It’s a fact: bad credit happens to good people. Layoffs, higher utility bills, the increased cost of living, any of these reasons and more can lead to missed payments and damage to your credit score.
But did you know that an affordable car loan is one of the most effective ways to improve your credit?
How a Car Loan Can Improve Your Credit
Why is a car loan so effective at improving your score? Because it shows lenders that you are fully capable of handling a relatively large loan.
Car loans are usually the 2nd largest amount people will borrow throughout their lives, behind home mortgages. While putting $150 on a credit card and paying it off that month looks nice, borrowing $15,000 and making consistent payments over a longer period really shows your reliability and responsibility.
You can not only demonstrate your financial responsibility with an auto loan, you’ll also be able to drive a vehicle that gives you high-quality reliability and comfort.
Think Like a Lender:
Put yourself in the lender’s shoes for a moment. Say you are a mortgage lender and two separate people come to your office asking for a home loan.
The first has no history of car loans, with only a small history of credit card payments every so often. Because they have not demonstrated the ability to pay back larger amounts over a long period of time, you’re probably hesitant to loan this person a large sum.
The second person, however, has improved their credit score with an affordable car loan. By making consistent payments for many months, this person has demonstrated that they are ready for a large mortgage loan. This person more likely to receive the home loan, and also more likely to receive a lower interest rate.
Improve Your Credit Score!
If you are experiencing credit issues, you might think you’re stuck, but we understand that your busy life goes on, even when you have a few dents in your credit score.
You still need to get to work, you still need to take the kids to school, and you still need to run errands all over town.
KBB in the News August new-car sales drop 2 percent from last year for estimated 17.3 million SAAR, according to...
Information You Need Before You Buy
After years of delays, the credit industry finally agreed to give consumers access to their personal "credit scores." This is important, because lenders use credit scores to determine who to give credit to and at what rates. Knowing your credit score can be empowering,If it's low you can take steps to improve your credit worthiness and if it's high you may be able to use it as leverage when shopping for your next car loan.
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