Can you buy a car with No Credit? And Other Questions

Usually, first-time car buyers, young college students or recent immigrants will have no credit score. But, what does it mean? Does it mean your score is zero? Can you build your score? Can you still buy a car when you have no credit history? Don’t get overwhelmed. We have all the answers for you.

Buying a Car with No Credit: Let’s End Your Curiosity

Buying a car is an overwhelming experience. When you come to know that you have zero credit score, it becomes all the more daunting. But, understand your situation in detail so that you can make the right choice and make a car purchase. 

1. Why is my credit score zero? Or why don’t I have a credit score? 

No one has the digit “zero” listed as their credit score. FICO score is the most common formula that credit bureaus (Transunion, Experian, Equifax, etc.) use for calculating your credit worthiness. It has a range of 300 to 850. Now, when you are told that your credit score is zero, it simply means that your credit history is non-existent. You have never applied for any kind of loan or mortgage in your life. The credit bureaus cannot calculate your credit worthiness in terms of FICO scores because you have no history of making payments or missing them. 

In rare situations, you may have applied for a loan in the past, but your credit score may still be non-existent. Closed accounts stay on your credit report for 10 years after the last date of the activity. And, negative accounts such as unpaid loans can stay up to seven years. If you have no recent credit activity, you will most likely not have a credit score. 

2. Does everyone start out with the same credit score? 

Not everyone starts with the same baseline credit score. You cannot have a minimum score of 300 and build it up after a series of credit accounts. It is also not possible to begin with a score of 850. 

Usually, it requires six months of credit history to generate a more accurate credit score. When you apply for a credit card or open any other credit account, the credit bureaus will consider your payment history and provide you with a mid-range score. If you have multiple credit accounts with a regular payment history, the number will be higher. The number reduces if there are missed payments on your credit report. 

3. Do I have to wait for six months to buy a car? 

If you are in the market to buy a car, you can either wait for half a year (and may be more) to build a solid credit score. It will definitely get you easy auto loan approval. 

You can also opt-in for UltraFICO scores. By allowing the data analytics company to link your UltraFICO score with your checking, savings and money market accounts, you will be able to increase the ratings. If you have a positive balance in your bank account with consistent cash in hand, your UltraFICO score will be higher than the traditional one. 

Another option is to try and link your utility bills to your credit score. Typically, your traditional FICO score will not include your utility bills because they are not credit accounts. So, opt for the newest credit score boosting tool from Experian called Experian Boost. Once you allow the company to access your bank account to identify utility payments, the payments will be added to your credit report and thus, increase your credit score. 

4. Are No Credit Auto Loans helpful? 

UltraFICO scores and Experian Boost are good tools to increase your credit score. However, not every lender uses them. Both the services are still in their nascent stage. If you want to buy a car and you want to buy it now, you can seek no credit auto financing. It is a loan program specially designed for car buyers who have no credit score. 

It is easy to get an auto loan with a zero credit score because lenders believe that a no credit history is always better than a bad credit history. When you do not have a credit score, lenders just don’t know enough about your financial habits. But if your credit score is bad, the lender’s risk increases phenomenally. 

Get in touch with an auto financing company that has tons of experience in helping out people with credit issues. Do not get too fixated with the credit score number. Prove yourself as a worthy borrower by providing proof of stable employment and regular income. 

So, there you have it! Now you know all there is to no credit history and how to buy a car with a no credit score. Zero credit score doesn’t mean NO auto loans. Go ahead and buy your favorite car today. 

If you want to buy a car with zero credit history, you need to work with America’s top auto financing company that has wide experience in no credit auto loans. If you do not have a cosigner, consider applying for no credit no cosigner auto loans and expedite the loan process.

What are the Risks of Cosigning a Car Loan?

My son needs a car for his daily commute. Is it wise to cosign a car loan for my son? Will it affect my credit score? - A Doting Father

Are you someone like Doting Father? Are you thinking about cosigning a loan for your son, daughter, brother, cousin or any other member of the family? You are not alone. Approximately 1 in 6 U.S. adults have cosigned a mortgage, loan, credit card or more. According to a poll by CreditCards.com, car loans accounted for a major chunk of total cosigning in USA. 51 percent of respondents have cosigned a car loan to a family member or a friend. A majority of parents will cosign for their children so that they can qualify for a loan. 

For many car buyers, cosigning is the difference between buying a car and facing loan rejection. Having a cosigner can ensure quick auto loan approval and it can lower the cost of the loan for your son. However, it can be a risky proposition for your financial health. In order to make a well-thought decision, please ask yourself the following questions before you sign on the dotted line. 

Why is your Son unable to get a Car Loan on his own? 

If your son is young and doesn’t have a credit history, it is obvious that you want to help him get a car loan and build a credit score. Helping your college-going kid secure a car loan can inculcate the right financial values in him. If your son has a full-time job and still cannot find an auto loan on his own, it is time to dig deeper. Learn why his credit report is bad. If he has been a victim of identity theft, it is understandable. But if he has missed a few payments in the past and has a history of making dubious financial decisions, consider them red flags. 

2. Are you ready for the Financial Responsibility? 

28 percent of the total 2003 poll respondents saw a decline in their credit score. Cosigning a car loan or any other loan/mortgage puts a big responsibility on your shoulders. 38 percent of cosigners had to pay a part of the loan or the total amount because the primary borrower couldn’t repay the loan. From the numbers, we can infer that when you open doors for someone (and cosign his loan), you may be left out in the open. 

If you want to cosign for your son, make sure you can take over the debt in case he fails to make payments. You can work with your financial planner and make contingency plans to absorb the debt, if and when the situation arises. If the numbers say you cannot manage the payments, it is best to avoid it. 

3. What are the Risks of being a Cosigner for Someone Else? 

The explicit risk is to your credit score and financial stability however there are many hidden risks that you should be wary of. If you are going to apply for a loan in the near future, cosigning can impact your debt-to-income ratio and keep you from buying your dream retirement home, car, holiday or anything else. Becoming a cosigner means assuming 100 percent responsibility for your son’s car loan. It will affect your credit worthiness and make borrowing money harder for you. 

Your credit score will be tied to your son’s financial habits as long as the loan term continues. If he doesn’t make a payment, it is your credit score that will be affected. When you want to help your child in getting a car loan, monitor the loan closely. Ensure he makes regular payments by checking the monthly statements on a regular basis. 

4. Is there a way out? 

If you do not want to be a cosigner, that’s okay. If you are not comfortable putting your financial well-being on the line, it is fine because there are many other options other than being a cosigner. If the goal is to help your son buy a car, you can seek no cosigner car loans. You will find many online auto financing companies that offer auto loan approval without a cosigner. There is a special first-time car buyers’ program designed for college students who want to buy a car on their own. 

You can choose a reliable auto financing company that will enable your son to get a car loan without familial help. You can also make a down payment on his behalf and help him buy a car without putting your credit score in danger. 

Cosigning a car loan is definitely ways of helping your son buy a car but it can take a toll on your financial health. Make a decision after understanding the different solutions available to you. 

Want to apply for a car loan without a cosigner? Choose a bad credit auto loan expert who will help you get a no cosigner car loan in no time. Get in touch today for guaranteed approval.