A friend of mine recently wanted to buy a new car and was denied credit. He knew that car dealers were desperate to sell SUVs and Trucks and he wanted a Jeep Grand Cherokee, but his dreams ended at the desk of the finance manager at the local Jeep Dealership. As always – these guys never tell you why your credit application was denied. They offered him to take the application to other “banks” and he eventually would be approved, but at a interest rate of 12% or more. My friend declined and left the dealership with his old car.

When he told me the story I told that he should have checked his credit score before he went. I am following the financial markets for quite a while and also have a lot of personal interest in this topic. I have read so many times now that credit is tight and lending requirements are much higher than they were a year ago. I recommended a couple of credit report services to him. They all offer free credit reports and credit scores. My friend went with Gofreecredit.com and signed up the next day. He received his 3-Credit Bureau Credit report and Credit score within minutes after signing up. The report analysis he received + the credit score information opened his eyes. He only has a 665 credit score right, but he spotted 4 items on his credit report that he could clean up.

I told him that if he would rush these things he might be able to boost his credit score by 30 points, maybe even 40.  This would move him from “Fair Credit” to “Good Credit” and he should be able to drive off the dealer’s lot with a new Jeep Grand Cherokee in a month or two.

From this story you can see how important it is to know your credit score before applying for a loan. So, don’t risk a negative entry in your credit report from a denied credit application that could have easily been avoided.