Don’t mistake this as a promise for a quick fix, however.  There’s really no such thing.  It likely took you a long time to work yourself into the financial mess you find yourself in and it’s going to take a while to get out.  But small victories along the way will start to make meaningful changes in your life before you know it.  Credit repair isn’t an easy or instant process, but it works.

Here are ten quick credit repair tips that will get you started on the road out of debt, repairing your credit score in the process.

1. Stop making late payments on your bills – start paying on time.  It sounds like common sense but a lot of people struggle to get organized and make payments on time — DO IT! This is the single most important factor in determining your credit score.  Beyond boosting your score, it helps you avoid late fees which puts more money toward paying down what you actually owe, rather than having that balance increase.
2. Eliminate small debts.  Paying a debt off completely will encourage you to keep at your credit repair plan.  You’ll see small successes along the way to better credit.  Just pay the minimum balance on other accounts and devote every dollar you can toward paying down your lowest balances.
3. Don’t carry a balance if you don’t need to.  If you have the money to do it, make a payment on your credit card right before the statement closes.  If you do it right, your credit card company will report a $0 balance (or close to it) for your monthly payment obligation.  This will boost your credit score AND increase the amount a lender would be willing to loan you.
4. Fix mistakes on your credit report.  A huge percentage of Americans have at least one error on their credit reports.  Taking the time to clear up inaccuracies can make a huge impact on your credit score.
5. Simplify your wants.  Realize that there’s a difference between “want” and “need.”  If you can master this, you’ll find LOTS of areas where you can cut corners and start putting more money towards your debts.  Pack a lunch instead of eating out, buy fewer clothes (or shop at a second hand store), eliminate or reduce your cable television package.  These things will add up quickly.  Likewise, consider what you REALLY need out of your next car.  Just because you get approved for a loan of a certain amount doesn’t mean that you need to spend that much.

Make no mistake about it — bad credit will make it harder to buy a car and might limit your choices, but you’re not totally out of luck.  Just remember these key things:

1. The less you borrow, the less your credit matters
   If you can come up with a lump sum of money to put down on a new vehicle, you’ll reduce the amount of money you need to borrow.  This increases the odds someone will give you a loan, because the loan will be secured by the car you’re buying.  If you default, the lender will repossess the vehicle — if you owe more than the car is worth, the lender will still lose money, but if the car is worth more than you owe, the lender can still be made whole.  Since this limits their risk, they’ll be more willing to work with you.
2. Not all lenders are equal
   Some lenders are very risk-averse.  They don’t want to lend to people with credit blemishes.  Others focus exclusively on this type of lending.  Find a lender who is experienced in working with people with bad credit and you’re likely to get a better deal.
3. New to you might be better than new
   Your “new” car doesn’t actually have to be new.  Used cars are less expensive and will depreciate less over time.  That makes them less risky for lenders, provided the vehicle isn’t too old or doesn’t have too many miles on it.  While it might be tempting to get a new car, it’s really not necessary.

Who Can Be A Cosigner?

Anyone with good to excellent credit can be a cosigner, Plus, he has to be willing to actually cosign the car loan. Not every qualified cosigner is willing to do this. But a cosigner can be a spouse, father, mother, brother, sister, cousin, best friend, aunt or uncle. Usually the closer the buyer and the cosigner are in terms of a relationship, the easier it is to get the person to actually cosign. Some people cosign multiple loans, whether they’re car loans, personal loans, or even home mortgages. Many do so simply to be kind and because they absolutely trust the buyer that he’ll pay back his loan debt right on time each month. So it definitely pays to search around to attempt to find a cosigner if bad credit is involved in the car purchase transaction.

What if the Buyer Defaults on the Loan?

If a default or nonpayment of the original car loan occurs, then the cosigner becomes financially responsible for paying back the debt. In the worst case scenario, with a very expensive car, this could add up to a substantial amount of money, and make the cosigner probably never want to cosign another loan again with anyone, not just with the buyer he partnered up with. Moreover, defaulting on the loan by the buyer with bad credit can mean that the vehicle will be repossessed or towed away. This is even worse than the default itself since a repossession goes down on the cosigner;s credit report as a seriously derogatory mark in his credit file. A repossession can last up to seven years in some states on a person’s credit report. So it’s essential for the potential cosigner to absolutely trust the financial solvency of the buyer who’s asking for a cosigner.

How Bad Does Credit Have to be to Need A Cosigner?

With the three major credit reporting agencies, usually a FICO score in the low 500 range and below means bad credit. The lower the FICO score, the worse the credit history is. But more than the FICO score is the fact if there are any negative marks on the buyer’s credit file such as series of late payments or charge offs. With such a poor credit record, no traditional lender will touch him in terms of giving him a car loan. One option he has is to put a third of the total price down in cash and or a trade and then use a finance company to secure a loan at very high interest rates. Not that wise, but at least he can get a car without a cosigner.

Cars Lose Value Quickly

There is an old saying: A new car loses thousands in value as soon as you drive it off the lot. While it may or may not be an exaggeration, it is definitely a reminder that a brand new vehicle has its price artificially increased to provide a profit for both the manufacturer and the car dealer selling the vehicle.

For financing purposes, this means a bank knows that its security on the vehicle loan will be worth less than the value of the loan very quickly. This is not an issue for a buyer with spotless credit, but those with a shaky credit history may find it difficult or impossible to secure financing for a brand new vehicle.

From the perspective of the buyer, there is financial risk as well. While we all hope life runs smoothly and nothing bad comes our way, we also know that unexpected challenges occur every day. In the event of someone buying a vehicle, a lost job or other unexpected financial burden could make it impossible to make payments on the vehicle. If this occurs in the first year of a five or seven year loan, such an owner who bought a brand new vehicle without a large down payment will find it impossible to sell the vehicle without adding out of pocket money to pay the loan down to the current value of the car. Someone who bought a used car on the other hand, could easily sell the car for the current loan value (and possibly even make a profit).

Some Cars are Lemons

Everyone has heard nightmare stories about brand new cars that spent weeks at a time in the shop because component after component failed within the first few months of ownership. Regardless of how strict the quality control during manufacturing is, there is and always will be a small percentage of faulty parts that make it through the inspection. These faulty parts generally make themselves known within 6 months of the vehicle being purchased. Someone who chooses to buy a used car can use one of the many services available to examine the car’s service history to ensure that it is a solid vehicle.

For everyone, buying a used car usually makes better financial sense than buying a new car. Most people who have had recent credit problems and are in the financial recovery process are not rolling in money, making the benefits of a used car even greater.

The primary way that a bad credit score could affect you when you are buying a car is that it could lead to you being denied any form of auto loan.  Similar to when taking out a new mortgage or opening up a credit card, the number one factor utilized by the underwriter in their decision process is your credit score.  While the approval process for an auto loan is more lenient than other forms of credit, major setbacks on your credit score could prevent you from receiving any form of loan for a bank.  This could make purchasing a car impossible unless you are able to make a complete cash purchase for the car.

When buying a car with bad credit your credit score could also force you to purchase a less expensive car.  In some situations your auto lender may review your credit history and determine that you could qualify for an auto loan, but your credit score may not be good enough to qualify for the lowest interest rates, which are normally only provided to those with good credit.  In many situations a rate offered to a person with a bad credit score could be as high as 15%, while a person with a good score may receive a 5% rate on their loan.  This will not only increase the amount of money spent on interest, but it will also drastically reduce how much you can afford to spend on a car.  For example, a person who can spend $400 per month on an auto payment could afford a $21,100 loan assuming they received a 5% rate on a 60-month loan.  The same person with a 15% loan could only receive a $16,800 loan.

Your bad credit score could also affect the car insurance rate that you receive.  Car insurance providers are increasingly factoring in a person’s credit score when determining the rate that they can provide them.  In some extreme situations a person with bad credit will either have to pay extremely high, and possibly unaffordable insurance premiums, or will maybe be rejected all together.  Since insurance is required practically everywhere, this could further alter your budget when buying a new car.

You’ve probably seen television and radio advertisements for a number of places that offer free credit scores — what these advertisements don’t clearly disclose is that you have to sign up for a credit monitoring service in order to get the free score.  The program you sign up for is almost always a 7 day free trial of the service, and if you don’t cancel within that time, you’ll be billed a recurring monthly fee for credit monitoring.

If all you want is the free credit score, you can easily sign up for one of these services, provide your billing information, and then cancel the service as soon as you have your score.  The key is to know that you have to do this beforehand, so that you’ll take care of the cancellation right away.  Many people who don’t realize they are subscribing to a recurring payment service only realize they need to cancel after they’ve already been billed for one or two months of service.

You absolutely have to know your credit score before you can try to get approved for a car loan, so it makes sense to use one of these free credit score programs.  If you see a huge difference in your scores from one agency to the next, you can get your actual credit report, which shows all of the accounts each reporting bureau has in your report.

This report (which is totally free) can be picked up at http://www.AnnualCreditReport.com.  You can request a copy of this report once every 12 months.  Note that this report won’t actually show your scores, which is why you first have to sign up for one of the free credit score services.  It lists all the information that goes into calculating your score, so you can spot any potential inaccuracies in the report.

How To Buy a Car with Bad Credit – The Four Things You Must Do

There are a lot of things that you can do to improve your chance at getting financing but there are only three that you absolutely MUST do if you have bad credit.  They are:

1. Know your exact credit score, as a change of a few points might make a big difference in financing
2. Put the internet to work for you
3. Work with a local bank to try to secure financing before going to a dealership
4. Scrounge up as much cash as you can for a down payment

Here’s why these three items are so vital if you’re trying to buy a car with bad credit.

Know Your Exact Credit Score

The importance of knowing your exact credit score can’t be stressed enough because if you fall on the borderline of two credit score ranges, the rate you pay for a loan could differ drastically.  The difference in finance rate for a person with a 585 credit score vs. a 595 score can be a full point in interest.  That could result in thousands of dollars of additional expense over the life of a loan.

If you check your credit score (you can learn how to do it for free here), you’ll have a good idea if you can make some quick changes to jump into a better interest rate tier.

Here’s a breakdown of one of the most commonly used score groupings:

• 720 – 850
• 690 – 719
• 660 – 689
• 620 – 659
• 590 – 619
• 500 – 590

If you’re on the borderline of one of those groupings and you have any errors in your credit report, you could improve your score (and interest rate on your car loan) for free.  Even if you don’t have errors in your report, you can improve your credit score quickly by using any one of a few proven tips.

This is the easiest (and fastest) way to save on your new car.

Get a Car Loan Online (From a Site Focused On Bad Credit Loans)

The internet has made a lot of things in life easier.  Buying a car with bad credit is one of them.  With access to more lenders, you increase the competition for your business.  That means the banks have to offer lower rates to get you to pick them.

There are lots of websites that cater specifically to car buyers with bad credit — pick one (or more) and you might be surprised by what they return. Just fill out their online application, submit your information, and look at the offers they give you.  Make sure you compare those to what you can get from local banks when you visit them as well.

Work with a Local Bank to Get Financing

Some local banks are willing to look at more than just your credit score when giving out loans.  If you have bad credit but you just recently received a promotion and pay raise, changed to a higher paying job, or finished paying off some debt, they’ll factor that in.  Also, if it’s a bank you have a long-standing relationship with where you’ve paid off other loans before, they’ll be more lenient.

The real benefit of working with a local bank is that you know before you go to the dealership what your financing situation is.  There are no mysteries, and you have a better chance to shop around for a good rate.  If you’re buying a car with bad credit and you don’t look at local lenders, you’re likely costing yourself thousands of dollars.

Put More Money Down

This is an answer a lot of people hate to hear, but it’s the single biggest thing you can do to increase the likelihood you’ll get approved for a loan.  The more money you can put down, the less risk the lender assumes.

Often, people with bad credit will indicate that they don’t have much available money to put down towards a car.  While understandable, there are some ways to make money quickly — either by selling personal items online, donating fluids (blood, plasma, eggs or sperm), or working a second job.

None of these methods are “magic bullets,” but if you put these three methods to work, you should be able to buy a car with bad credit.