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Posted in Auto Loans
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Question By
bobdole1776

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Auto loan just to build credit?
Since I have little credit history, I've been told by friends/family that I should take out an auto loan (instead of paying cash) for a new car to build credit.

However, I got on CreditKarma and it tells me that although my history consists only of paying off credit cards for ~8 years, I have a TransUnion score of 769. Furthermore, the simulator tells me that an auto loan will only hurt my score by ~30 points.

So now I'm not sure. Should I finance the car assuming the score will be better in the long run, or should I just do cash?

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Top Contributor
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If you finance the car I would take a copy of your Transunion report (bring the actual paper report) to the dealership with you. That way you're showing the good score and they're not hitting your credit with an inquiry.

Another suggestion is to look into financing through a local bank or credit union. They'll have similar if not better rates than the financiers the dealership will go to. They might also be willing to work with someone who has limited credit history.

Reply by
bobdole1776

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Thanks for your suggestions. Right now I just have the score that CK gives me, which I don't think includes a print-worthy report. Should I go to transunion.com and get a report from there?

I'm a member of two credit unions, but Honda is advertising lower rates, so I was going to try to qualify for that at the dealer, and then go to my credit unions only if they can't get me a good rate.

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