In this Post:
- Applying for New Credit Cards Temporarily Lowers Your Score
- Applying for a Credit Card after Buying a Car: Offers will Start Coming In
- Find the Right Mix
Applying for a credit card after buying a car is a good choice. Yes, we know you love that new car smell! But when is the right time to buy a car? After you get a new credit card? Before? Well, both, in a way.
Applying for a credit card before buying a car is good in that you need to have credit cards long before you buy a car to help you build a good credit score – a score that will net you a better finance rate on your new roadster. But, when you get close to actually getting the car you want, sit tight for a while and don’t open any new accounts. Just pay your bills on time, pay down your debt, and wait until you drive away in that gleam hunk of metal before you get a new card. In fact, if you can pay off a credit card before buying a car it might increase your FICO and help you get a better rate.
Applying for New Credit Cards Temporarily Lowers Your Score
According to financial expert Clark Howard, 99% of people who buy a car finance it. While 80% of people who finance cars get their financing right at the dealer, Clark suggests that you can save big by going to a bank or a credit union instead. Another way to save big is to build up your credit before shopping for a car and auto loan. When you apply for a credit card you lower your FICO score by 3-5 points. This might not seem like a lot, but the fact is that it is enough to change the price of your new car.
Applying for a credit card after buying a car is definitely the best choice.
Applying for a Credit Card after Buying a Car: Offers will Start Coming In
After you buy a new car you may be surprised to see credit card offers start coming in. The short of it is that now that companies see someone taking a big risk on you — by giving you a large loan for a car — you are suddenly deemed a better prospect. That’s why getting a good credit card after buying a car might be easier than it ever was before. Sometimes this takes a few months, but once you have made a few car payments and shown yourself worthy you’ll be excited to see how the credit card offers pile up in your mail. Now is the time to get a new credit card, if you need it.
Find the Right Mix
Remember that your credit score is determined, in part, by the mix of accounts that you have open. FICO wants to see you with a variety of financial accounts, such as a mortgage, auto loan, student loans, and credit cards. Variety is the spice of life, and also part of the formula to a higher credit score.