When it comes to securing an interest rate that doesn’t threaten to overturn your monthly budget, applying for a new vehicle loan might give you pause. But one great way to plan ahead and ensure you’ll encounter no surprises when car-buying is to do a little credit tracking.
But what is it, and how can you do it successfully?
The process of credit tracking is keeping tabs on your credit score and monitoring your creditworthiness to ensure you’re picking the optimum time to apply for financing on a purchase such as a vehicle. More and more services are becoming available that allow you to do this for a minimal fee or as a perk with an existing account—and the likelihood that knowing your credit score will negatively impact the score itself is waning as the years go by. More and more consumers are seeing that impact only on hard inquiries (a.k.a., credit applications).
One of the primary reasons to engage in a credit-monitoring service is to be notified when a major change occurs to your score—namely, being in the loop when a potential data breach or identify theft has caused your score to spike. This means you’ll be able to take quick action to resolve it before you apply for credit, as this false score might have a negative impact on the amount of funds and interest rate you’re able to secure.
Not only does knowing about changes in your credit score help you monitor for fraud, but tracking your credit can also signal opportunities for improvement that can impact your ability to borrow. Say your credit score is below the most desirable level—about 750—and you’d like to work your way up to a better score before applying for an auto loan. You can track your progress through credit monitoring, and make healthy financial choices to make yourself more credit-worthy before taking the plunge on your auto loan.
Interested in hearing from auto lending professionals on how credit tracking can prepare you for your purchase? See for yourself what Sioux Falls Fed offers for vehicle purchases of all shapes and sizes—see for yourself.