Do you want to learn more about the impact Mazda financing has on your credit? We have some good news if you’ve hesitated because you’re worried that financing a car will cause a hit to your credit score. The long-term picture is positive, as Brown and Wood Mazda explains.
How Financing a Car Impacts Your Credit Score
A car loan or lease relies on what’s called a hard credit inquiry, and it causes your credit score to drop between one to five points temporarily. If you’re shopping for financing at multiple dealerships, we suggest pre-qualifying instead since it uses a soft inquiry that won’t affect your credit. This way, you get the benefits (especially knowing what you can afford) without the drawbacks.
Can MAZDA Financing Help Your Credit?
Since the hit to your credit is minor and temporary, let’s look at a few ways the loan will help you in the longer term.
- Payment history: When lenders evaluate your credit, they’re not just looking at the three-digit score. Payment history matters too, and if yours are on time, it boosts your credit rating and credibility with lenders.
- Credit Mix: It’s common for many of us to have mostly revolving credit (like credit cards). Putting a new type of credit in the mix diversifies your credit types and shows lenders you can be responsible with each.
- Credit Utilization: You may have extensive lines of revolving credit, but car loans help you in ways that putting even an inexpensive vehicle on a card won’t. Besides the interest rates typically being lower, you’re keeping credit utilization down, which helps your score too.
Contact the Brown and Wood Finance Department for More Questions
Do you have more questions about financing a car? Don’t guess; ask. The Brown and Wood Mazda finance team will happily answer your questions today!
