Shopping for Lexus financing options doesn’t have to be confusing. Keyes Lexus can help with your questions about car loans and financing offers. One question you likely have is how auto financing affects your credit score, so let’s examine the facts.
How Does a Car Loan Impact Your Credit Score?
When you’re shopping for a car, you can either pre-qualify for financing or apply for a loan or lease. The difference between the two isn’t simply semantic.
A pre-qualification is a quick check of your finances called a soft inquiry, resulting in an estimated value. This has no impact on your credit. On the other hand, a loan application relies on a hard inquiry that results in a firm offer.
A hard inquiry on any kind of financing – car, boat, home — will lead to a slight decrease in your credit score. Credit bureaus will notice that you’re applying for a loan and will issue a minor demerit. However, this dip is usually negligible in almost all cases and won’t affect your score too much.
How to Improve Credit Score
Once you’ve secured a Lexus financing offer, there are several things you can do to improve your credit score. The best way to overcome this credit score decrease is to make timely payments to your auto loan. When credit bureaus see that you’re responsible with your loan, they will increase your score over time.
You must also be diligent with your other financial obligations and not over-extend your credit utilization. This will ensure you aren’t in too much debt, keeping your credit score in check.
Explore Lexus Financing Options at Keyes Lexus
If you’re impatient and skipped to the end, here’s the short version: the short-term hit can lead to long-term benefits as long as you’re diligent about payments. So when it’s time to buy or lease a luxury car, visit Keyes Lexus to discuss your Lexus financing options.
