Auto Loan and Score

[EaglesFan2006]

I got a new auto loan and am wondering the short term and long term impact on my credit...my credit wasn't that good in the loan was in no small effort.  So i'm wondering with all the auto inquiries made (though i think within 2 weeks they all count as one) and anything else what i can expect...how long before i see improvement assuming i pay on time?  What is the short term hit?

[daisyduke]

Eagles Fan,

it REALLY depends on what is in your current report. For example, I too have a new auto loan - EQ picked it up and I didn't lose or gain anything but i also added another CC. Why no increase/decrease with EQ - because EQ likes installment, the mix, i think the new card negated the effect of the auto loan. it's hard to say really....but i do believe when the lease closed out i lost a few points on EQ...a few, like four or five...

TU  tanked - from 693 to 663 but I think there were other things going on - I had all three auto inks on TU and one other CC, so a total of four. But i don't blame all of that on the auto loan --- there were other things going on so maybe ten points I lost for the new loan report. hard to say becuase there were other changes, utility changed, new cards hit, etc....

[Jazzzy]

Hi Eagles Fan...OK...for purposes of full disclosure, I'm a Dallas fan (sorry about last weekend...well, no, not really)...but here goes anyway.

daisyduke is right. There is no set way to tell what your impact might be. There are so many facets to everyone's FICO scores, and they are all different.

I recently had an auto loan report that had very little impact on my score....but I have an old, thick credit file. Normally, your FICO may take a small hit because of the inquiries. True, they should all count as one for FICO scoring, but be aware that, if you apply for credit, those creditors will still see all those inquiries. It's possible that they will count every one, so you may have some 'splanin to do about that.

Then, when the new loan is reported, it's likely you could take another ding for having a new account. That should start to have less of an impact when it is 6 mos old, and it shouldn't affect your score at all after one year.

That said, any new account also lowers your average age of account (AAoA). This is where it can make a bigger difference if you don't have very many accounts showing on your reports. If you have a lot, like I do, it takes more to move the averages.

Your score should gradually recover within a year, but, in fact, some people see an increased score when their auto loan reports. If you don't have any other installment loans, and this gives you an installment tradeline, that's good for the mix that they sometimes like to see.

I wish I could give you more exact answers...but the impact differs for everyone.