Credit Score My Auto Loan

Hi Paul,

My name is Miguel and I have a question about my credit score…Ive been working to restore my credit the last couple of years due to some negligance on my part when i was younger…my cedit score is a lot better now but i do not want to stop that process…I recently found a car that i just cant live without but wasnt sure if trading in my old car and getting a new auto loan woukd make my score go down…Should I wait until my score is where i want it or would taking on this new loan not affect my credit score…I would also be financing roughly about 10,000.00 more than my old loan…hopfully your answer will help me in obtaining the car of my dreams…but if it doesnt im ok in knowing that ultimiately raising my credit score is the ultimate goal in trying to become a successful person… Thanks for taking the time to read my dillema and hopfully i will hear from you soon… Thanks 

Miguel 

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Hello Miguel,

Taking on a new auto loan will generally lower your credit score in the immediate term.  This should only be a temporary setback and once a payment history has been established for a sufficient period of time on the new loan and all else being equal, your credit score will ultimately sit higher than it does now.

The standards for auto loans have risen dramatically as of recent and it is much more difficult to obtain auto loan financing these days.  With that being said, if you can safely afford the new loan and you qualify, don’t let your temporary credit score drop stand in the way of progress.  Unless, of course, there was another reason you needed to have a higher credit score in the short term.  No matter what anyone’s age, I am reminded of sensible auto loan.

Thanks for the questions and hope this helps.

Paul