Obtaining an Auto Loan: Good for Credit or Just a Myth?

There are many different ways to build a credit score and establish good credit. Unfortunately, some of the advice that is often given is just plain false. For example, some people recommend only using cash, no loans or credit cards to build good credit. This actually accomplishes nothing – you don’t build any credit score at all.

However, there are strategies you can use and advice to take that actually works. 
One such piece of advice is to use an auto loan to build good credit.

Years of Behavior

Credit scores aren’t built overnight. They take years to accumulate. A car loan is something that generally takes a few years to pay off. Making consistent payments over a period of time is a fantastic way to build a strong credit history and credit score. However, if you miss a payment or are late a few times, then this strategy can backfire. You can harm the credit score you were trying to build.

Easy to Obtain

Car loans are often quite easy to obtain. Additionally, if you’re in need of a car then it’s a great way to accomplish two steps at once. Most car dealerships and banks are happy to give car loans to first-time buyers.

A Caveat

As a first-time car buyer and borrower, you’re a credit risk - even if you've never paid a late bill. This is because you have no prior credit history, or a very short credit history.

Unfortunately, this means you'll likely have to make a higher interest payment on your car loan. You can reduce the amount of interest you pay by taking a shorter car loan. For example, instead of a five-year loan, you could take a three-year loan. You’ll still earn several years of credit history and you’ll pay less in interest.

You can also make more frequent payments or pay off your loan early. Paying off your loan early not only saves you money on interest, it may boost your credit score faster as well. You can also put down a larger down payment from the beginning or refinance later to get a lower interest rate.

Buying a car with a loan can help you build a good credit score. Before you head to the dealership or to the bank, though, check with one of the three credit reporting agencies and make sure your existing credit score is true. Make sure there aren’t any mistakes. That way you’ll be starting your good credit quest on the right foot.

All consumers should have a vested interest in establishing and preserving their creditworthiness and credit standing in order to obtain and use credit.  Consumers who have experienced credit problems should search for ways to improve and strengthen their credit standing. 
Are you considering purchasing a new home or a new car in 2016?  
Now is the time to start and make a commitment to better spending habits, more savings and an improved credit score. You will need to make sure all of your "financial ducks" are in order before making a serious commitment.  Join us for a Free Credit Workshop!

Join us on Thursday, January 14th or Tuesday, January 19th at CREDIT WORKSHOP 101!  Our Credit Workshop is the first step and covers credit score basics, how to improve and/or repair consumer credit, and the requirements for obtaining pre-approval and financing for auto loans and home loans. This interactive workshop will also provide participants a basic understanding of credit reports and the importance of your credit score & budgeting. We will introduce you to resources and local professionals and specialists that will help you achieve your goals.

• Where:  22 W. Padonia Rd., Ste. A-100 (Coldwell Banker Residential Brokerage), Timonium, MD.
• When: Thursday, January 14th 5:30pm to 7:00pm and Tuesday, January 19th 5:30pm to 7:00pm 
• Guest Speaker: Bruce Evans & Co. of Credit Sweepers, LLC
• Sponsors & Special Guests: Coldwell Banker Residential Brokerage - Timonium Agents, PHH Home Loans and Soon Ok Kinney of Lexus of Towson
• Organizer/Host: Nakia Evans, REALTOR at Coldwell Banker Residential Brokerage - Timonium
• Seating Is Limited - Reserve Your Spot today!

For more information about CREDIT workshops, please contact Nakia Evans, REALTOR, Coldwell Banker Residential Brokerage at 410-252-2111 (office) or via email, nakia.evans@cbmove.com. 

You may also visit my website, www.nakiaevans.cbintouch.com for additional information about real estate and leasing, buying or selling a home. My office is located at 22 W. Padonia Rd., Ste. A-100, Timonium, MD 21093.  Equal Housing Opportunity.

For more information about credit restoration services, please contact Bruce Evans, CCO, Credit Sweepers, LLC, at  410.363.2220 (office). Credit Sweepers, LLC is located at 3701 Old Court Road, Suite 9B, Pikesville, MD 21208   www.creditsweepersllc.com  email info@creditsweepersllc.com