Your FICO credit score is a numerical value calculated based on your debt and repayment history, which lenders use to get an impression of your propensity to responsibly handle your liabilities. The range in which your credit score falls affects whether lenders will approve you for loans and at what interest rate. Your credit score has an enormous impact on your financial future, and the sooner you begin actively improving it, the more financial options you will enjoy throughout the rest of your lifetime.

Purchasing a used vehicle presents the perfect opportunity to work on raising your credit score, if you obtain your loan from the right lender and manage your debt sensibly. You can easily raise your score through your vehicle purchase by ensuring that your lender reports to at least one of the credit bureaus. Making timely payments on accounts is a major factor in the calculation of your credit score, and if your lender reports that you make payments as agreed, your score will improve. Just be sure to pay all of your other expenses on time as well, without incurring excessive additional debt. It is important to analyze your budget before obtaining a loan to ensure that you will be able to make your loan payment on time each month.

When you apply for a loan through an establishment such as a bank, the lender pulls your credit score during the application process. Even if you are not approved for the loan, multiple such inquiries to your credit negatively affect your credit score. If you finance your loan through a dealership that outsources loans to a bank or other financial institution, multiple inquiries will likely be made on your credit, hurting your score. Selecting a dealership that provides true in house financing can help avoid the possibility of multiple inquiries being made and harming your credit score. Avoiding such a middle man type lending hierarchy can also mean that your loan will cost you less money in the long run.

If you, like many people, have less than great credit, you can still obtain a loan that sets you on your way to better credit. Applying for financing at multiple dealerships is a bad idea, again because of the multiple inquiries to your credit. If you already know that you have a low credit score, deal directly with a used car dealership which specializes in bad credit financing, and be sure to verify that the financing is in house and that your status will be reported to a credit bureau.

Though it takes time, building a better credit score is easier than you may have thought. Take advantage of the opportunity to improve your credit score as you make your vehicle purchase, and improve your financial outlook for the future.