- by C.C.
Saving up to pay cash for a car instead of taking out a loan
Saving up to pay cash for a car may seem smart. However, avoiding installment loans such as car loans can hurt your credit. That’s because lenders look for a history of paying installment loans on time when reviewing your creditworthiness.
Having a good mix of revolving credit, such as credit cards, and installment loans, such as a car loan or a mortgage, are important for your credit score. Being too heavily skewed one way or the other can affect what loans you can get down the road or the terms of any credit you receive.