auto loan schedule

Is an Auto Loan the best option?

I’m in the process of recovering from declaring bankruptcy. I was discharged earlier (non-asset forfeiture) this year. My credit card debt was the only debt discharged.

My lawyer and just about everyone I’ve talked to have advised me to get an auto loan. I’ve pulled my credit score and although not an impressive number but still within the “Good Credit” range.

Is getting an auto loan really a good idea? Can it raise my score?

I understand paying a higher APR, longer payment schedule, etc. I’m worried that the auto loan will not improve my score.

Wouldn’t my monthly mortgage payments raise my credit score?

Throughout the bankruptcy process I was/am current on all my mortgage payments.

Anyone with experience or best advice would be appreciated. Thank you in advance.



It does not matter if you get a automobile loan, which is an installment loan or a credit card, revolving credit. The key to rebuilding/re-establishing your credit is to obtain “new” lines of credit SINCE the BK and to make your payments on time each month. Your mortgage payments will still show up as prompt payment every month, the account is marked as “included in BK” which could be considered negative.

Consistent on-time payments are what builds your credit rating. It will take about 24 months of consistent on-time payments to re-establish a good credit rating.

If you do not need the car and do not want to pay higher interest rates, and do not want to commit to a long term car loan, then go to the bank you do business with, open an account, save until you have $1,000 in the bank account and tell them you want a loan using the account as collateral. Put the money they give you into your checking account to repay the loan, make the payments for 12 months. This will start you rebuilding your credit.

After that time period apply for a low credit limit credit card, charge small amounts like gas or groceries each month and handle the account responsibly this time. Make your payments in full and before the due date each month. A credit card is an excellent way to build credit as long as you use it as a tool that works for you, never charge what you can not afford to repay and remember that it is borrowed money.

2010 Honda Odyssey Penske Honda – Indianapolis, Indiana