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.

Top Ways Buying a Car Affects Your Credit

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.

Managing Your Credit Mix

Your credit mix is the different sorts of credits you have, such as revolving credits, installment credits, and more. Your ability to manage a mix of various types of credits proves that you are creditworthy and will give your credit score a positive boost.

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

- 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

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