When you apply for a car loan, your account goes through a hard inquiry. Unfortunately, a hard inquiry will lead to an automatic lowering of a few points of your credit score.
Once you buy a car and acquire a loan for it, your credit report will reflect the additional debt that will impact your credit score. That is because you haven’t made any payments yet.
Payment history is one of the most significant factors that affect your credit score. By making timely payments, you can enhance your credit score.
Your ability to manage a mix of various types of credits proves that you are creditworthy and will give your credit score a positive boost. Adding an installment credit in the form of a car loan will lead to a positive impact on your credit score.