Does Hyundai Financing Hurt Your Credit?

Most car buyers won’t pay cash for a new or used car, choosing to lease or finance it through the dealership instead. That raises a question, however: what happens to your credit when you opt for Hyundai financing? Kearny Mesa Hyundai is happy to explain how your score will change over time, ultimately to your benefit, if you play your cards right.

Auto Loans and Your Credit Score

The first worry to address is how much your credit score will drop. This is primarily a concern for those rebuilding their credit or who have invested considerable effort into keeping it high.

The good news is that the decrease in your credit score is typically minor and short-lived. As we’re about to see, the even better news is that there are ways to mitigate this, and your San Diego Hyundai dealer can help.

How Credit Inquiries Affect Your Credit Score

Credit inquiries are either “soft” or “hard.” A hard inquiry or “pull” happens when you apply for a loan. The drop is minor, usually no more than five points, because the credit bureaus realize you’re taking on more debt. If you’re applying for financing in more than one place (say, your bank, the dealership, and an outside lender), keeping those inquiries within a few days of each other effectively causes them to be “bundled” as one.

A soft inquiry is used when you pre-qualify for credit instead of applying. The numbers aren’t quite as precise, but it’s a close enough ballpark figure when you’re shopping. The advantage here is that a soft pull has no credit impact.

How Hyundai Financing Can Ultimately Raise Your Credit Score

A Hyundai loan can raise your credit score in the long run. The most significant factors affecting your credit score are payment history and making on-time payments. Your credit mix (having loans in addition to revolving debt like credit cards) may also improve. This is especially helpful for renters (who won’t have a mortgage) and those with low or no credit since it positively contributes to your credit profile.

Get Pre-Approved for Hyundai Financing in San Diego, CA

Some aspects of car loans can be mystifying, but they don’t have to be scary. Now that you know how Hyundai financing affects your credit score, pre-qualify for Hyundai financing today on a new or pre-owned Hyundai vehicle here at Kearny Mesa Hyundai.