Will a Car Payment Affect my Credit?
You’ve been thinking about a car payment lately – especially since you spotted the 2021 Chevrolet Silverado 2500HD on the lot. Eyeing its bright red paint and spacious truck bed you wonder something.
“Will a car payment affect my credit?”
We hear you. If you want to know if your car payment can affect your credit, read on.
You can get a free credit report every 12 months.
Your Credit Report
Before we get into the meat of this article, lets first focus on the potatoes: where to find your credit report. There are four companies that have information on your credit score. They are Experian, Equifax, TransUnion and Credit Karma. You can get a free credit report from them every 12 months to ensure your credit score is being reported correctly. There are two important things to look at when viewing your credit score: Account types and current status.
Account Types: This where all your accounts that factor into your credit score are listed. Car payments, like college loan and mortgage payments, are listed as installment accounts. This means that you’re paying a set amount each month for a set number of payments.
Current Status: This is the status of each account. If you don’t miss payments at all and pay on time, your account should be listed as “current” or “paid as agreed.” It’s ALWAYS a good idea to pay on time. To avoid high payments, check out this post on car payments and the Dan Cummins payment calculator to see what you can afford.
If your credit is checked several times in under 30 days, all credit checks within that time are counted as one.
So, What Does Affect Credit?
“Alright,” you might be thinking. “What does affect credit?” There are two things that affect your credit score. One is car loan shopping. Every time you shop for a car and its loan your credit does take a hit. But there is a little trick you can use to minimize this hit.
Suppose you need a new truck. You’ve recently bought a spot at an antique shop and need something to haul your inventory. Before you rush off to test drive trucks, research what one you want. Then, once you have a pretty good idea of the make, model, and price, keep your car shopping short. Finance your new truck within 30 days. Why? It has to do with credit checks.
Each time you get a loan (car or otherwise) your credit score is checked. The more checks there are, the more they negatively affect your credit score. However, if your credit is checked several times in under 30 days, all credit checks within that time will be counted as one. So instead of it looking like your credit is being pulled several times, it will look like your credit score is being pulled only once.
“What if I need two buy two cars?” Life happens. Just when you’ve settled on your new car, your partner’s car breaks on you. Just be sure to complete their car purchase within the 30-day window and you should be fine.
So what’s the other thing that affects your credit score? Keeping up with your car payments.
Making consistent car payments does improve credit.
Yes, Financing Your Truck Can Help
While it’s true getting your credit checked for a car loan negatively affects your score, payments offset that. How? Let’s say you decided to finance that 2019 Chevrolet Silverado. It has everything you need and couldn’t be happier.
Each time you make a car payment on time your credit score improves. That’s because the payments show you’re reliable and are making enough income to cover the payments. In fact, having a car payment can improve your score so much it can help you with other loans.
Imagine this a moment. You’ve been living in an apartment and want to upgrade to home ownership. You look at your savings/bank accounts and get a pre-approval for a loan.
Then, after finding your perfect starter home, you begin applying for a home loan in earnest. As the lender looks over your accounts and information they’ll also see your credit score. And because you’ve been making steady, on-time car payments your credit score is pretty decent. This makes lenders more willing to give you an affordable interest rate.
“But how can I make sure my car payments are affordable?”
Check Out Our Payment Calculator
Credit score improvement hinges on the fact that you’re making payments on time. So what can you do to make your car payments are easy to make?
Use Dan Cummins Payment calculator. With this simple tool, and some quick information from you, you can find out exactly how much you can afford each month. That way, you can plan your budget so your payment is easy to make without fail.
Contact Dan Cummins to See What Your Car Payment is Today!
See how you can improve your credit with Dan Cummins car payment calculator. To find out which car meets your requirements, talk to our friendly staff. Leave a message or call us at 877-661-2805. Click here to apply for auto financing and get pre-approved in seconds.
Will a Car Payment Affect my Credit? | Dan Cummins Chevrolet & Buick – Louisville, KY