Does Buying a Car Help Your Credit? The Best Advice for 2022

Buying a car has the potential to increase your credit score, but it can also go the other way and drop. 

If you’re wondering if buying a car helps your credit, then we’re here to make things clear. Here are a few ways your credit score is affected when you decide to buy a vehicle.

Hard Inquiry

When you apply for a car loan, the first course of action your account goes through is a hard inquiry. Unfortunately, a hard inquiry will lead to an automatic lowering of a few points of your credit score for a couple of months.

Acquiring Debt

Once you buy a car and acquire a loan for it, your credit report will reflect the additional debt that will impact your credit score. As soon as the debt is accepted, you will see a drop in your credit score as your liabilities increase.

Making Timely Payments

Payment history is one of the most significant factors that affect your credit score. By making timely payments, you can enhance your credit score.

When you apply for a car loan, lenders can see a credit mix on your credit history. Your credit mix is the different sorts of credits you have, such as revolving credits, installment credits, and more.  

Managing Your Credit Mix

Although sometimes, your auto loan might be missing from your credit score due to the infancy of the loan. Another reason is if the three major credit reporting bureaus, Experian, TransUnion, and Equifax, haven’t yet updated the loan information on your credit score, usually because the lender hasn’t forwarded the information to the credit reporting agencies. 

Where To Find Auto Loans on Your Credit Report

- Check Your Credit Report and Scores - Pay Bills on Time - Pay off Credit Card Debt - Apply for Credit Only As a Last Resort - Dispute Inaccuracies - Save Up for a Down Payment

How To Make Sure Your Credit Is Ready to Buy a Car

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