Spruce up your Credit History
Thursday, April 19th, 2007The rule of thumb says that the amount of money you pay toward debts should be within 30% of your annual income. If you are considering an auto loan, add up the total amount you pay off as debts each year, including the amount you plan to pay on your car. If this amount exceeds 30% of your annual income, you’ll need to lower your debt-to-income ratio immediately. This means that, you either clear some debts before applying for a car loan, or reduce the amount you want to borrow.
Make timely payments on your other credit accounts prior to applying for an auto loan. If you have made timely payments for a few months, it could improve your chances of approval by the lender. You must also refrain from applying for other forms of credit. Inquiries on your credit report also lower your credit ratings. 