How's your credit? Here's why it's important to know BEFORE you go for a home loan or refi, auto loan, personal loan, business loan, or other financing:
So you're getting ready to make a major purchase -- like a new car, or a home, or a refinance.
You know the question that's going to come up is : "How's your credit?"
You have two options:
1) You can make your best guess on your credit rating or credit score: "I think it's pretty good" or "Great" or "Not so good", or any of a number of other not-so-sure answers. Immediately, whoever has asked you the question is in control. They may say something like, "well, if your credit qualifies you, we may be able to get you a real good deal," or "once we take a look at your credit, we'll have a better idea of what we can do..." In this scenario, right off the bat, you are giving up control of the sales and negotiating process, and the salesperson asking the big question is gaining control -- even letting you know that they need to fill out a credit application at some point just to find out what kind of deal they can "give" you! This is pushing you into a buying situation way to soon for your own good. They are holding your credit over your head. It's their secret weapon over you. They have power. You need to take it away from them. Here's a better option:
2) Know your credit before you go!. You can know your credit score and what's in your credit report before you go. In this case, when you're asked about your credit, you can state confidently that you know what your credit is and you expect to get a really good deal. Obviously, if you're buying on credit, they will have to check your credit at some point, but just the fact that you are letting them know that you have already checked your credit and you expect the very best deal is establishing the fact that you are a knowledgeable buyer. You are setting the stage for a better deal because:
- You are in control,
- You are forearmed with important information.
- You are expecting the deal of the century.
If you don't have high expectations and project high expectations you will never reach your goal.
You may think this only applies when you have excellent credit or a high credit score. No! Certainly it is a big plus when you have great credit, but even when you have less-than-perfect credit you are establishing the clear fact that you are knowledgeable about credit, and you know that you have plenty of options to land a favorable deal. And you do! You're biggest weapon when it comes to your credit and negotiating is your feet. You can walk away! No matter what your credit is like, know before you go!
Many people don't want to check their credit because they are afraid of what they may find. It's the great unknown. Make sure you know your credit, know your credit score, and know what's in your credit report! No matter what you discover, do everything possible to use it to your advantage. If your credit is "good", "very good" or "high", you have a strong advantage in negotiating the best deal.
Even if your credit is not-so-good, you can still say, "I've got a few dings, but in a few months or so, it'll be better, so I'll come back then." The likely response:
"No, let's see what we can work out today...we should be able to put together something real strong for you..."
Knowledge is Power. Know before you go..and know how to use your credit to get the upper hand no matter what your credit is. In many cases you have more bargaining power than you might imagine!