How to Improve Your Credit Score with an Auto Loan in Yulee, FL

Boost Your Credit Score by Making On-Time Monthly Payments

You'll Keep Your Auto Loan Account Longer

When it comes to credit, the longer you have the account in good standing, the better.  The length of credit attribute can account for up to 15% of your score. Fortunately, auto loans have terms for up to 84 months, which means you can cash in on all of that good will with each monthly payment.

Can New Credit Improve Credit?

Most people are shocked when we tell them opening new credit accounts can actually help improve your credit score. How? Because credit utilization is a very important factor in your credit score (can account for up to 30%), opening new auto loan accounts and consistently paying them down can help improve your overall credit utilization ratio. With each monthly payment, your utilization ratio will go down; while your credit score goes up.

Auto Loans Can Help You Find the Right Mix!

Lenders are more likely to extend credit to borrowers who have demonstrated the ability to successfully manage different types of credit. As a result, it should come as no surprise your credit mix plays a substantial effect on your credit score. In fact, your ability to manage different types of credit, like a new car auto loan and credit cards, can make up to 10% of your credit score. So, when you open a new or used car auto loan, you'll be adding one of the most common types of credit to your mix, which can improve your score.

Will Pulling My Credit Lower It?

As you're shopping for a vehicle and an auto loan, lenders will need to conduct a hard pull of your credit. It's important to understand hard credit inquiries will typically cause your score to drop a couple of points, which may not be a big deal. The problem is when you have more than one hard pull from several different lenders. However, FICO -the most widely used company for calculating credit scores - reports as long as the multiple hard pulls happen within a 14-day period, they will be rolled into one. This convenience window generally applies to installment-type loan inquiries, such as mortgages and auto loans. Based on the individual credit bureau, this period could extend up to 45 days.