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.
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