After you obtain a car loan, there are many ways that it can affect your credit score. Good Fellow’s Auto Wholesalers is a trusted dealership that provides Auto Financing in Toronto and our team is here today to explain how auto loans and credit scores can work together. Overall, you can expect an improvement in your credit score as long as you make your payments on time!
How Car Loans Influence Credit
When you obtain a car loan, two things can happen:
- When you apply for credit, a request to check your credit status can temporarily impact your credit score by bringing it down a few points. While this happens for auto loans, rest assured that it can also happen when you check your credit for a mortgage, student loan, or personal loan.
- A car loan can add to your credit history – this is a good thing! When you have a credit history, it shows lenders that you are capable and responsible to obtain and hopefully pay off a loan. Loans should always be paid on time, every time, to bring a positive impact on your credit.
How Auto Loans Look on Your Credit Report
When you first see your credit report, you may feel overwhelmed by the amount of data that is there. To keep it simple, let’s review two categories:
- Type of Accounts: You can expect your car loan to be listed under an “installment account”. This type of account lets one borrow a lump sum of money from a lender – which is done in terms of a car loan. Typically, an installment has a set number of payments and if all are made in a timely manner, this will help to improve your credit score.
- Current Status: The current status category will inform you of where you sit with your loan. If you have been making payments on time, you can expect to have a good status. If you have made a payment late or you are behind by several days, your credit score and report will give negative reports and you risk having your car repossessed by the lender.
Car Loan Shopping
If you are nervous about having too many hard inquiries on your credit report, you can rest assured that all hard inquiries conducted within a 30-day window will only count as one when your FICO score is computed. This will allow you to shop comfortably without having to worry about how your credit score will be impacted.
How We Can Help
If you wish to obtain Bad Credit Auto Financing in Toronto, our team at Good Fellow’s Auto Wholesalers is well-prepared to assist you. Our dealership accepts all credit scores and we have access to the best financial experts that can work hard to approve your car loan application. With us, the approval process is quick and easy and we provide the best interest rates! To begin your search for a used car, start with our dealership and give us a call at 1 (855) 581-9590 today!