Will Financing a Car Help Rebuild My Credit?

Yes, applying for auto credit financing can help you rebuild your credit history, especially if you keep up with your on-time payments. With our Buy Here Pay Here financing at PA Auto Credit, we can work with drivers at any level of credit score, making this a great way to get back on the road to financial health.

Short-Term Effects

When you finance a car, you are giving the bank permission to perform a hard inquiry on your credit and adding to your debt load. Both of these will initially lower your credit score, but it will recover. You can keep the damage to a minimum by finishing your auto loan shopping within two weeks, as the credit company will treat them as one request.

Building Your Credit

Once you get past this initial dip, you can start rebuilding your credit with your loan. Set up automated bill payments to ensure you never miss your bill, as your payment history makes up 35 percent of your FICO® score. However, since a default on a loan stays on your report for up to seven years, you’ll want to be confident you can keep up with your payments.

Other Ways to Build Credit

The types of credit you already have on your account can have a major impact on how much a new loan affects your score. Diversity of credit sources makes up 10 percent of your score, so if you already have a car loan open, a second loan may not make as much of an impact. Focus on paying down outstanding balances or opening a new revolving line of credit.

Finance Your Next Vehicle at PA Auto Credit

At PA Auto Credit, we’re passionate about our mission to offer affordable financing in Fairless Hills, PA. With our Buy Here Pay Here financing, we’re able to work with drivers across the credit spectrum, so visit us today to find out more!