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. How are you to know? 

It all depends upon when and how you make the payments for your car loan. To find out if you can afford a car or not, consider if you can make timely payments, which will result in your credit score going up. 

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. The good thing is that even though your car loan application gets forwarded to many lenders, major credit bureaus will all count as a single inquiry. 

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. 

Payment history is one of the most significant factors that affect your credit score. By making timely payments, you can enhance your credit score. As you continue to make these payments, your credit score will increase steadily.

Making Timely Payments

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. 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. 

Managing Your Credit Mix

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