How an Auto Loan Helps Rebuild Your CreditJan 23rd, 2022
The process of rebuilding your credit may seem like a tough battle to win, and although it may be daunting it can be done with a lot of dedicated and consistent work. One major way to help jumpstart an improvement on your credit is through an auto loan. It may seem counterintuitive at first, but that big loan you take out on your vehicle can be used as a large piece in which to establish new, good habits with. Learn more with our finance team here at Surgenor Auto Credit as we delve into the huge impact a car loan has on building credit, as well as some tips you can employ to safely build it into the future.
The Large Impact of a Car Loan on Building Credit
A vehicle is a major purchase in one’s life, and thus purchasing one with the help of an auto loan (which itself is quite big) can give you a lot to work with, which you can then focus on paying off in a dedicated manner on a grand scale. This large auto loan on your credit listing will now be yours to establish proper practice with, paying off consistently each month, building trust and ever so slightly building your way out from that bad credit rating. It’s not an overnight fix, but developing these good habits pays off over time, in both your credit rating and in your relationship to payments.
Tips on Rebuilding Your Credit
Pay Off The Loan Consistently
Payment history is the largest part of a credit score breakdown, and takes up over a third of the overall score. As such, your primary focus in rebuilding your credit should be to consistently pay the amount requested, and on time. Doing this month-after-month-after-month will go a long way in establishing trust, and to show that you can be depended on for this money, and thus more in the future.
An auto loan can be a big chunk and a helpful kickstart in rebuilding your credit, but it shouldn’t be the only portion that’s helping you drive it back up again. Ensure that you diversify your credit and take on a variety, which is still within your means that you’re able to confidently pay off, and on time.
Don’t Move Debts Around
Do not try to oversimplify the simple act of paying debts off in a consistent manner and try to cheat the system by moving debts around for a quick fix. Paying off smaller amounts that you know you can afford each month is the way better and safer method.
Don’t Overstretch Your Means
Building off the last point of not moving debts around, don’t look for an easy fix that may seem helpful in the short term, but which leaves you suffering in the long term. Don’t try to pay off huge sums right out of the gate in order to get it done quicker if you can’t afford it. Slow and steady wins the race, trust the process and only take out a loan for what you can consistently pay off each month.
Get Approved at Surgenor Auto Credit
Our team here at Surgenor Auto Credit has years of experience working with those who have a varied credit history. If you’re looking to use an auto loan to help rebuild your credit, we can help you out, today. Apply for financing and get approved now at Surgenor Auto Credit in Ottawa!