| Have You Seen Your Credit Report Lately?
September 1st marked the one-year anniversary that all Americans were able to take advantage of receiving a free credit report from each of the three nationwide consumer credit reporting companies. The Fair and Accurate Credit Transactions Act of 2003 (FACT Act) was phased in regionally last year and enables consumers to obtain a free copy of their credit report once a year from each of the three nationwide consumer credit reporting companies: Equifax , Experian and TransUnion .
AWARE, a nonprofit group dedicated to educating consumers about auto financing, advises consumers looking to buy their next car or truck to first obtain an updated copy of their credit report by visiting https://www.annualcreditreport.com . Inaccurate or missing information in your credit report could affect the financing you're offered on a new car or truck. Consumers should consider the following when requesting and reviewing their credit report:
• Spread out your requests: You have access to three credit reports a year -- one from each of the three consumer credit reporting companies. Don't request all three reports at the same time. Space out your requests over the span of a year so you can see ongoing changes to your credit record and check if there are persistent problems.
• Understand what's in your credit report: It's important to know and understand the type of information you'll see in your credit report. This includes employment information; inquiries into your credit history over the last year; your payment history including different creditors and if you pay your bills on time; and information about you in the public record, such as bankruptcies or foreclosures.
• Review your credit history: Getting a peek at your credit history lets you see what vehicle financers see when reviewing your creditworthiness for financing a new vehicle. Knowing your credit history and where you stand will help you understand the financing rates you're offered and can help you negotiate financing more effectively.
• Correct errors before you start shopping for a new car or truck: You can correct any errors before you request financing for a new car or truck to make sure your credit is judged accurately. Report any inaccuracies you find in your credit report to the credit reporting company in writing and include copies of documents that support your position.
Getting an up to date credit report can help consumers evaluate the competitive deals they're offered and negotiate when shopping for vehicle financing. Consumers should also consider some other important tips when navigating the auto financing process:
• Get Educated: Make sure you are familiar with common terms you're likely to hear or read in the course of getting your credit report, making corrections, and purchasing or financing a vehicle. Many of these terms, including down payment, fixed- and variable-rate financing, and on- and off-site financing can be found at www.autofinancing101.org/resources/glossary.asp .
• Develop a budget: If you don't already have a budget, now is the time to create one. Don't forget to factor in vehicle related costs outside of a new car payment, such as insurance, maintenance and gas costs. Also, be sure to budget for other financial goals you may have, such as buying a house, ongoing education, or funding your retirement savings. Drawing up a comprehensive budget will help you determine how much car you can actually afford.
• Shop around for financing: There are many sources of financing for automobile purchases, such as banks, credit unions, financing companies, savings banks, loans from stock brokerage firms, and home equity loans. This has created a highly competitive marketplace and lower rates for all consumers. Virtually all 22,000 automobile dealerships offer the convenience of one-stop shopping through on-site financing offerings that assist consumers in securing financing. Most dealerships work with five to 10 different banks or finance companies so that they can offer competitive deals to their customers.
• Negotiate: Vehicle financers use a number of factors to determine the finance rate they will offer you. But remember that you may be able to negotiate the finance rate you are offered just as you would the price of the vehicle.
• Understand the difference between buying and leasing a vehicle : "Keys to Vehicle Leasing," a publication of the Federal Reserve Board, provides useful information on this topic and can be downloaded from the Internet at www.federalreserve.gov/pubs/leasing .
• Make payments on time: Late or missed payments incur late fees and can even cause your vehicle to be repossessed. A bad payment record will also appear on your credit report, damaging your ability to get credit in the future.
These tips were brought to you by AWARE, a non-profit organization seeking to build a greater understanding about how auto financing works. AWARE is supported by leaders of the vehicle financing industry, and is perhaps the only resource that focuses exclusively on auto financing education in materials, a Web site, and other educational offerings that are entirely free of marketing, advertising, or sales efforts. Visit www.AutoFinancing101.org for financing calculators, tips, and other free educational materials.
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