Title: Extending Your Auto Mortgages Hurts Your Credit? – Here’s What You Must Know!
Wondering if extending your auto mortgages hurts your credit? If yes, then please look no further as you have landed on the right page!
To provide you with a quick answer to the above question – any type of mortgage including auto mortgages will temporarily hurt your credit score. Well, here’s a general rule i.e. immediately after getting a new mortgage or extending a previous mortgage, your credit is likely to suffer.
Nevertheless, this shouldn’t be a great concern for you as the overall effect is both small and temporary. Usually, extending auto mortgages will cause a small score dip – i.e. around five points.
In this context, please note that a credit score is nothing but a numerical representation of how your finance is capable to pay back a debt obligation.
So, here’s the catch! We have already mentioned that this credit score dip is temporary. So, you must be now wondering how your credit score can be improved later on.
Your credit score can be improved based on the following two conditions.
* As soon as you prove an ability to pay back the auto mortgaging loan
* By consistently paying back your payments on time and also maintaining your debt-to-income ratio at a balanced and reasonable level
Kindly note that you must make all your mortgage payments — on time. Never miss the deadline whether it’s a monthly payment date or a quarterly installment date. Because — you need to prove yourself a responsible borrower. As you can prove that you’re a responsible borrower, your credit score will gradually rise.
Thus, it’s true that extending your auto mortgages hurts your credit but it’s not a permanent hit. Your credit score will definitely be improved and set back to normal as you clear your due payments on time.
What’s more, by responsibly managing your auto mortgage – you will demonstrate your ability to pay back loans on time and prove that you’re capable of handling different credit types pretty well. These factors will positively contribute to your credit score as well over time.
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