If you have what’s called a thin credit report, it means there isn’t a lot of information on your credit report. This may be because you don’t use credit very often or if you’re new to the world of credit. Here’s a look at how a thin credit history can impact your ability to get approved for the financing of the car you want.

How Does a Thin Credit Report Affect Your Credit Score? Credit scores are determined by a combined analysis of your payment history, length of credit history, amounts owed, new credit and credit mix. Since payment history is the most important factor considered, having little information about someone’s payment reliability can affect your score. For this reason, if you are just beginning your credit journey with a thin credit history, your credit score will generally start in the low to mid range.

There are several ways to improve your score if you don’t like your starting point. Having a combination of revolving credit, like credit cards, and installment credit, like loans and mortgages, can be a good idea to help you build both your credit report and your credit score, both that payments are made on time and in full. .

Auto loans can strengthen your credit. While applying for a credit card or loan with a thin credit history may make approval a bit more difficult, that doesn’t mean it’s impossible, as lenders can probably tell if a low score is due to a poor management or simply a lack. credit history. If you are approved, getting something like a car loan, for example, can be a great way to improve your credit and build your credit history. This is because car loans are long-term installment loans that can have a huge impact on your credit report by giving you years to make payments on time.

Where can you go to get approved with a thin credit history? One of the best places to look for an auto loan may be a financing dealership that has subprime lenders. Subprime lenders tend to look at more than the information in your credit report to determine if you qualify for a car loan. Instead, they look at income level, employment, residency stability, and may require you to meet certain conditions, such as a down payment, to qualify.

If you qualify, you may have higher interest charges, but the loan is reported to the credit bureaus, which helps build your credit.

Another way to go might be to work with a Buy Here Pay Here (BHPH) dealership. Although getting a loan from a BHPH dealership can help you get a car, it’s not always a guarantee that they can help you build your credit. BHPH dealers are known as inside lenders since they are both lender and dealer. This means that, as long as you can prove that you receive enough income to manage the car loan and make a large down payment, they don’t need to do a credit check. Since they don’t need to do the credit check, that means they also don’t need to report payments on time to the credit bureaus, which means your credit score n will not increase to make these payments. If you decide to use a BHPH reseller, be sure to check beforehand that your loan will be declared correctly.

These lenders and subprime lenders have experience dealing with borrowers with limited credit history. Be sure to do your research to see if either might be the right choice for you.