Used Car Loans and Building Credit: Answers for New Borrowers with No Credit
If you are just getting out on your own and you need to buy a car for yourself, you might find that you are unable to get a new car. Many young people believe that because they have never gotten anything on credit that their credit is good. This is not the case.
In fact, having no credit can be worse than having bad credit. Because you don’t have any credit on file, the lender or creditor cannot determine risk. All credit decisions are based on the lender’s risk of you defaulting on the loan or contract.
The most common question asked by young people starting out in life is how to build credit when no one will give you a loan because you have no credit. It can seem like an endless cycle that leaves you with no credit and a frustrating pile of rejections. Fortunately, there are some options for building credit.
Getting a used car for bad credit can help you build your credit just as much as it can help someone with bad credit recover their credit score. As long as the company or lender financing your used car reports to at least one credit bureau, you will build credit over the life of your term. In fact, with each on time payment your score will increase.
Be careful to make on time payments. Late payments or defaulting on the loan could give you a very low score, especially if that is the only thing on your credit. A low credit score can affect many things you might not think of, including leasing a home or apartment.
If you are ready to get used car financing to build your credit, please contact us today for more information.