topic how does an auto loan help rebuild? in Rebuilding Your Credit

how does an auto loan help rebuild?

LindaLu — Sun, 26 Apr 2009 15:02:28 GMT

I often see people saying that an auto loan helps with your credit score..Is it because you are approved for a larger amount than your normal credit card can give you when rebuilding or is it that making payments an an auto loan is basically raising your score more than a payment on a credit card does? Is it worth more points or something?

I don't technically need a new vehicle but mine is getting a little older and would probably benefit me to put money into a new car payment than to repair an older car. I was just wondering.

thanks

Re: how does an auto loan help rebuild?

Anonymous — Sun, 26 Apr 2009 16:02:51 GMT

I wouldn't purchase a vehicle for the purpose of raising scores.

Re: how does an auto loan help rebuild?

medicgrrl — Sun, 26 Apr 2009 16:14:51 GMT

It has to do with the mix of use. The system doesn't like to see just one type of credit. I have heard of others suggesting taking out an installment loan with your bank and then paying some of it down and putting the rest into savings. You take a hit on paying interest but it gives you another type of credit on your report.

Re: how does an auto loan help rebuild?

LindaLu — Sun, 26 Apr 2009 17:37:50 GMT

thanks for the info! but does it actually increase your score because it is an auto loan? do the payments have more points value?

I actually do have my last auto loan still showing on my credit report but the car was paid off in December 2007 or 2006..does that auto loan have any effect on my score since it is paid off..? it should show a mix or doesnt' it?

Re: how does an auto loan help rebuild?

LindaLu — Sun, 26 Apr 2009 17:41:10 GMT

No I wouldnt technically be purchasing a vehicle for the purpose of raising my score..technically I should get a new vehicle but I can manage to just maintain repairs on my current one just thought when I weighed the purpose of buying a car is the amount I might be saving in repairs tothe one I have I might be even and improving my score too.

Re: how does an auto loan help rebuild?

Anonymous — Mon, 27 Apr 2009 12:42:50 GMT

One thing an auto loan will do is make sure you have less money. While at the same time your car is losing value. So you are paying interest on something that has less value every time you drive it. Financing cars are not a good idea imo.