Can Bad Credit Car Loans Improve Credit?

If you’re looking to purchase a new Toyota car at Toyota Chula Vista with a less-than-ideal credit score, the professionals at our Toyota finance center can help. We offer bad credit car loans to buyers, and one question we often receive is whether or not these bad credit loans can help your credit score. Let’s find out.

Factors That Go Into Your Credit Score

Before discussing whether or not bad credit car loans can improve your credit score, it’s first essential to understand the different factors that go into your credit score. As we move through our lives and utilize various types of credit, these five factors change over time:

• Payment history: Whether or not you have paid your credit accounts on time
• Utilization ratio: The percentage of your available credit you’re currently using
• Credit history: How long you have had a credit score; generally, a longer credit history increases your score
• New credit: Opening new credit accounts in a short amount of time can temporarily lower your score
• Types of credit: Ideally, you should have several types of credit accounts, which can include a car loan or lease, credit cards, home equity loans, and others

Bad Credit Car Loans and Your Credit Score

Because new credit accounts and hard credit inquiries can lower your credit score over the short term, you may see an immediate reduction in your score after receiving the loan. However, if you continue paying off your loan payments on time, your score can increase. This is because a car loan lengthens your credit history, and on-time payments can raise your credit score.

Chula Vista Bad Credit Car Loans

Whether you have bad credit or good credit, the finance professionals at our Chula Vista Toyota dealership will find a loan that works for you. Stop by our lot today for a test drive.