Are you currently in a bad credit situation? Do you also need to buy a new car, however worry that securing vehicle financing will be an issue?
Well, Canada Drives is here to help. We connect borrowers with lenders who help people with different credit situations. At Canada Drives we can connect you to a lender who an help you obtain the necessary car loan you require to get your new car out on the road as soon as possible. At the same time you can also begin to rebuild your credit score and improve your finances. If this situation seems like it may be the outcome you are looking for, contact us to learn more about the specific benefits we can offer you.
Now that you are aware of where you can turn, to receive the vehicle financing you need, on top of re-establishing your credit, let’s take a closer look at debt and learn more about the distinctions between different types of debt and how each can affect your finances. These debt types include car loans, mortgages, and credit card debt. While all of these kinds of debts can certainly impact your financial circumstances, it is important to understand how each can have their own set of implications. Knowing this can then give you more understanding of how you can take steps to improve your credit and make things more manageable in the future.
Specific across all loan and credit categories are various ways that credit management can impact your credit score and your overall finances. Here is a bit of a breakdown of all of your possible credit domains and how they are factored in when your credit score is calculated.
Payment History:
Anytime you are late with your loan payments or have missed a payment, your credit rating will be affected. If, however you can pay all of your credit card and bill payments on time and in full each month, your credit score can remain stable. Miss even one and your credit score will be affected for some time.
Current Debt:
If you are carrying high balances that are very close to your credit card limit, especially if this is on more than one card or account, this can indicate that you are unable to stay on top of your credit levels. As a result this can lower you rating even further and make it challenging to obtain future loan approval.
Credit History:
If your credit history has been negatively affected over time, such as a record of missed payment and high credit levels, your score will also be lower. If, on the other hand you do not have a credit history at all, this will also lead to a poor score. In this instance, not all creditors will issue loans to borrowers with no apparent credit history. Other financial institutions can however work with first-time borrowers and are eager to help them establish their new-found credit score.
Having Different Types of Credit:
Lastly, having a variety of different types of credit can also lead to a steady credit rating. Different types of credit products that can help you keep or establish a good credit score often include a mortgage, a home equity loan, one or two credit cards, as well as a car loan.
Ultimately, it is finding the right balance between these loans so you can continue to manage your finances efficiently.
As mentioned, having a car loan, in addition to maintaining some other types of loans can help you keep up a solid credit rating. If you currently have bad credit, yet need to take on a car loan to secure the new vehicle you require, knowing that you have options is a good step towards rebuilding your credit, while obtaining a loan that is based on your needs and what is manageable for you.
Different types of debt is not necessarily created equal and can affect your ability to pay off your loans, as well as be able to keep a lid on your credit score.
Credit Cards
This kind of debt is one of the most common methods of borrowing and also can be one of the most expensive too. This is because banks can offer larger limits that are attached to a variety of different interest rates and fees. Some of these fees can mean big expenses and some time’s big credit issues too. While credit cards, if managed effectively can help build your credit score, making sure to keep on top of the payments and keeping the limit not sky high is important. Also as mentioned, having one or two credit cards can be a good way to maintain a good credit score, while more than two cards may lead to debt and poor credit.
Home Loans
Mortgages are typically meant for longer periods of time as well as being larger in size. These loans are also more likely to have lower interest rates. Some financial firms can lend up to 80% of the value of the property and so depending on the home, the loan can be larger and over several years. This type of purchase can also be a long-term investment for individuals and can be considered ‘good’ debt, as long as it is not too large or a financial stress for the borrower.
Car Loans
For those borrowers who require a car loan to secure your car, this can be a good method of achieving a credit score, whether you are rebuilding your lower score or starting to establish a credit score from a zero credit score/history position. If you have, for example filed for bankruptcy or have no previous experience with credit, you can start to develop this score in a healthy manner that can continue to allow for a good solid credit rating.
Understanding what contributes to your credit score and also that debt doesn’t just need to be considered bad is important. Some debt can be classified as good debt and if managed properly can help you as you apply for new loans. Car loans, in particular can be a valuable resource for establishing better credit and at the same time being able to have a set of wheels at your disposal.
A vehicle can be a great asset not only for your credit history, but also can help you experience financial gain. Canada Drives wants to connect you to people who can help you improve your finances and make the most of your life. In the end, let’s try to find a loan that can help and improve your finances.
