Posted on: Jun. 23, 2015 in Credit

Most people know that paying their bills on time is essential to maintaining a good credit score. Similarly, too many credit inquiries in a short period of time can ding your score and make it harder to obtain a car loan. What many people don't know, however, is just how many everyday activities can trigger a credit check and hurt your score. Here are three things you may want to avoid if you are trying to repair your credit or plan on making a major purchase that requires a loan in the near future.

  1. Switching Cell Phone Providers
    Most of the major cell phone companies require a credit check before they will approve a new account. So while you may think you are saving money by snapping up that offer for a brand new smart phone and switching to a different cell phone provider, it may actually end up costing you more in the long run in loan finance charges.
  2. Applying For Employment
    Some companies also require a credit check before they will offer you a job. One inquiry won't hurt your score too much, but if multiple employers are checking at the same time they can add up and really hurt your score. This can often be a catch-22 situation. You need a job to get an auto loan, but multiple credit checks can hurt your chances of getting the loan. If you are worried about your credit score, you may want to limit your job search to employers who do not perform a credit inquiry.
  3. Not Using Credit Cards
    More and more people are using debit cards rather than credit cards to better budget and manage their money. This is a sound financial philosophy, unless you need to get a loan. Having a bunch of credit cards that are never used can actually harm your credit utilization ratio which is one of the factors used to calculate your credit score. It is a good idea to continue to use credit cards on a fairly regular basis and pay them off each month instead.

The Bottom Line

There are a number of different factors that can affect your credit score, making it harder to obtain an auto loan. The rules and regulations that govern credit scores can also change from time to time. The best way to keep a favorable credit rating or repair an unfavorable rating is to use common sense when it comes to finances and stay current on what everyday activities can hurt your score. If you still have a hard time obtaining financing, look for a reputable loan provider that specializes in "bad credit" loans to help.

If you need auto financing but your credit is keeping you from getting approved, CreditYes can help! We can match you with a dealership in your area that will be with you every step of the way. Our service is fast and free. Fill out our secure online application and get behind the wheel of your next car today!