The only way to start building a credit score is to start taking out credit and loans, but as an expatriate this is easier said than done. One way to get your foot in the “credit door” is to take out a car loan from an expatriate leasing and financing company, such as International AutoSource.
How does a car loan affect credit?
A car loan is considered consumer debt. In order to have a healthy credit score, you will want to have an assortment of credit types on your report. Other types of credit include credit cards and mortgages.
For many people, taking out a car loan is the first step in building a solid credit history to make larger purchases in the future, like a home. Getting approved for a car loan is more difficult than getting approved for a credit card, so it has a stronger impact on your credit report.
Having a car loan will increase your credit score if you make all of your payments on time. It is important to always pay on time to show that you are a responsible borrower who can handle larger loans, such as a mortgage, in the future.
Car loans for Expats
For expatriates with no credit in their new country, the car loan can be an even more important avenue for building a local credit history. Unlike other lenders and credit institutions, Expat leasing and financing companies will take into consideration the expatriate’s employment and visa when granting an auto loan, instead of a credit history.
Once the expatriate proves they are a responsible borrower by paying all of their car payments on time, other types of lenders will be more willing to open the door and grant loans. This will help Expats open bank accounts, take out credit cards, buy cell phones, and find housing.
If used responsibly, a car loan can be the perfect tool for Expats to begin building a credit history in their new country.