When it comes to purchasing a commercial truck, your credit score makes a huge difference to the overall amount you'll pay. A good credit score of over 700 will help you secure finance as low as 6.9%, which, on a $150,000 truck, will give you a monthly repayment of $2,963 over 60 months. A poor credit score of below 700 may see your finance rise to 12%, costing you $22,380 more in interest over the term of the loan, all because your credit score isn't up to snuff. Here are five simple ways to boost your credit score fast and finance a commercial truck for less.
The first way to boost your credit score fast is to investigate errors on your credit file. Errors could cause you to be turned down for a truck loan or offered high-interest financing, so it's important to check and try to have them removed. To investigate errors, ask one of the main nationwide credit reporting companies - Equifax, Experian, or TransUnion - for a copy of your report. You may notice common errors on your file, such as credit cards being kept 'live' by a bank even though you already canceled the card. In this case, a bank manager can help you trace your card and remove negative marks from your credit file.
If this sounds challenging, you can pay a law firm or ask a debt agency to help investigate your credit file on your behalf. Their experienced staff will be able to spot errors that may be dragging your score down and apply for them to be fixed or removed.
The second way to boost your credit score fast is to pay debts promptly. Nothing impacts your credit score than delinquent accounts, and your payment history makes up over 30 percent of your overall credit score. Creating a history of regular payments will quickly raise your score. If your business is capital-intensive and you're struggling to maximize cash flow, it may be worth using a third-party company to handle your invoices. By outsourcing various payments like insurance, fuel, and salaries, you can ensure your bills are paid promptly. This will quickly raise your credit score and help you qualify for lower financing rates on loans.
The third way to boost your credit score fast is to keep your credit card balances low. This typically means keeping them below 35% of your limit. For example, if your card has a $10,000 limit and you regularly hold a $7,000 balance, this is going to hurt your credit score. A smarter approach is to reduce your credit card spending, or shift some of your payments onto other cards. Keeping low balances on multiple cards will quickly improve your credit score.
The fourth way to boost your credit score fast is to get your credit card limits increased. This is a good option if you are unable to reduce credit card spending or don't have other cards to use for payments. For example, there may be a perfectly good reason for having a high balance of $7,000 on your credit cards, such as making regular fuel payments. In this case, you can ask the credit card company to give you a higher limit of, say $20,000. This will make your usual $7,000 balance a smaller percentage of the overall limit and boost your credit score.
The fifth way to boost your credit score fast is to be selective about which companies you work with. Applying for a loan with a finance company will cause them to check your credit file. In some cases, this will add a search mark to your report, which can hurt your overall score. Be mindful of this when applying for financing and limit the number of searches that you trigger.
These five simple ways to boost your credit score should help you secure finance for a commercial truck for less. Once you have improved your score, you can calculate your purchasing power and see how much finance you can afford to take on. Calculate or estimate the monthly payment you can afford and how much you can set aside as a down payment. Once you have calculated how much state and sales tax will apply to your purchase, you can hunt for a loan with the lowest anticipated annual percentage rate (APR).
If you are still struggling to secure affordable financing, you may want to use a residual value or 'balloon' payment lease to finance your truck instead of financing the entire vehicle. Whereas conventional leases see you pay a down payment and make monthly installments over a set period, balloon payment leases let you keep a large payment (the 'balloon') until the end of the lease. For example, you could make a ten-percent down payment and keep a ten percent balloon payment until the end of the lease. This lowers your monthly lease payments while you use your truck to earn a living. At the end of the lease, you can pay off the final loan through installments with a fixed APR and fixed monthly payments. This approach makes a truck more affordable and easier to finance while helping to boost your credit score by making regular payments.