Getting a car loan after bankruptcy may be the last thing on your mind. Especially, if you’re keen on rebuilding credit. Then opening the door for larger purchases with an auto loan may be the way to go. Many people refrain from using their credit card after they’ve paid off their debts. Don’t assume that waiting for your credit score to build itself is the most efficient way to regain financial control. It may be daunting to attain a car loan soon after bankruptcy, doing so could allow for future purchasing power. Allowing you to buy something more desirable in the near future – like real estate. If you’re interested in learning more about how a car loan after bankruptcy can bolster your credit, then follow along.
What Makes a Good Credit Score?
There are several factors that play into the rating of your credit score. Factors can include, the length of time in which you’ve had credit. They might also reflect your track record paying those debts, how often you use your credit, and the types of credit you use. As for the duration of your credit history, a long record of timely payments shows responsibility. Thus proving to lenders that you’re able to manage payments and maintain a high credit score. Using your credit often adds to your score in the same way as your history. In short, the more times you make purchases and successfully pay off your debts, the lower the risk you are for lenders. In addition to these factors, using various types of credit also yields a better rating. For example, a person who only uses credit cards and pays each bill timely will have a lower rating than the person with a mix of credit. A mix of credit types can include real estate, vehicle ownership and the use of credit cards.
What Does A Car Loan Mean For My Credit?
By attaining a car loan after you’ve been discharged from bankruptcy, you open the possibility to regain financial stability through good credit. Getting an auto loan will diversify your credit history which makes up 1/10 of your overall score. Having a well-rounded mix of credit is more likely to improve your score at a faster rate than simply waiting for it to build over time. If you’re eager to get things back on track, a TransCan auto loan is right for you! Of course, a car loan is only beneficial to your credit score if you are able to make payments punctually. Neglecting to pay your dues on time (usually within a month’s length) could mean having the vehicle repossessed by the dealer.
Credit Inquiries – What they are and how to shop.
A credit inquiry is a credit check. There are two types of credit inquiries – hard and soft. When purchasing a vehicle loan a hard inquiry is standard. This check is done by lenders during the loan application to review your credit report and will impact your score. If you allow multiple dealerships to check your credit, it can cause various reports of hard inquiries. However, if you shop efficiently and take a short window of time to find the right vehicle all inquiries should be listed as one. By planning ahead and doing your research you can minimize the time needed to shop around and save your credit from being negatively impacted.
To find out more on how a car loan after bankruptcy can improve your credit rating, contact us at TransCan Leasing today. If you have any questions feel free to reach out. We look forward to working with you and helping you get your finances back on track!