How Auto Financing Can Impact Your Credit History

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For most car shoppers in the process of purchasing a vehicle and applying for auto financing, the end goal is getting the keys to their new ride and driving it off the lot. But aside from the satisfaction of owning a reliable vehicle, a major part of buying a car that many people tend to overlook is the impact it can have on your credit history.

So, how exactly does getting a car loan or auto financing impact your credit history?

Well, a couple ways:

  1. Hard inquiry
    When applying for a car loan or auto financing to purchase a vehicle, a hard inquiry is usually added to your credit report. This is the result of a creditor requesting to look at your credit report so they can review your credit history. While a hard inquiry can impact your credit score, it typically doesn’t stay on your credit report for long.

  2. On-time car payments
    Making on-time payments on your car loan or auto financing every month can have a positive effect on your credit history.

How does auto financing appear on your credit report?

In your credit report provided by each of the three major credit bureaus – Equifax, Experian and TransUnion – you can find information and data of all your car loan or auto financing accounts. This includes:

  • Type of accounts
    Auto financing is typically reported as an installment account, which includes payments of the same amount, made for a set number of payments.

  • Car payments
    If you’re always making on-time car payments, your car loan or auto financing will be recorded on your credit report as “current” or “paid as agreed.” Your payment activity has a significant influence on your credit history, so it’s important for you to pay on time, every time.

There also could be errors in your credit report that can affect your credit history, which is why it’s important for you to check your credit report periodically. You can get a free copy of your credit report from each of the three major credit bureaus every 12 months at

If you’re in the market to purchase a vehicle and need help getting approved for auto financing, a car dealership enrolled in the Credit Acceptance program can help you get started.

Start your auto financing pre-qualification today!