The most common reason we see for a high-priced bond is the dealer not having established credit. In this scenario, no credit is basically the same as bad credit. There are a few reasons why folks don’t have established credit when they are getting their dealer license. Simply being young and not having loans that have been set up through a bank may be the most common. The other reason that is common with Used Car Dealers is that the individual likes to pay for everything with cash.
Some folks buy into the logic that they never want to buy anything that they can’t pay for on the spot. While that is a great approach, it doesn’t help establish credit. The process of building credit will take some time but getting a credit card with a very low limit can help quite a bit. Buy $25 – $50 worth of items every month and pay the card off within 2 or so weeks of the charges.
With about 6 months of this process, you will be in a good position to call your credit card company and ask them to increase your credit limit. Then keep doing the same thing. The fact that you have never been late on a single payment will look great. Also having available credit that you are not utilizing will also improve your overall credit profile.
You should see a nice increase in your credit score with this strategy and will be in good shape to renew your bond at a much-reduced cost as your Experian Credit Score improves.
Related FAQs
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