Will Car Payments Raise Credit Score???
I just purchased a car about 3 months ago (this month will be the 3rd payment), and got financing for it even though I have hardly any credit history/BAD credit history(only 2 bad accounts that total $900, but never had any other kind of credit or anything to make payments on). My first couple payments have been on time, and there should be no problem in paying every payment on time. The total financing for the car was $17,755 for 62 months. I am on my 3rd payment this month. I understand that this is a pretty big investment and will help build my credit, but I just wanted to know how long will it take to begin raising my credit score, and how much I should expect it to raise, if every payment continues to be on time? ****I checked with my loan company AND THEY DO report to all 3 credit bureaus....****
Public Comments
- Auto financing is what I do for a living. At first, your credit score will actually drop because of the additional debt. After you have established a good pay history 4-6 months it will rise again, after 12-18 months it will have gone up approx. 100 points. This is all assuming that you financed with a lender who reports to the credit bureaus and not some fly by night buy here pay her lot.
- The simple answer is that any kind of credit payments which are reported to credit bureaus or associations will affect your credit in some way. The result will depend on your promptness of payment. Late and/or missed payments will affect it negatively. Prompt payments and not missing any will affect it positively.
- If they report it, your score will go down at first, then creep up as you make ON-TIME payments. See http://www.aalhome.com/Article2.html for an interesting and informative article on how your FICO score is determined.
- Yes, it will raise your credit score, but you are going to have to wait about a year before it really shows up on all the credit bureaus. Just keep paying it. You are entitled to 1 (one) free credit report every year. So if you haven't seen your report yet, I'd get one. (Myfico.com, freecreditreport.com, etc) Then check it again in 1 year, and you'll be surprised (and pleased).
- Why dont you just remove your negative items? Its easy and you can do it yourself. Go to www.adviceontime.com and read the article about credit, this helped me out, and i even go a decent interest loan.
- Generally speaking, yes as long as you pay your bills on time with your car payments it will improve your score! When you're trying to rebuild your credit score it's important to get a comprehensive view of what is actually effecting it... Your Credit Score is calculated with the following breakdown: 35 - Payment History 30 - Credit to Debt Ratio 15 - Credit History 10 - New Credit 10 - Credit Types in Use If you excel in one area and lack in another, only fixing the areas which you lack are going to improve your score. I've got a lot of information on my blog about credit scores, and I get a lot of questions so feel free to check out any of my posts on millionster.com; I believe my articles here address many of your concerns but if they don't and you still have any specific questions feel free to leave a comment and I'll reply. How Can I Increase My Credit Score http://millionster.com/articles/debt/ask-1mil-how-can-i-increase-my-credit-score/ and 10-Ways to Boost Your MyFico Score http://millionster.com/articles/debt/increase-fico-credit-score/ Also be sure to check out the Credit Score services I've listed here; the only way to know how to raise your credit score so that you can get cheap rate and qualify for great loans is to know what your credit score is and to see what's in your credit history: MyFico's Full Credit Report http://millionster.com/go/myfico Suze Orman's Credit Report Repair Kit http://millionster.com/go/suzekit 30-day Trial of Credit Score Tracker with Free MyFico Score http://millionster.com/go/fico30
