Will A Bad Credit Car Loan Affect Your Credit Score?

If you’re looking for a bad car loan, you might be wondering if it will affect your credit score. Generally, a loan will only negatively affect your credit score if you begin to miss your repayments, or if you default on the loan. In those cases, you may see your credit score lower over time, and it may be hard to get it back on track.

If you get a bad credit car loan and you make your repayments on time, you could see your credit score improve, as having a good credit and repayment history will positively affect your credit score.

To find out more about bad credit car loans and if they will affect your credit score, read on below.

Will a bad credit car loan affect your credit score?

If you manage to make repayments on time and have no issues with defaults, you may find that your credit score increases from what it was when you first got approved for the loan. Good repayment history is good for a credit score, and you may see your credit score grow over the life of the loan.

On the other hand, a bad credit loan may affect your credit score if you fail to meet your repayments. If you miss repayments regularly, you could see your credit score reduce to reflect the payments you have missed.

If you are late with your repayments, a default could end up being listed on your credit file, depending on how late the payment is. As well as having a default listed, your lender may add late charges to your repayment fees. Before listing a default, your lender must send you two separate notices requesting payment and letting you know the debt may be listed on your credit file.

In both cases, late payments and defaults may harm your credit score. Your repayment history, including any missed payments, may remain on your credit report for two years. Defaults will stay on your credit report for five years, regardless of whether or not you have paid off the overdue amount.

What is considered bad credit?

Sometimes, bad credit can be hard to avoid. Generally, bad credit can be caused by:

Missed payments on your home loan – The more mortgage payments that you’ve missed, the more wary lenders will be.
Bad credit history – Listings such as defaults, bankruptcy, or judgments can impact whether or not a lender will finance you. The same can be said for too many credit applications or inquiries.

Unpaid bills: – Outstanding bills can be a type of bad credit history, although they may not always show up on your credit file.
Too much debt – If you have debts piling up or your total assets are less than your liabilities, then lenders may class you as being too risky to lend to.

How are bad credit car loans different?

Bad credit car loans are different from traditional loans in that they are targeted towards those with bad credit who may struggle to get approved for a traditional loan. While some lenders may refuse to provide a car loan based on poor credit history, some lenders specialise in giving people with bad credit a second chance. This can make it easy to get funded regardless of your credit score for that car loan you’ve been searching for.

Where does Tiger Finance come in?

To us, you are more than your credit rating. We have helped countless Australians with both good and bad credit ratings to be funded for their dream car. The lending criteria from other lenders can be unfairly strict when you have bad credit, and it can hold you back.

With Tiger Finance, we can help to get you a loan in four easy steps. You will have a free consultation with one of our specialists, and we will tailor-make you a loan. We will negotiate with lenders on your behalf before you are approved. You won’t find an easier way to improve and grow your credit score.

How we can help

We can help you regardless of your credit score, and we can make the process simple and pain-free. If you’re ready to drive away in your new car, call us today for your free initial consultation with one of our loan specialists.