What happens to your credit score after you get a new car loan?

I want to get a credit score, but I've read that it can affect your credit. Is this true? What might happen to my credit score?

Answer
A new car loan will impact the credit score by about five to 10 points. But don’t stress out; it’s only temporary.
When you get a new car loan, the lender pulls your credit, causing a hard inquiry. A hard inquiry lowers your credit score by about five to 10 points and usually remains on your credit score for about a year.
Once you start to make on-time payments to your car loan, your credit will start to rise, effectively offsetting this initial setback to your credit score. You can also pay off credit cards or keep your credit utilization ratio on your credit report lower to further increase your credit score after getting a car loan.
But don’t stretch yourself too thin. Remember that you’re still going to need to save for maintenance, gas, a car emergency fund, and car insurance.
The good news is that you can save some cash by shopping around for car insurance. Use the Jerry app to compare personalized quotes from more than 50 top insurance companies and get the best deals delivered to your phone in minutes for free. The average Jerry driver saves $879 a year on car insurance!
Eric Schad
Answered on Nov 24, 2021
Eric Schad has been a freelance writer for nearly a decade, as well as an SEO specialist and editor for the past five years. Before getting behind the keyboard, he worked in the finance and music industries (the perfect combo). With a wide array of professional and personal experiences, he’s developed a knack for tone and branding across many different verticals. Away from the computer, Schad is a blues guitar shredder, crazed sports fan, and always down for a spontaneous trip anywhere around the globe.
thumb-up

Did this answer help you?

Ask us a question by email and we will respond within a few days.
thumb-up

Have a different question?

You can meet us at our office and discuss the details of your question.
Let Jerry’s experts help you find savings on your car insurance!
No long forms or spam · Get quotes from 40+ carriers
Find insurance savings (100% Free)
rating primary
4.7/5 Rating on App Store