Applying for a credit card after buying a car is a good choice. Yes, we know, you love that new car smell! Don’t be bothered that the smell is really volatile organic compounds off-gassing – it makes you feel good and goes away all too soon. But when is the right time to buy a car? After you get a new credit card? Before? Well, both, in a way.
Applying for a credit card before buying a car is good in that you need to have credit cards long before you buy a car to help you build a good credit score – a score that will net you a better finance rate on your new roadster. But, when you are getting close to actually getting the car you want to sit idle for a while and not open any new accounts. Just pay your bills on time, bring down your debt and wait until you drive away in that beautiful pile of metal before you get a new card. In fact, if you can pay off a credit card before buying a car it might increase your FICO and help you get a better rate.
According to financial expert Clark Howard, 99% of people who buy a car finance it (Howard, n.d.). While 80% of people who finance cars do their financing right at the dealer, Clark suggests that you can save big by going to a bank or a credit union and not financing with the dealership (Howard, n.d.). Another way to save big is to build your credit up before you shop for that car and auto loan. When you apply for a credit card you lower your FICO score by 3-5 points. This might not seem like a lot, but the fact is that it is enough to change the price of your new car.
Right before you get a new car is not the time to get a new credit card, finance your new roof or do anything else that could lower your credit score. This is the time to sit back, financially, and relax – just pay your bills on time, pay off debt as much as possible, and put yourself in the best position you can to get a good rate on your car. Applying for a credit card after buying a car is definitely the best choice.
After you buy a new car you may be surprised to see credit card offers start coming in. The short of it is that now that companies see someone taking a big risk – like a car – on you, you suddenly seem more attractive to them and getting a credit card after buying a car might be easy. Sometimes this takes a few months, but once you have made a few car payments and shown yourself worthy you might be amazed how the credit card offers pile up in your mail. Now is the time to get a new credit card, if you need it.
Remember that your credit score is determined, in part, by the mix of accounts that you have open. FICO wants to see you with a variety of financial accounts, such as a mortgage, auto loan, student loans, and credit cards. Variety is the spice of life, and also part of the formula to a higher credit score.
Howard, C. (n.d.). A better way to do a car loan. Retrieved from,
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