When you finance a car purchase, the car dealership or the company that you're using for a car loan looks at your credit report but there is also another option like in-house financing.
When the car loan companies look at your report, they examine it for several different things to determine whether or not they wish to extend credit to you.
The first thing the car loan companies look at is whether you have established credit at all. Credit cards, mortgages, and student loans are types of credit lines that appear on your credit report. From there, they take a look at whether or not you've made all of your payments on time. Your credit score is determined by many different factors, so if there's a question of whether or not you are credit-worthy enough for the loan, the loan officer takes an in-depth look at your file.
Other items that the loan office looks for includes collection accounts and public records. A collection account is a red flag that you haven't kept up with your debt obligations, although it doesn't immediately disqualify you for a loan. Public records are items such as judgments and bankruptcy filings. These have a bigger impact on your credit report.
If you do have negative items on your credit report when you finance a car and you get denied, the company sends you an explanation letter so you can fix those issues with your credit report.
If you have questions about how to finance a car loan, ask the finance experts at University Motors for advice. Contact us today.