Can buying a car increase your credit score?
How does buying a used car affect your credit?
Are you looking to buy a used car? Concerned about what it could do to your credit score? How does buying a used car affect your credit? At Aristocrat Motors Lee’s Summit, we can help. You can even check out our current used car inventory in Lee’s Summit, MO by clicking the link below.
Why does your credit score go down when you buy a car?
This is where a lot of people get confused. Immediately after you buy a car, your credit score will usually go down. That’s because a hard credit inquiry, which most dealerships have to perform, will make your credit score drop temporarily. The drop is usually short-lived, lasting only a few months, and the inquiry will fall off your report entirely after two years.
Read More: Can you buy a pre-owned car online in Lee’s Summit MO?
Hard inquiries impact your credit score negatively because if you were to seek a lot of credit, you would accumulate multiple hard inquiries in a short time. This shows as a red flag to many borrowers, but a few hard inquiries usually only have a small impact on your overall score.
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What makes your credit score go up?
Making your score go up is done by buying something on credit or through a loan and making those payments on time. If those payments are made on time and reported to the credit bureaus, then your score will go up assuming there are no other issues.
Most car loans are done through banks and credit unions, all of which regularly report payments. It’s those reported payments that help you the most and over time, with on-time payments, you will see your score rise. Buying a used car can have just as much of an effect on your credit score as buying a new car.
Why is your credit score still going down after buying a car?
If your credit continues to go down after you buy a car, then you may want to take a close look at your reports. Perhaps something else is impacting them negatively. Not paying your bills, things going to collections, high credit card balances, and additional hard inquiries can all impact it negatively. Your credit report may have issues that you can dispute and you’ll also want to ensure that your identity hasn’t been compromised.