One of the first questions some car buyers ask is: “what credit score do I need to buy this car?” Not long afterward, they might also wonder: “How will financing a vehicle affect my existing credit score?”
At LeSueur Car Company, we want to help you understand the effect an auto loan could have on your credit score.
Getting a car loan impacts your credit in two predictable ways:
It adds a hard inquiry to your credit report, which might temporarily lower your score by a few points
It adds to your credit history, which has a positive impact when you pay on time, every time.
Applying for a car loan doesn’t impact your credit significantly if linked to a purchase; however, if you continually apply for credit, multiple hits can add up and significantly lower your score.
If you’re looking to purchase a vehicle, but your credit score is not where you want it to be, check out some of these quick tips to improve it!
The most obvious tip is to pay off as much outstanding debt as possible without adding new charges. Outstanding balances can bring a credit score down. While paying off your debt in one big swoop may be unrealistic, increasing your monthly payment even by just a few dollars can make a significant difference.
Avoid closing unused accounts. Getting rid of old accounts might make you less likely to use credit, and it also wipes out part of your credit history. People with little or no credit history will face the same challenges as those people with poor credit.
Keep an eye on your credit report. Everyone makes mistakes – even the credit bureaus! There may be inaccurate information on your credit report that is contributing to a low score. Each of the main credit bureaus maintains a dispute department. If something does not look right, report it.
Free websites like Credit Karma allow users to view and track their credit score, and even offers tips to improve it.
Create a personal budget and stick to it. Being disciplined with your finances will help avoid the situations that may result in a lowered your credit score.
These tips are just a few things you can do to help improve your credit score. If you’re interested in purchasing a vehicle now, you can increase your credit score overtime. To browse our LeSueur Car Company inventory today, click here!