Buying a new car is a big decision, but even small purchases such as electronics and jewelry require thoughtful consideration.
Consider these factors when planning a new purchase:
Your "credit score" is the numerical value assigned to the information in your credit report. This "score" gives lenders an idea of how big of a credit risk you are. The higher your score, the less likely you are to default or make late payments. Your "credit report" contains detailed information about your credit history. The information comes from various sources including utility companies, lenders, and landlords. If you've ever taken out a loan or had a credit card or utility account in your name, you probably have a credit score. It is based on your personal financial information and can go up or down as your financial situation changes.
Even though no one is ever likely to ask you directly for your score, lenders, employers, landlords, and service providers may routinely reference it as an indication of your creditworthiness. It can determine whether you get approved for a loan, rental lease, or security clearance, as well as the interest rates you pay.
You are entitled, by law, to a free copy of your credit report, once a year, from each of the three credit-reporting agencies: Equifax, Experian, and Transunion. It's a good idea to regularly check your credit report for inaccuracies. Get your free request form at www.annualcreditreport.com.
The credit-reporting agencies that set your credit score use a formula that considers the following five areas of your finances. By avoiding behavior that negatively impacts your score, you can improve it over time.
Find out how to financially prepare for buying a new car or other large purchase:
Identify your goal, create a plan, and follow these steps to get the ball rolling: