Does a car loan increase my credit score?

  • Does a car loan increase my credit score?

    Navigating the world of credit can be quite challenging. Credit specialists often debate the best and worst ways to use credit, so individuals may find themselves baffled by the dos and don’ts. At Amherst Toyota, we’re hoping to help our Amherst, NS drivers answer questions like ‘does a car loan increase my credit score?’ to help them be more responsible credit users and consumers.

    When searching for a new car there are many questions a driver must ask themselves - ‘what is my budget?,’ ‘what features do I need in a vehicle?,’ ‘should I buy new or used?’ When also working with troubled credit, drivers have even more questions to ask like, ‘does a car loan build my credit score?’ When a driver’s mission is to build credit, save money, make an investment or make a larger purchase down the line, taking out a car loan may be an excellent option for drivers with unsatisfactory credit.

    Taking out a car loan

    If a person has the means to pay for a vehicle in cash, many credit specialists would suggest doing that before taking out another loan. However, if that isn’t an option, taking out an installment loan for a car can help drivers build up their credit.

    Whether drivers have struggled to create a strong credit score or have yet to build a sizable credit history, an installment loan like a mortgage or car loan can help them to get on track. Whether you’re trying to establish stronger credit or maintain a solid score, it is important for lenders to see improvement or consistent strength in your credit usage. When car loans payments are made in full and on time, they have the capacity to improve your credit score.

    Is an auto loan a good choice for me?

    Taking out an auto loan is a choice that should be considered based on your personal financial needs and capabilities. It can impact a person’s credit score, so all benefits and disadvantages should be contemplated.

    If a driver has reasonably strong credit, but they really want to take their score to another level, it usually isn’t recommended to take out a loan for that purpose, especially if drivers have the means to comfortably make a payment. When drivers really need a boost in credit, an installment loan like an auto loan can be a great solution. However, if you’re not confident in your ability to make payments on time, you may want to seek alternative resources to rebuild your credit score. For more information on how to build credit or obtain a bad credit auto loan in Amherst, NS, contact Amherst Toyota today.