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How Does Bad Credit Affect Buying a Car?


There are few things in life that are more exciting than finally getting behind the wheel of a brand new car. You are the one that tears the plastic off of the seats and gets to bask in the ambience of that new car smell. But unfortunately, there is a bit of a catch to new car ownership; your credit score. That simple three-digit number that could either make or break that new car deal. You might be thinking to yourself now, how does bad credit affect buying a car? Well, we at Lakeside Toyota are going to shed some light on the subject and hopefully get you the necessary information and answer your questions.


Before we get too deep into how your credit score affects your daily life, it makes the most sense for us to go and break down the details and explain exactly what your credit score is and how it is accumulated and calculated. The short of it is that your credit score is a reflection of your creditworthiness based on your past credit history. Generally between 500-900, your credit score is a direct reflection of your level of risk as a borrower; the higher the number the lower of a risk you are to loan lenders, banks, etc.

Your Credit Score and the Automotive Industry


One of the first places you find your credit score being scrutinized is when you apply for an auto-loan to finance a new vehicle. If your credit is on the lower end of things, you could find yourself in a bit of a pickle. You could be offered a high interest rate or even turned down completely when applying. Approval for a loan could also come with a limit on how much you are trusted to borrow. Clearly it is paramount to keep that credit score up if you are hoping to even get that first step in the door when it comes to picking up a new vehicle.
You might also find yourself a victim of your credit score when getting automotive insurance as well. Yes, that may sound crazy, but insurance providers use your credit score too. You see, to an insurance provider, the credit score is a baseline for predicting the likelihood of one getting into an accident and filing a claim. Statistically, those with higher credit scores file fewer insurance claims. Although it may not seem fair, a higher credit score can result in a savings of hundreds of dollars a year on your auto insurance.

If your credit score is lower than you'd like it to be, there are a few simple steps you can take to make sure it doesn't get any lower and steadily rises from there on out. These steps also work great for those with good credit scores who are looking to keep things that way.


  • Pay down and keep credit balances low

  • Make sure to pay bills on time

  • Pay more than the minimum if you can

  • Only apply for/open new lines of credit as necessary

  • Under-use your credit cards


Your credit score doesn't need to be a burden. You can bring that low score up or keep that high score in the green and make you credit history work for you! It is as simple as being smart with your finances and keeping yourself level.

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