809Getting that golden FICO credit score of 750 to 850 is difficult at any age, but for consumers that start later in life, it can seem impossible or even pointless to try. The truth is that working for a better credit score is beneficial, no matter how old or young you are.

Many consumers mistakenly believe that after a certain age, they really don’t need to worry about their credit. They have paid off their mortgage and car loan, and they either don’t have credit cards or closed their credit card accounts long ago. What reason would they need to take out a loan or need access to credit anyways?

Unfortunately, this kind of thinking usually leads to disastrous inaction. There are many reasons why a consumer could need a loan or available credit, and to get a loan, consumers need a good credit history and by extension, a good credit score. A medical emergency, sickness in the family, temporary job loss, or another unforeseen emergency can happen to anyone. Even if none of these circumstances occur, most people want to travel in their retirement or rent out a condo in a warmer climate. Travel credit cards will require a good or excellent credit score, and renting a condo will usually require a credit check.

There are a few ways that consumers at any age can ensure a solid credit score. First, do not close old credit card accounts. As long as these accounts are open and active, they will report to Equifax, Experian, and TransUnion. Closing these accounts shortens a credit history and lowers the amount of available credit. This raises the overall credit utilization and lowers the FICO score. Second, pay all loans and lines of credit on time and keep the balances low. Payment history makes up a huge part of a credit score, so consumers who pay on time will benefit while consumers who miss payments will end up with a lower score. Finally, consumers who don’t have many accounts on their credit report can boost their score by opening a new line of credit, like an auto loan, and making their payments on time. This action will also diversify the type of credit on the report.

Obtaining an auto loan without a credit history or troubled credit history is tough, but it is achievable. Contact a sales person at Bayside Chrysler Jeep Dodge and find a time to come in so we can work with you to find the proper loan. We’ll get you driving away in the new or pre-owned vehicle best suited for your lifestyle. Be sure to like us on Facebook and to follow us on Twitter to see our monthly specials.

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Car Dealerships and the Incentive for Low Interest Rates

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Recent statements from the Consumer Financial Protection Bureau have left car buyers worried that their local dealership will intentionally set them up with a high interest rate.

In a recent commentary for Automotive News, Jim Henry explained why that is simply not the case. Auto dealers are actually more motivated to get their customers a lower interest rate than, for example, a mortgage broker because a mortgage broker will only make money on the mortgage. When it comes to an auto loan, a dealership is set to make money, even if they take a lower interest rate, because the dealership will make money on the service of the car.

Besides this argument, there is great availability of low-interest auto loans to consumers, even those with bad credit or no established credit history. Car buyers can negotiate lower monthly payments, lower interest rates, longer loan terms, or whatever they need for their particular credit and financial situation. All it takes is a car buyer sitting down with a dealership’s finance department and exploring their options.

Obtaining an auto loan with bad credit or without a credit history can be difficult, but it is achievable. Contact a sales person at Bayside Chrysler Jeep Dodge and find a time to come in so we can work with you to find the proper loan. We’ll get you driving away in the new or pre-owned vehicle best suited for your lifestyle. Be sure to like us on Facebook and to follow us on Twitter to see our monthly specials.

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Credit Education and Kids: Easy as 1, 2, 3!

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These days, parents want to give their kids the best chance at success, whether that means tutors, private school, or life coaches. Often times, however, parents don’t give their children and teenagers a comprehensive financial education or the tools and experience they will need before leaving home, and schools are sadly falling short as well in teaching basic personal finance and how credit works.

With all of this in mind, we wanted to give a few simple ways to prepare older children and teenagers for the real world and give them a head-start in building their credit score.

  1. Merit-Based Allowance – When we say “merit-based allowance,” we don’t mean that parents should pay their children for A’s and B’s on their report cards or for good behavior. Paying for grades will train children to value the grade and not value what they are actually learning, and it could encourage children to cheat. Allowances should be based on chores and responsibilities around the home, tasks that go above and beyond. This is also an opportunity to teach negotiation skills. Sit down with your child and discuss potential chores around the house (sweeping, raking leaves, washing dishes), and you can discuss with your child how much they can earn for each task. Through merit-based allowance, your child will learn to value money and understand the time and effort it takes to earn it.
  2. Credit Card – Teenagers can get a head-start building their credit score by becoming an authorized user on a parent’s credit card. As an authorized user, they can make purchases on credit card, and the account will be listed on their credit report. As long as the teenager and parent are responsible with their spending and make payments on time, the teenager can have an established credit history long before they have to apply for a credit card, auto loan, or personal loan.
  3. Secured Credit Card – If a parent feels uneasy about making their teenager an authorized user on their credit card, they can also help their teenager apply for a secured credit card through their bank. A secured credit card will only help their credit if the card will be reporting to the credit bureaus, so ask your bank before applying. Getting a secured credit card is also a great lesson in responsibility because it requires a money deposit, so your teenager can save up the money for the deposit.

Parents, we want to hear from you! What other tips do you recommend for teaching financial responsibility to your kids? Are you helping your kids and teenagers establish their credit? Leave a comment below, and let us know what you think!

Do you have poor credit or no credit? Obtaining an auto loan can be tough, but it is achievable. Contact a sales person at Bayside Chrysler Jeep Dodge and find a time to come in so we can work with you to find the proper loan. We’ll get you driving away in the new or pre-owned vehicle best suited for your lifestyle. Be sure to like us on Facebook, follow us on Twitter, and subscribe to us on YouTube to see our monthly specials.

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