Many people struggling with bad credit struggle to improve their credit rating. This makes sense – if you already have bad credit, it is more difficult to get a loan that makes creditworthiness difficult.
So if you are in a situation where bad credit prevents you from improving your creditworthiness, or bad credit prevents you from making important purchases such as a home or a new vehicle, what can you do?
What is buy here pay here financing?
Buying a car on a cash basis is simply impossible for most of us. For that reason, one way to get a vehicle is from a car dealer “buy here, pay here”. Buy here, pay here (or “tote the note”). Dealers can help you finance a car, even if your poor credit rating prevents you from getting a loan from a bank or credit union. So if you make regular payments, buy some here, pay here. Merchants report their consistency to credit bureaus, which increases creditworthiness.
With regular payments, credit bureaus can be confident that they can make timely payments, which increases creditworthiness. As your bad credit quality improves, you will be approved more and more for future loans (e.g. a new vehicle or a home loan).
Buy here and pay merchants here
Of course, it is important to be vigilant when it comes to choosing the right purchase. Not all offer to report your credit score, while others say they promise. When you select a purchase here, you pay a dealer here and do your research to make sure they really tell your bank about your success.
Similarly, people who do not have a credit can buy and pay merchants here. Many people who have never bought on credit have difficulty getting home loans or new vehicles. By buying a vehicle through a BHPH dealer, even people without credit can build up their credit score.
All in all, buying here, paying here, buying a car can have a positive impact on your credit score as long as you choose the right dealer and keep track of payments.