26:["$","$L27",null,{"category":"$28","relatedArticles":[{"id":"cG9zdDo1OTg4Nw==","databaseId":59887,"postId":59887,"author":{"node":{"id":"dXNlcjo1MA==","databaseId":50,"userId":50,"avatar":{"url":"https://secure.gravatar.com/avatar/10ca58872f36412ceff58616bb971c22?s=96&d=mm&r=g","size":96,"__typename":"Avatar"},"description":"Amelia Josephson is a writer passionate about covering financial literacy topics. Her areas of expertise include retirement and home buying. Amelia's work has appeared across the web, including on AOL, CBS News and The Simple Dollar. She holds degrees from Columbia and Oxford. Originally from Alaska, Amelia now calls Brooklyn home.","additionalMeta":{"expertise":null,"__typename":"User_Additionalmeta"},"email":null,"firstName":"Amelia","fullName":"Amelia Josephson","lastName":"Josephson","name":"Amelia Josephson","postCount":{"pageInfo":{"offsetPagination":{"total":334,"__typename":"OffsetPaginationPageInfo"},"__typename":"UserToPostConnectionPageInfo"},"__typename":"UserToPostConnection"},"slug":"ajosephson","__typename":"User"},"__typename":"NodeWithAuthorToUserConnectionEdge"},"categories":{"nodes":[{"id":"dGVybTo0NzIw","children":{"nodes":[],"__typename":"CategoryToCategoryConnection"},"databaseId":4720,"categoryId":4720,"link":"https://smartasset.com/credit-cards/articles","name":"Credit Cards","postCount":{"pageInfo":{"offsetPagination":{"total":89,"__typename":"OffsetPaginationPageInfo"},"__typename":"CategoryToPostConnectionPageInfo"},"__typename":"CategoryToPostConnection"},"slug":"credit-cards","ancestors":null,"parent":null,"__typename":"Category"}],"__typename":"PostToCategoryConnection"},"content":"$29","date":"2017-02-02T10:00:48","excerpt":"

\n","featuredImage":{"id":"cG9zdDoxNzQzMzU=","databaseId":174335,"altText":"What Are the Credit Score Ranges for 2020?","date":"2022-11-08T18:50:08","fileSize":37174,"mimeType":"image/jpeg","modified":"2022-11-08T18:50:08","sourceUrl":"https://smartasset.com/wp-content/uploads/sites/2/2017/02/credit-report-with-score-rating-app-on-smartphone-screen-showing-of-picture-id1203955041-1.jpg","__typename":"MediaItem"},"modified":{"datetime":"2023-3-19","readable":"March 19, 2023"},"multipleBylinesByRole":{"editedBy":null,"reviewedBy":null,"writtenBy":null,"factCheckedBy":null,"secondEditor":null,"hideAuthor":null,"__typename":"Post_Multiplebylinesbyrole"},"adTargetingOverrides":{"fieldGroupName":"adTargetingOverrides","pageGroupNewKey":null,"__typename":"Post_Adtargetingoverrides"},"seo":{"canonical":"https://smartasset.com/credit-cards/what-are-the-credit-score-ranges","metaDesc":"The credit scores that each credit bureau publishes are divided into categories, like good, excellent and poor. Here are the current credit score ranges.","metaKeywords":"","metaRobotsNofollow":"follow","metaRobotsNoindex":"index","readingTime":5,"title":"What Are the Credit Score Ranges? - SmartAsset","__typename":"PostTypeSEO"},"slug":"what-are-the-credit-score-ranges","status":"publish","title":"What Are the Credit Score Ranges?","uri":"/credit-cards/what-are-the-credit-score-ranges","tags":{"nodes":[],"__typename":"PostToTagConnection"},"__typename":"Post","adPageGroupOverride":null,"bylines":{"writtenBy":{"id":"dXNlcjo1MA==","databaseId":50,"userId":50,"avatar":"$2a","description":"Amelia Josephson is a writer passionate about covering financial literacy topics. Her areas of expertise include retirement and home buying. Amelia's work has appeared across the web, including on AOL, CBS News and The Simple Dollar. She holds degrees from Columbia and Oxford. Originally from Alaska, Amelia now calls Brooklyn home.","additionalMeta":"$2b","email":null,"firstName":"Amelia","fullName":"Amelia Josephson","lastName":"Josephson","name":"Amelia Josephson","postCount":"$2c","slug":"amelia-josephson","__typename":"User"},"editedBy":null,"reviewedBy":null,"factCheckedBy":null,"secondEditor":null},"category":{"id":"dGVybTo0NzIw","children":"$2f","databaseId":4720,"categoryId":4720,"link":"https://smartasset.com/credit-cards/articles","name":"Credit Cards","postCount":89,"slug":"credit-cards","ancestors":null,"parent":null,"__typename":"Category"},"isModifiedBeforePublished":false,"contentBlocks":["

Each of the three major credit bureaus evaluates credit scores differently, with each score falling into a specific range. However, the most commonly used basis for these credit scores was created by FICO. The FICO credit score ranges vary from poor to excellent, with specific factors affecting the score you receive. The better you manage specific areas of your finances, the more likely your score will be to improve. Having a good credit score will raise your chances of receiving low interest rates on credit cards and loans.

","

No matter your credit score, a financial advisor can help you plan for the future. Talk to a local financial advisor today.

","

FICO Credit Score Ranges

","

The sheer number of credit scores makes it hard to name a definitive cut-off for good credit. That’s because some credit scorers max out at 750, while others might cap at 850 or 990. A lender who’s assessing your creditworthiness for, say, a mortgage, will look at several different scores to get a sense of the likelihood that you will pay back your debt on time.

","

Check out the chart below to see the consensus FICO credit score ranges. For scores that max out at 850, a score of 670 or higher is generally considered to be “good.” If you’re unsure whether your credit score will get you the lowest mortgage rates, you can always reach out to a mortgage broker directly.

","

FICO Credit Score Ranges

","

FICO Scores	Category
300 – 579	Poor
580 – 669	Fair
670 – 739	Good
740 – 799	Very Good
800 – 850	Excellent

","

How Are Credit Scores Determined?

","

","

A credit score is a number that indicates your perceived creditworthiness in the eyes of credit rating companies, banks and other financial institutions. If you have a history of paying your bills on time and only using a small percentage of your available credit, you should have a high score. If you’ve missed bills, filed for bankruptcy, defaulted on loans or dealt with collections, then your score will likely be lower.

","

Here’s a deeper breakdown of what goes into the creation of your credit score:

","

Payment history: 35% of your score
Credit usage: 30% of your score
Credit history: 15% of your score
New credit applications: 10% of your score
Credit mix: 10% of your score

","

The most well-known provider of credit scores is the Fair Isaac Corporation, or FICO. However, each of the three credit bureaus (Experian, Equifax and Transunion) has its own take on your score. This is known as a VantageScore. This is a modified version of your FICO score that’s based on both the credit bureaus’ scoring models and their own information on your credit history.

","

There are also different FICO credit scores for bank cards, auto loans and more. That’s why a single person can have several credit scores. Different bureaus may treat credit events or authorized user accounts differently, so you may have excellent credit according to your Transunion credit score, but still be in the “good ” range with your Equifax score.

","

Ways to Improve Your Credit Score

","

If you want to get a loan or a credit card, you want to have the best credit score possible. If you’re looking to improve your score, there are a few things you can focus on:

","$31","

There isn’t any foolproof plan to raise your credit card in a short time frame, so don’t fall for anyone telling you that’s possible. Just follow these general rules and be smart, and you could see your score rising over time.

","

Bottom Line

","

Credit scores range from 300 to 850. Where you fall on that scale can determine a lot about your financial life. It’s always a good idea to pay your bills on time and keep your credit utilization ratio low. However, experts generally agree that chasing a credit score of 850 is not the best use of your time. You don’t need a perfect credit score to get access to competitive rates on mortgages and other forms of credit.

","

Financial Planning Tips

","$32","

Photo credit: ©iStock.com/NicoElNino, ©iStock.com/Kameleon007, ©iStock.com/AntonioGuillem

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\n","featuredImage":{"id":"cG9zdDoxOTM4MTM=","databaseId":193813,"altText":"Free FICO Scores","date":"2023-04-02T02:02:13","fileSize":33669,"mimeType":"image/jpeg","modified":"2023-04-02T02:02:13","sourceUrl":"https://smartasset.com/wp-content/uploads/sites/2/2017/10/rsz_istock-620738574-1.jpg","__typename":"MediaItem"},"modified":{"datetime":"2024-1-9","readable":"January 9, 2024"},"multipleBylinesByRole":{"editedBy":null,"reviewedBy":null,"writtenBy":null,"factCheckedBy":null,"secondEditor":null,"hideAuthor":null,"__typename":"Post_Multiplebylinesbyrole"},"adTargetingOverrides":{"fieldGroupName":"adTargetingOverrides","pageGroupNewKey":null,"__typename":"Post_Adtargetingoverrides"},"seo":{"canonical":"https://smartasset.com/credit-cards/credit-cards-free-fico-scores","metaDesc":"Here’s a roundup of major card issuers offering free FICO® scores to credit card customers. Bank of America, Chase, Citi, Discover and Wells Fargo provide","metaKeywords":"","metaRobotsNofollow":"follow","metaRobotsNoindex":"index","readingTime":7,"title":"Free FICO® Scores: Which Credit Cards Offer Them - SmartAsset","__typename":"PostTypeSEO"},"slug":"credit-cards-free-fico-scores","status":"publish","title":"Which Credit Cards Give Free FICO® Scores?","uri":"/credit-cards/credit-cards-free-fico-scores","tags":{"nodes":[],"__typename":"PostToTagConnection"},"__typename":"Post","adPageGroupOverride":null,"bylines":{"writtenBy":{"id":"dXNlcjo3NQ==","databaseId":75,"userId":75,"avatar":"$34","description":"Lucy Lazarony has been writing about personal finance for more than a decade. Lucy's a credit card expert. She is a freelance writer and award-winning journalist living in South Florida. Lucy earned a bachelor’s degree in journalism from the University of Florida. Her work is featured on Credit.com, CardRatings.com, MoneyRates.com and Art Hive Magazine.","additionalMeta":"$35","email":null,"firstName":"Lucy","fullName":"Lucy Lazarony","lastName":"Lazarony","name":"Lucy Lazarony","postCount":"$36","slug":"lucy-lazarony","__typename":"User"},"editedBy":null,"reviewedBy":null,"factCheckedBy":null,"secondEditor":null},"category":{"id":"dGVybTo0NzIw","children":"$39","databaseId":4720,"categoryId":4720,"link":"https://smartasset.com/credit-cards/articles","name":"Credit Cards","postCount":89,"slug":"credit-cards","ancestors":null,"parent":null,"__typename":"Category"},"isModifiedBeforePublished":false,"contentBlocks":["

Your FICO® score comes from the Fair Isaac Corporation and is represented as a three-digit number between 300 and 850. The higher the number, the better the score. Your score reflects creditworthiness and risk based on your credit history. More than 90% of the top lenders look at your FICO® score when making credit decisions. You’ll always want to keep an eye on your credit score to make sure lenders and creditors are seeing the most correct version. Several credit card issuers provide free FICO® scores as an added card benefit.

","

Find the right card for you with our credit card comparison tool.

","

What Is Your FICO® Credit Score?

","

It’s important to know that there is no single FICO® score. Each of the three main credit reporting agencies, Equifax, TransUnion and Experian, has a variation of your FICO® score. These variations depend on which information from your credit report they weigh the most. Due to these differences, you’ll usually see one or two scores that are slightly higher than the next. However, each score should remain in the same general credit score range.

","

Why You Should Check Your FICO® Credit Score

","

When you check your credit score online, you may not get your official FICO® score. For example, a company might create a credit score using a similar formula. The resulting score will show a good approximation of your FICO® score, but it won’t be exact.

","

The most common non-FICO® credit score is the VantageScore, a score created by the three credit bureaus. Your VantageScore includes most of the same factors as your FICO® score, but it weighs those factors differently. Many places that offer a free credit score provide your VantageScore. Just note that there can be a difference of 50 points or more between your VantageScore and your official FICO® score.

","

So why should you care about your FICO® score in particular? While knowing your VantageScore is definitely useful, your FICO® score is the one that most lenders tend to look at. Your FICO® score will help them determine whether to lend to you or not. So if you want to increase your credit card approval chances, make sure your FICO® score is as high as possible.

","

Which Credit Cards Give Free FICO® Scores?

","

Luckily, if you have a credit card, you might already have access to your free FICO® score. Many credit card issuers offer free FICO® scores to their customers, with more issuers joining in this practice. Below, we’ve compiled a roundup of major card issuers that do provide this free feature. Plus, checking your score through your credit card will not have any impact on your score.

","

American Express

","

You can access your free FICO® credit score if you have an American Express consumer credit card. This excludes American Express corporate cards. After going through a successful pilot program, American Express is able to offer this free credit score feature through a partnership with Experian.

","

Bank of America

","

All Bank of America credit card customers can access their free FICO® score. The score, which comes from TransUnion, updates each month. In addition to your score, Bank of America provides two interesting charts. One chart displays the changes in your score over time. This is especially useful if you’re trying to raise your credit score so you can see your progress. And if you are trying to raise your score, you’ll like that Bank of America also shares the key factors that are affecting your score. The second chart shows national FICO® score averages.

","

To view your free FICO® score, just log in to Bank of America’s online or mobile banking. You can also receive text or email notifications when your credit score changes. If you’re not already a Bank of America customer, you may consider opening up a Bank of America credit card to gain access to this perk.

","

Barclays

","

Barclays provides all its credit card customers with a free FICO® score from TransUnion. Cardholders can access their scores through Barclays’ online banking. When your credit score changes, you will receive an email notification along with the reasoning behind the change. Barclays also makes tracking changes in your score easy with a chart of your FICO® score history. This chart becomes available once you’ve had your card for three months and covers the length of time that you’ve had a Barclays account.

","

Chase

","

","

Currently, Chase Slate, Chase Freedom and Chase Freedom Unlimited credit cardholders have access to their free FICO® score through Chase. The score uses data from Experian and updates monthly. To get your score, simply log in to Chase’s online banking system. Chase provides a history of your score and information on the factors affecting your score.

","

Free FICO® scores are only available to primary cardholders with an open account and sufficient credit history to generate a FICO® score. So if you don’t have enough credit history, you probably will have a low FICO® score, if at all. So if you are just starting to build your credit, it may take a little time before you have a FICO® score. New Slate card customers may also need to wait up to seven days before their FICO® score is available online.

","

Citi

","

With Citi you can view your FICO® score, from Equifax, for free. Your score is updated monthly. Citi only began offering free FICO® scores in 2015, but this feature is now available with all Citi-branded credit cards.

","

Discover®

","

Discover gives its cardholders free access to FICO® scores from TransUnion. It also allows you to view your FICO® score for the previous 12 months. Not sure why you score changed? Discover provides the key factors impacting your credit score, like high account balances, through its website and mobile app. Unlike many card issuers who only let you see your score online, Discover also puts your score on card statements.

","

Walmart Credit Card

","

The Walmart credit card, which is issued by Capital One, offers free access to your FICO® credit score. The only caveat is that you have to sign up to receive electronic statements.

","

Wells Fargo

","

Free access to your FICO® score is available through Wells Fargo’s online banking. All consumer credit card customers can access their scores. Once you’re logged in to your account, you can go to your account summary section to find your score. When you check your score, you will also see the last time your score was updated by Wells Fargo. Scores update either monthly or quarterly.

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The Bottom Line

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Your FICO® score plays a huge part in your financial health whether you know it or not. Banks and lenders decide your creditworthiness depending on this score. If you have a high score, you’re more likely to get approval for loans and lines of credit. It’s a good idea to check your score regularly, especially if you are trying to build credit or if you are applying for a loan soon.

","

Thankfully, many credit card issuers now provide access to your FICO® score at no extra cost to you. Most card issuers let you access your score through their online account management system. Start there if you aren’t sure whether your card offers free FICO® scores. You can also call customer service to ask if this is a feature on your card.

","

Tips for Boosting Your Credit Score

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Photo credit: ©iStock.com/Petar Chernaev, ©iStock.com/GaryPhoto, ©iStock.com/cnythzl

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Credit scores across the country are on the rise. Up about 1% on average, according to Experian data. But does that fact hold for every generation? Millennials sometimes have a reputation for not handling their finances well, are their credit scores also rising? We decided to investigate and found the places where millennial credit scores […]

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","

Have a high credit score? You may qualify for the best rewards credit cards.

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For the purposes of this study we looked at VantageScores across the country. To see where millennials’ credit scores have risen the fastest, we used metro level millennial credit scores from 2010 and compared it to millennial credit scores from 2016. Check out our data and methodology below to see where we got our data and how we put it together to create our rankings.

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Key Findings

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1. Fort Myers-Naples, Florida

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On average millennial credit scores in Fort Myers-Naples jumped over 26 points from 2010 to 2016. The average score went from 592.2 to 619.03. This translates to a percent increase of 4.53%: the largest growth in the country.

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Millennials were not the only group to see their finances improve in Fort Myers-Naples. Every generation except the Silent Generation (those born from 1925 – 1945) saw their average credit scores improve.

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2. Seattle-Tacoma, Washington

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The Seattle-Tacoma area is home to some of the most financially responsible millennials in the country. Seattle-Tacoma millennials went from having the 32nd-highest average credit score in 2010 to having the 11th-highest average credit score in 2016. Overall their average credit scores improved from 630.8 to 658.2. That’s a percent increase of 4.35%.

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With how expensive the Seattle area can be, millennials will be thankful for their improved credit scores as they now have better access to solid rewards credit cards and lower mortgage rates.

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3. Austin, Texas

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Back in 2010, Austin millennials were in a precarious financial position. They had an average credit score of 616, which is considered quite low. Fortunately they were able to improve that average credit score by 4.31%, from 616.2 in 2010 to 642.7 in 2016. While this means Austin millennials may not quite qualify for the best low APR credit cards with that score, they are certainly making progress.

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4. San Francisco-Oakland-San Jose, California

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As of 2016, San Francisco-Oakland-San Jose contains the most financially savvy millennials in the country, on average. With an average credit score of 676.1, San Francisco beat out Charlottesville, Virginia (671.7) and Minneapolis (669.9) for the city where millennials have the highest average credit score. In 2010 SF millennials’ average credit score was 648.3 and by 2016 it has risen by 4.29%.

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In fact, if not for their high credit scores in 2010, San Francisco-Oakland-San Jose would have taken first on this list. This area had the largest absolute gain in credit score, but due to their higher 2010 credit score saw a lower percent growth.

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5. Denver, Colorado

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The average credit score across all age groups in Denver rose from 675 to 687. Millennials, more than any other group, powered the explosive credit score growth. From 2010 to 2016, the average credit score for Denver millennials rose from 626 to 650.8. This equals an increase of just under 25 points or 3.96%.

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While 650 isn’t bad it doesn’t give Denver millennials, who may be looking to switch from renting to buying, access to the best mortgage rates. According to our mortgage rates table a Denver resident with a credit score of 650 would be looking at a mortgage rate of around 5%.

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6. Juneau, Alaska

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Juneau is the capital of Alaska, a state with a lot of debt and a few bad credit card habits. Overall Juneau millennials increased the average credit score from 611 to 635. That’s a 3.92% increase. There’s still room for improvement. Juneau millennials, on average, will struggle to qualify for good mortgage rates with a 635 credit score.

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7. Charleston, South Carolina

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In 2010 millennials in Charleston had an average credit score of 596. With a score that low, they were likely facing very high credit card APRs. This would have made any credit card debt Charleston millennials take on and don’t pay right away, very expensive. From 2010 to 2016 Charleston millennials did a better job managing their finances. Overall the average millennial’s credit score rose from 596.3 to 619.1. That’s a 3.83% increase.

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8. Dallas-Fort Worth, Texas

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Dallas-Fort Worth takes eighth place, barely beating Tampa-St. Petersburg by 0.001%. Overall Dallas-Fort Worth millennials have done a good job improving their credit scores. According to our data, millennials here went from having the 148th-highest average credit score (out of 211) in 2010 to having the 111th-highest average credit score in 2016. This 37-spot jump was brought on by a 3.79% increase in average credit score.

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9. Tampa-St. Petersburg, Florida

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As mentioned in the Dallas-Fort Worth blurb, Tampa-St. Petersburg just barely fell to ninth. Of all the cities in our top 10, Tampa millennials started in the worst financial position. The average millennial credit score was 591. Fortunately they’ve upped that figure to 614. There’s still some way to go to a truly healthy credit score however.

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10. Phoenix, Arizona

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Phoenix rounds out our top 10. The average millennial credit score jumped 23 points from 615.7 to 638.7. That’s a 3.73% increase. Our data suggests that it was not just millennials in the Phoenix area who worked on improving their financial well-being. Across the metro area the average credit score jumped 14 points, with Gen Xers and Baby Boomers also doing well.

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Data and Methodology

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In order to find out where millennial credit scores have risen the fastest, we looked at data on 211 metro areas. Specifically we looked at the following two metrics:

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2010 average millennial credit score. Data comes from Experian’s 2016 State of Credit Report.
2016 average millennial credit score. Data comes from Experian’s 2016 State of Credit Report.

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In order to create our final rankings, we found each city’s percent change in credit scores from 2010 to 2016. We ranked the metros from highest percent change to lowest.

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Tip for Millennials Looking to Build Their Credit Score

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Many millennials have lean credit files. This may mean that they don’t even have a credit score due to a lack of information/credit history. Here are some tips for millennials looking to build their credit.

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The most accessible way for people to build credit is to use a credit card. However, one issue for people who are trying to build their credit score is that they often don’t qualify for the majority credit cards. For millennials in this position, a secured credit card is a great option. Pretty much anyone can qualify for a secured credit card regardless of credit score, including people without any credit history. One thing to keep in mind is that in order to get a secured credit card and start building your credit score, the credit card company will require a monetary deposit. This is often around $200.

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Once you have a secured credit card, you can begin using it to create some credit history. Remember to make your payments in full and on time. Many secured credit cards have a low credit limit. This can be a good thing because it ensures you won’t rack up high charges that you’ll struggle to pay back. And you won’t be stuck with the low limit forever. In time, once you’ve built some credit history and hopefully have a solid credit score, you’ll begin to qualify for unsecured credit cards.

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Questions about our study? Contact us at press@smartasset.com.

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With payment plans, buying a car can be a reasonably affordable venture. The average monthly payment for a new car is around $480, according to Experian Automotive. A used car, on the other hand, will set you back around $360 a month. But what if you want to pay your car loan with a credit card. Is that possible? The short answer is yes but the longer answer is more complicated.

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Consider working with a financial advisor as you weigh car-buying opportunities to ensure that you are handling your personal finances wisely.

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Can You Pay a Car Loan With a Credit Card?

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Whether you can make your car payment with a credit card will depend on your auto loan lender. Some lenders will accept credit card payments with no problem. Other lenders will accept credit cards, but will charge a hefty processing fee. In that case, you’ll have to calculate whether paying with your credit card is worth the fee. Many lenders, though, don’t allow direct payment by credit card.

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However, there is a way around that limitation. You could use a 0% APR credit card. These cards come with a limited period (often six – 18 months) of 0% interest, allowing you to pay off your loan without accruing interest. Once you have this credit card, you can transfer your auto loan balance to the card, called a balance transfer. If you can finish paying off your car payments in full during that introductory period, you won’t accrue any interest on your loan’s total. The balance transfer can save you money and pay off your loan, but only if you have a repayment plan that you stick to.

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You could also make your car payments with a credit card through a cash advance. A cash advance involves withdrawing cash with your credit card. This is different from withdrawing cash with a debit card, though, since a cash advance isn’t technically your own money. Because of this, cash advances come with high fees and even higher interest rates. Plus, interest begins accruing immediately. If you’re already struggling to make your car payments, using a cash advance probably won’t be the best financial move.

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You technically can make your car payments with a credit card in some shape or form. However, there are definitely pros and cons to this method.

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Pros of Paying a Car Loan With a Credit Card

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By transferring your auto loan’s balance to a 0% APR credit card, you could save hundreds in interest charges. Not only that, but you get to pay off your car faster, too. It’s important to note that this method transforms your auto loan from a secured loan into an unsecured loan as revolving credit. As a secured loan, your car served as collateral, meaning it could be repossessed if you failed to make payments. But with your car payments on a credit card, you no longer risk losing your car.

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Having your auto loan transformed to revolving credit also offers its own perks. Revolving credit means you can carry over a balance from statement to statement. This alone doesn’t incur a penalty as long as you pay at least the minimum amount on your statement. This kind of flexibility in repayment can be a huge asset to you.

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However, while carrying a balance and paying the minimum keeps you afloat, that’s how many people end up in serious credit card debt. Before you know it, you could owe even more than your original loan was worth because you failed to pay it off fast enough. If you use this method, you should be sure that you can afford to pay off the entire loan before the 0% period ends. That way you can avoid a huge interest hit.

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Cons of Paying a Car Loan With a Credit Card

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A huge disadvantage to paying off an auto loan with a credit card is the potential harm it could do to your credit score. Credit reporting agencies view revolving debt, a type of unsecured debt, much less favorably than secured loans. So even if you’re making your payments on time, it won’t boost your score as much. Plus, since you’ll no doubt be placing a rather large balance on your card, your overall credit utilization will increase drastically. Your credit utilization ratio plays a big part in your score. When you use too much of your available credit, your credit score usually sees a drop. This could then affect your interest rates on any future loans or credit cards you might apply for.

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A typical 0% introductory APR offer lasts about six to 18 months, so you won’t have an interest-free loan forever. Interest will start accruing eventually, and you’ll need to pay off the loan before it does. If you can’t repay the balance of your loan within that time, you could end up paying more interest than you would’ve on your original loan.

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It’s also important to note that using a 0% APR credit card isn’t a readily available option to everyone. These cards often require a very good or excellent credit score for approval.

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Bottom Line

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Paying off a loan by taking on another loan is always a risky decision. In order for it to work, you have to repay and spend incredibly responsibly. Before you even think about this method, you should thoroughly assess your financial situation. That way, you can prepare yourself and your finances for the responsibility that comes with paying off any loan.

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Personal Finance Tips

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