Car Loan amount and credit rating impact?
Oct 18th 2011, 5:54 pm
#1
Just Joined
Thread Starter
Joined: Oct 2011
Posts: 1
Car Loan amount and credit rating impact?
Hi,
I'm a new H1-b arrival and would like to start to build credit rating here in the US.
One way would be by taking a loan to buy a car.
I actually don't need the loan, but i've been informed that having one and paying it off over time will help my credit scores.
Now, how does the loan amount relate to the effect on the credit rating?
Ideally I'd apply for a larger loan and then pay off most of it in one go, and leave a smaller amount for the remainder of the loan term. Alternatively I'll just take a small loan and keep it small. Any suggestions or experience from doing this in regards to credit rating score impact?
Cheers,
Ted
PS. I'm aware that there might be penalty fees etc. with the large initial pay-off, but I'm unsure about the overall credit rating impact of the loan amount.
I'm a new H1-b arrival and would like to start to build credit rating here in the US.
One way would be by taking a loan to buy a car.
I actually don't need the loan, but i've been informed that having one and paying it off over time will help my credit scores.
Now, how does the loan amount relate to the effect on the credit rating?
Ideally I'd apply for a larger loan and then pay off most of it in one go, and leave a smaller amount for the remainder of the loan term. Alternatively I'll just take a small loan and keep it small. Any suggestions or experience from doing this in regards to credit rating score impact?
Cheers,
Ted
PS. I'm aware that there might be penalty fees etc. with the large initial pay-off, but I'm unsure about the overall credit rating impact of the loan amount.
Oct 18th 2011, 6:03 pm
#2
Yes, I know i'm awesome.
Joined: Jan 2011
Location: Twin Cities, Minnesota
Posts: 624
Re: Car Loan amount and credit rating impact?
This may be somewhat useful.
http://britishexpats.com/articles/us...nce-in-the-us/
Welcome to BE btw!
http://britishexpats.com/articles/us...nce-in-the-us/
Welcome to BE btw!
Oct 18th 2011, 8:54 pm
#3
BE Site Lead
Joined: Aug 2004
Location: MA, USA
Posts: 92,170
Re: Car Loan amount and credit rating impact?
Size of the loan won't make any difference.
A lot of car loans don't have penalties for paying off early or making larger payments, but do check.
You need to keep the loan going a minimum of 6 months, but 12 would be better. Get a loan for whatever amount that'll net the best interest rate and pay off as much as you can straight off, leaving say $120 and then pay off $10 a month over the year to minimise having any interest to pay if you can afford to do that.
It's good bit of diverse credit history on top of a credit card and the history is far more important than the score that it'll help build up
Oh and welcome to BE and the US
A lot of car loans don't have penalties for paying off early or making larger payments, but do check.
You need to keep the loan going a minimum of 6 months, but 12 would be better. Get a loan for whatever amount that'll net the best interest rate and pay off as much as you can straight off, leaving say $120 and then pay off $10 a month over the year to minimise having any interest to pay if you can afford to do that.
It's good bit of diverse credit history on top of a credit card and the history is far more important than the score that it'll help build up
Oh and welcome to BE and the US
