Does Buying a Car Help Your Credit?

When you’re driving away from the dealership in your brand-new car, you’re probably not asking yourself, “Does buying a car help your credit score?” However, that’s an important question to answer.

Top Ways Buying a Car Affects Your Credit

Hard Inquiry

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.

Acquiring Debt

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. Depending on the price of the car and the loan amount, the fallen points may vary.

Making Timely Payments

Payment history is one of the most significant factors that affect your credit score. By making timely payments, you can enhance your credit score.

Managing Your Credit Mix

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.

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