 TITLE: How Does Buying a Car Affect Your Credit? CONTENT: Ways Buying a Car Can Impact Your Credit\n----------------------------------------\nWhether buying a car negatively or positively impacts your credit will depend on how reliably you make your loan payments. When you first get an auto loan, you may see a slight dip in your credit scores because you're taking on a hefty new debt. However, as you begin making on-time payments on the loan, your credit score should bounce back.\nBuying a car can help your credit if:\n*   **You make all of your payments on time.** Because payment history is the biggest factor in your credit score, making payments on time and in full should improve your credit score over time.\n*   **It improves your credit mix.** Lenders like to see a mix of revolving credit (such as credit cards) and installment credit (such as auto loans) in your credit history. Successfully managing a wide variety of credit accounts helps prove that you're creditworthy. If you currently have only revolving credit accounts, credit cards for instance, adding installment credit in the form of an auto loan could help boost your credit score.\nHowever, buying a car could end up hurting your credit if:\n*   **You miss one or more payments.** As soon as you miss a payment due date, your car loan is considered delinquent. You'll usually have a short grace period during which you can make up the payment. If a full billing cycle passes and you still haven't paid, the lender will report your delinquency to the major credit bureaus, which is likely to hurt your credit scores.\n*   **You default on the loan.** Some auto lenders will declare your loan in default 30 days after your payment is due; others will wait 90 days. Once your loan is in default, your account will be turned over to debt collectors, who will contact you to seek payment. If you still don't pay, your car could be repossessed. Late payments, default, having your account go to collections and repossession each leave a separate, negative mark on your credit report, and each stays on your credit history for up to seven years.\n*   **You can't afford the loan.** If you're struggling to make your car payments, you might fall behind on other bills, leading to late payments that could negatively affect your credit score. Before you buy a car, review your budget to be sure you can manage the monthly payments and other costs of car ownership. END