11-08-2012 03:08 AM
Let's try this again... My question is... How does getting an auto loan effect your credit score?
In the beginning is it lowered (due to the inquiry) until it reports the payments? Do the payment help boost your score or does it not have any effect at all, unless of course you're late or missing payments...
The only things I have right now on my credit report are credit cards and student loans, all in good standing. So I am wondering how my new auto loan will effect my credit score?
11-08-2012 09:33 AM
Although it's difficult to accurately predict what will happen for each individual I would say that you are most likely going to see a raise in your credit score with the addition of an auto loan. I base my guess on the idea that you are adding a first installment loan to your credit profile and FICO likes the mix of credit. The addition should offset any reduction for a new line of credit or average age of accounts.
On the other hand, if this is not the first installment loan on your report or if it drops your average age of accounts below one of the unknown thresholds that affect scoring then you could see a minor dip in credit score initially and a recovery of those points and more in 6 - 12 months. In any event in the longer term it will do nothing but help assuming that the account is maintained in good standing.
11-08-2012 10:04 AM
Ditto. AAoA can be impacted, but also you'll always have a new account ding once it reports. Most folks are limited to an impact of 6-12 months and any score drop will rebound by then.
FICO doesn't really reward you for on-time payments. You'll see gains over time due to the aging of the TL, but those aren't due to paying on-time. Conversely, paying late will drop your score in a hurry.
An auto loan is scored as an installment loan and adding one won't help your mix because you have SLs reporting.
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