Can financing a car help you build credit in Canada? Many buyers wonder if taking out an auto loan improves their credit score or adds financial risk. How do timely payments, loan terms, and interest rates impact your credit history? Dive into our detailed guide to find out how car financing can shape your credit profile!
Are you worried about your credit score? Maintaining a good credit score is important for you because it comes with lots of added benefits. As a renowned auto financing partner with the best options in car loan rates in British Columbia, we are here to guide you on how to build credit with a car loan so that you can boost your credit score with ease!
How Do Car Loans Help Your Credit?
A car loan helps you with building credit by making timely payments and adding to your credit history. 35% of your overall credit score depends on your payment history. So, if you have a bad credit score and you are trying to improve it, then car loans are an effective way to build your credit. The timely payments when accumulated become a large part of your credit calculation score and greatly improve your credit.
Benefits Of Rebuilding Your Credit With A Car Loan
Rebuilds and Increases Credits Score
The timely payments, as previously mentioned, help your score to improve and help you reach a stable score for yourself. By rebuilding your score, you can be financially safer. You will be able to pay off your debt while you rebuild your score. This will help in proving that you are responsible when it comes to managing a healthy mix of credit.
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Refinance At A Lower Rate When Score Improves
If you have a low credit score, chances are that you might have trouble getting a loan approval. The loans, even if approved, may be offered with a high rate of interest compared to what you get with a higher credit score. With timely payments when repaying car loans, you will see a great improvement in your score within a few months. After your credit improves, you’ll be able to refinance at a lower rate and save a lot of money.
Getting Approval For Car Loans Is Easy
It’s easy for Canadians to get loan approval even with a below-average credit score. Subprime loans are given out when an individual has a credit score of under 670. Many dealerships specialize in subprime loans and the number has been steadily growing over the years. Auto Lending Hub can help you with subprime loans if you’re looking for British Columbia car dealerships.
Improves Odds Of Securing Other Loans
Having a better credit score will help you get approval for a car loan and also other loan products. You will be able to secure credit cards, mortgages, and personal loans with much more ease. There are many benefits to improving your credit score, and this is one of them.
Your credit history is an important determining factor that can positively affect your credit. By opening a new account, you will be able to add to the length of your credit history. It’ll increase the weight of your credit by 15%, so the longer you keep the account active, the better it will be.
