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Your monthly digital newsletter is now available. Stay up to date on all things CommonWealth!
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Boost Your Credit Score With an Auto Loan
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Getting behind the wheel might seem like the end goal, but your auto loan journey is just beginning—and it’s a key player in shaping your credit score. Your credit score, that three-digit snapshot of your financial habits, isn't just a number; it's the ticket to favorable loan terms and financial opportunities.
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Credit Scores and Auto Loans There are five factors that affect your credit score and the percentage of your score they represent: - Payment History (35%): This is the main factor in your credit score, reflecting your track record of timely and complete bill payments. Consistently making timely payments boosts your score and reassures lenders of your reliability.
Pro Tip: Making timely payments on your auto loan can build a strong payment history and significantly improve your chances of securing favorable loan terms.
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- Credit Utilization (30%): This measures the proportion of your available credit you're using. It's best to keep utilization under 30%. Maxed-out credit cards can lower your score and signal financial overextension. High credit utilization can suggest to auto loan lenders that you're financially stretched, potentially leading to higher interest rates or loan denial.
Pro Tip: Keeping your credit card utilization in a healthy range can help you receive a better auto loan rate.
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- Credit History (15%): Starting out can be challenging without a credit history, making it hard for lenders to assess your risk. By responsibly using credit over time, you build a positive history. A longer, well-managed credit history reassures auto lenders of your financial stability, potentially leading to better loan offers.
Pro Tip: Having an auto loan helps build a credit history, which, over time, boosts your credit score.
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- Credit Mix (10%): Lenders like to see that you are capable of managing various types of credit before adding another financial responsibility.
Pro Tip: It is ideal to have several different types of credit, such as credit cards, auto loans, and mortgages.
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- New Credit (10%): Rapidly seeking multiple lines of credit can have a negative impact on your credit score. When applying for a new car loan, each lender's hard credit check—known as a "hard inquiry" or "hard pull"—can briefly decrease your score.
Pro Tip: When rate shopping for the best car loan, inquiries made within a 30-day window are consolidated into a single inquiry, minimizing any adverse effects on your score.
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Embarking on your auto loan journey isn't just about driving off the lot—it's about understanding how it shapes your credit score, influencing your future financial opportunities. By managing payments, credit utilization, and new credit wisely, you're not just getting behind the wheel, you're paving a smoother road for your financial future. And when it's time to buy your next car, CommonWealth has you covered. With pre-approval, car selection, and loan signing all possible from the comfort of your home, the process is seamless. Plus, if you refinance with us from another financial institution, you can earn 1% cash back, giving you an extra boost for whatever you need.1
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11% cash back offer valid only for vehicles refinanced from another financial institution. 1% cash back will be paid at loan closing. Refinance of existing CommonWealth auto loans does not qualify. You must keep your auto loan open for 12 months in order to keep the 1% cash back incentive. Cash back incentives over $599.99 are subject to IRS reporting on form 1099-MISC.
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How-To Videos Get the most out of Online and Mobile Banking with our step-by-step tutorial videos that cover topics like: Transfer Payments, Account Preferences, & Bill Pay.
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April’s Financial Literacy Month FinLit Challenge Congratulations to Lucy, Jason, and Katie! Thank you to everyone for joining us in April’s FinLit Challenge.
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Archie is available 24/7! Did you know: When you log in to Online and Mobile Banking, Archie can show you your most recent transactions? Learn More!
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Holiday Closures Memorial Day - Monday, May 27th
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Federally Insured by NCUA
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