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What happens to your credit score after you get a new car loan?
I want to get a credit score, but I've read that it can affect your credit. Is this true? What might happen to my credit score?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
A new
car loan
will impact the credit score by about five to 10 points. But don’t stress out; it’s only temporary.When you get a new car loan, the lender pulls your credit, causing a hard inquiry. A hard inquiry lowers your credit score by about five to 10 points and usually remains on your credit score for about a year.
Once you start to make on-time payments to your car loan, your credit will start to rise, effectively offsetting this initial setback to your credit score. You can also pay off credit cards or keep your credit utilization ratio on your credit report lower to further increase your credit score after getting a car loan.
But don’t stretch yourself too thin. Remember that you’re still going to need to save for maintenance, gas, a car emergency fund, and car insurance.
The good news is that you can save some cash by shopping around for car insurance. Use the
Jerry
app to compare personalized quotes from more than 50 top insurance companies and get the best deals delivered to your phone in minutes for free. The average Jerry driver saves $879 a year on car insurance!View full answer
- Gregory R.
WHY YOU CAN TRUST JERRY
Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.
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