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Does Buying a Pre-owned Vehicle Really Help Me Reestablish My Credit

You have a question: “Does Buying a Pre-owned Vehicle Really Help Me Reestablish My Credit?” The answer is unequivocally, “Maybe.” But there are some questions you can ask to ensure that this step does make a positive impact on your credit score.

Start by learning all you can about your credit score and how it’s determined. Remember that there are three major credit-reporting companies and that each of them get their information from creditors. That means that when you make a timely payment (or miss a payment), that information is sent by the creditor to Experian, Equifax or Transunion, or maybe all three. The creditors then compile the information and calculate your credit score.

The key is that not all creditors turn in information to these or any credit reporting companies. Some “buy here, pay here” car dealerships do not submit information to the credit agencies. That means that even if you make every payment on time, it won’t impact your credit score. That also means that if you make every payment late, your credit score also won’t be impacted.

If your goal is to improve a lagging credit score, ask the seller for their reporting practices. If they don’t report, consider going to another dealership. If you can achieve a loan on your own, you may want to borrow money from a bank or other reliable lender, using the proceeds of that loan to buy the car. Most reputable lenders will report to the agencies.

Remember that the bottom line is that any purchase you make will impact your credit score if the creditor reports to any of the three reporting agencies. That means that buying a pre-owned vehicle really can help to reestablish credit.