While a credit card can help you will probably need to apply for approved auto loans to restore your auto credit
How to begin
If you're unable to qualify for a traditional car loan because of bad credit you should consider a problem credit auto loan – even if you qualify for a credit card.
We want you to know this because we've been working in bad credit car sales for nearly two decades through our local dealerships and nationally through other dealers here at Auto Credit Express. During that we've helped thousands of buyers get approved for no credit auto loans.
We know that a loan from a tote the note dealer won't help your credit situation (out of area applicants can fill out our online car loans bad credit application to locate a nearby dealer). We'll also gladly show you the loan process (to minimize the chances of repossession).
Why you might need a problem credit auto loan
You may be wondering why you'll probably need a bad credit auto loan. After all, paying cash for a car and getting a regular or secured credit card can rebuild your credit.
But there is usually one reason why doing this won't work, even if your credit card use does raise your credit scores.
This is because a charge card represents revolving credit. This type of credit means that if you don't pay off the entire balance every month, the credit card issuer will allow you to carry over (revolve) the remaining balance to the next month.
A car loan is different. It represents installment credit. With an installment loan, you sign a contract stating you will pay back the loan amount, plus interest, for a fixed amount each month for the loan term.
As a whole, installment loan amounts are higher than revolving credit limits and require a higher monthly payment as a percentage of the amount borrowed. Installment credit loans are also much less flexible to any changes, which mean buyers have to be more disciplined in paying them back.
In determining your credit scores, FICO looks at both types of credit. Automotive lenders also look at both types credit, but they put a special emphasis on how you paid your installment car 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 if you're applying for an auto loan.
For this reason, some applicants with decent credit scores are turned down for a car 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 prove themselves by first establishing auto credit with a lender willing to take a greater risk. In most cases, that lender will be one that caters to customers with poor credit – up to and including horrible credit auto loans.
But if you don't qualify for a traditional auto loan, where can you find a dealer that can get you approved?
We know where they are
At Auto Credit Express we have helped thousands of people with bad credit buy cars and establish their car credit at the same time through a nationwide network of dealers that specialize in bad credit auto loans.
So if you are serious about getting your car credit on track, you can now by filling out our secure online car loans bad credit application.