As a full-service credit consulting company, we’ve seen it all. Our clients come to us with a range of credit woes, and we love using their success stories as helpful lessons for the public. Our story today is a cautionary tale with a happy ending! We’re talking about how to obtain an auto refinance with a low credit score. If this applies to you or someone you care about, take heart and read on.
A consumer went into her local bank and attempted to refinance her high-interest rate auto loan. Excited to break free from her high-interest rate auto loan, she sat down with the loan officer to see how he could help. Unfortunately, she soon learned that several obstacles were preventing her from refinancing her auto loan.
Pitfalls of High-Interest Loans
To start, this consumer was “upside-down” on her auto loan (this simply means that she owed more than what the vehicle was actually worth). Due to her high-interest rate auto loan, most of her payments were going towards her 21% interest and very little was directed toward the principal. Here’s where we’d like to offer a word of caution! When buying your car, steer clear of long-term financing that will quickly cause you to owe more than your vehicle is worth. These financing packages can be tempting, since they’ll promise a lower monthly payment, but learn from our consumers and stay away.
Low Credit Scores Prevent Refinancing
Once our consumer understood that her high-interest auto loan was causing so many issues, she asked to refinance to a lower rate. Unfortunately, Experian was reporting her credit score as 565. A 560 credit score is considered by most banks as high risk, and the bank couldn’t extend her credit to refinance her auto loan.
Raising a Low Credit Score to Lower A High-Interest Rate
The bank suggested that she work on her credit and come back when she was able to raise her credit score to at least a 660. This is typically the threshold required to take advantage of a lower interest rate. Well, she took the bank’s advice and sought out the services of InCreditable Advisors. Here comes the happy ending; we were able to set her on the path to success!
Raising a Credit Score
To begin, we immediately obtained a credit report from all three major credit bureaus: Experian, Equifax and TransUnion. Not every bank uses the same credit reporting agency, and not every credit reporting agency shares the same information with each other about the consumer, so it’s important to pull a credit report from all three bureaus to increase the chance of obtaining financing from any bank.
InCreditable Advisors did a complete credit analysis and audit of our consumer’s credit profile and recognized several areas where she could improve. We recommended several enhancing strategies to boost her credit score.
After three months of utilizing our advice and recommendations, our clients’ credit score went from 585, 565 and 597, to 629, 662 and 672, respectively. This is an average increase of 72 points! Our client was finally able to ditch that awful auto loan of 21% for one with a manageable rate of 5.9%.
Our Approach Could Work For You, Too
If you need a boost in your credit score, please give InCreditable Advisors a call today at 317.202.1297. InCreditable Advisors is Indy’s #1 Credit Consulting Company. We are fully licensed, registered, and bonded, as required in every state in which we operate. Our company’s specialization is credit repair, debt settlement and credit education. Our service is empowering and impactful; we assist with all phases of the credit rebuilding process.