Consumer Car Buying Advice Blog

While any type of credit card can help raise your FICO scores it usually takes approved auto loans to establish car credit

Some of the answers

Even with a traditional or secured credit card you may need some type of terrible credit auto loans to regain your auto credit.

We understand why this is true because since 1992 we’ve been doing bad credit auto sales here at Auto Credit Express. We even built a website so people with bad credit could read about such topics as tote the note loans and certified used cars as well as today’s topic, why, even after establishing credit with a credit card, it is sometimes necessary to finance a car with poor credit car loans.

Bad credit car loans

You may be wondering why you should even apply for a bad credit auto loan. After all, paying cash for a vehicle, while using a regular or secured credit card, can often rebuild credit.

The fact is that this method usually doesn’t help your auto credit, even if it does raise your FICO scores.

This is because any type of credit card is a form of revolving credit. If you don’t pay off the card balance every month, revolving credit allows you to carry over the remaining balance to the next month.

A car loan is different in that it’s a type of installment credit. In this instance, you sign a contract to pay back the loan balance, plus interest, for a fixed payment each month during the loan term.

Another difference is that initial installment loan balances are typically higher than revolving credit limits. They also carry higher monthly payments as a percentage of the credit balance and are much less flexible to changes, which mean buyers have to be more disciplined when paying them back.

Checking your auto credit

In determining your credit scores, FICO looks at both types of credit. Automotive lenders also look at both credit types but pay special attention to how you paid on your installment auto loans. This means that while a good payment history with a credit card will help your credit scores, it doesn’t carry as much weight with car lenders.

For this reason, even applicants with decent credit scores are sometimes turned down for an auto loan if they’ve never had one or if it turns out that a previous car loan had a poor payment history.

In either case, applicants might have to first prove themselves by establishing their car credit with a lender willing to take a greater risk. In most cases, this means signing up for a poor credit car loan.

But if you have been turned down for a traditional auto loan, where do you find a dealer that can get you approved?

How we can help

Websites like Auto Credit Express specialize in assisting people with bad auto credit find a dealer for their best chance at getting approved for a bad credit car loan.

This means that if you really want your car credit back on track, you can begin now by filling out our online auto loans application.

Tags: Bad Credit, Credit Repair, poor credit car loans

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