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How a car loan can help you rebuild bad credit in Stoney Creek

How a car loan can help you rebuild bad credit in Stoney Creek

It seems counterintuitive that a car loan could actually help you rebuild credit but it’s true. You would be forgiven for thinking we got that the wrong way round, that bad credit would influence your loan, and it does. It’s actually a two-way street.

So how can a Stoney Creek car loan help you rebuild bad credit?

If you need a car for work but don’t have the cash, a bad credit car loan in Stoney Creek could be the answer. As long as you can afford the repayments, we can find you a great deal on that loan. As well as getting you to work, the loan can also help you rebuild bad credit.

Here’s how.

Car loans and rebuilding bad credit in Stoney Creek

A car loan can help you in two ways, by building a positive payment history and by increasing your credit mix. It also contributes in minor ways by adding another successfully serviced debt to your credit history.

Car loans and payment history

Your payment history makes up around 30-35% to your credit score and is the largest influence over it. That makes paying on time essential for more reasons than staying on top of debt.

Paying your car loan on time every month adds to that payment history which will help increase your score. Not only that, future lenders will view your payment history to see how you handle debt so it’s good to have an entirely positive history for them to see.

Car loans and your credit mix

We’re not entirely convinced of the real world value of credit mix but it can form up to 10% of your credit score so is worth remembering.

Your credit mix is a measure of the variety of credit products you use at any one time. The more types you have, the better for your credit score. Your car loan contributes as one more debt type in the mix.

Alongside your mortgage, credit cards and any other debts, it can help boost your credit score in a positive, if minor, way.

We’re not implying you should get a car loan simply to boost your credit score. There are much cheaper and easier ways to do that. What we are saying is that if you need a car loan and can afford the repayments, the loan repays you in a small way by boosting your credit score.

Over time, it could be enough to get you out of the bad credit zone and into standard borrowing. Then, at a later date, when you need another car loan in Stoney Creek, you should be able to borrow more at a much lower rate. Who doesn’t want that?

If you need help or advice on anything to do with car loans in Stoney Creek, contact Car Nation Canada today, we can help!

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