Tips on Buying Cars: interest rate with low credit score, how do i raise my credit score, emergency fund

Question
I want to purchase a 2007 Chrysler. The problem is my credit score dropped from 650 to 580. The financing on a car would be around 20%. is more than I want to pay. I do not have any credit cards, however I was late paying some of the monthly payments on my 2003 Toyota late. That and the fact that I have a $624 outstanding loan that has not been paid on in two years, however I do not who or why I owe this loan. I didn't realize that I'm responsible for a loan that I know nothing about. My questions is Should I ask the credit bureau to dispute that loan amount. And my second questions is should I pay off a loan that only has three payment left, by paying $350 of more own money and borrowing the other $700 from a loan company. Will this help increase my credit score. Or should I should take money out of my emergency fund and pay of the loan early and see if it raises my credit score. Or should I pay off the loan during the due date the next three month, will that raise my credit score. I desperately need a vehicle but the last rate was 7.9% and now cannot see paying 20% or more. The car I want to buy is $16.6991. I can wait three more months, but in the mean time how do I raise my credit score.

Answer
Barbara,

Thanks for your question.  First of all with at 580 credit score, 20% seems OFTLY high.  I could see a 14 or 15% rate, but 20% is obserd.  Secondly, yes call the bureau and dispute the item that you say you know nothing about, but understand that it will not affect your score.  Also, yes pay the outstanding loan off as quickly as you possibly can, but understand that will not affect your score for several months, sometimes 6 to 8 months.  It takes quite a while for things like that to affect your credit score.

Hope this helps.

Thanks - JB