Does Buying a Car Help Your Credit? The Best Advice for 2022 Story

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.

Your credit score is something you want to pay close attention to and it could be affected more easily than you think. We want to keep chasing our dreams and making our vision boards a reality but we still need to be aware of the facts and things that might hold us back.

Top Ways Buying a Car Affects Your Credit

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.

Hard Inquiry

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

Acquiring Debt

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