For those looking at ways to improve their credit, they may have heard that paying on an auto loan will help.
And it will, as long as you pay on time. Lenders look at payment history, and so does the credit bureau. Make on time payments for a car loan and other credit and it will help. A car loan is something you have to budget for monthly. If you can make your car loan on time, lenders will be more confident that you can budget for more credit in the future. This is why some people turn to buying at a used car lot that reports to the credit bureau, when they need to rebuild their credit, rather than simply paying cash for a used car.
Of course your credit is only rebuilt if you make your payments on time. For those who don’t prioritize their car payments, especially at a buy here pay here car lot, may run out of financing options. Most buy here pay here dealers have a limit to how much risk they will take when selling a car – too many repossessions, may prevent you from being able to get a car loan.
Its a concerted effort but you too can improve your credit one car payment at a time!