Reply
New Contributor
tisch0791
Posts: 57
Registered: ‎03-31-2012
0

Approval potential?

I just checked my Experian report from annualcreditreport.com.  This is what is on my report:

 

1. Cap One Opened 8/2003 CLOSED 7/2006 Bal. 229 Limit 1000 Opened 8/03, closed 7/06.  Strangely the account reported closed from 7/06 to June 2008, then reported as "ok" up through June 2012, now reporting as closed again for July and August 2012.  Always making ontime payments, not sure why the reporting codes changed.  I've been chipping away at this one and it is FINALLY close to being paid off.

 

2.  Barclays bank Opened 8/2005.  Balance 3395, Limit 2900.  Yes this one is over limit.  Never Late.  Jumped over limit when we had to have a/c fixed in middle of summer!  Grrr!

 

3.  Cap One Opened 4/2007.  Used to be HSBC until Cap One took over.  Bal. 982 Limit 1100.  Never late.  This is an old balance that I've been chipping away at.  Sadly high interest makes it a challenge.

 

4.  Chase Visa Opened 5/2005 Bal. 1388 Limit 1500.  Never late.  Again same situation as my Cap One on chipping away at an old balance.

 

5.  Chase Visa (AU with hubby) Opened 5/2005 CLOSED 7/2008.  Bal. 2504 Limit 5247.  Never late.  Again how does a CLOSED account factor into utilization since the balance will only go down and not up?

 

6.  One auto loan with CU.  Never late.  Been transferred three times over several years since credit unions changed so each CU it was with shows all good on payments.

 

7.  2nd auto loan with CU is PAID IN FULL as of July 2012.  Never late..

 

My only 30 day "baddie" is from back in 2008 on one auto loan payment.

 

My auto loans have always been good.  As you can see, I have credit cards with good payment history, just high utilization.  If I factored this right, the balance to limit ratio is 72%.  I don't think I can get them paid down before I will need to purchase a car.  So I am wondering, would it help to open any new cards and NOT USE THEM to reduce utilization?

 

The other thing is, do closed accounts count in the utilization?  If not then I presume my ratio will change. 

 

Because my auto loans are excellent (and now only ONE is reporting because we just paid off our other one - woo hoo!) I'm sure this would be a plus on an auto enhanced FICO.  Any thoughts on what I might expect for an auto loan approval?  I have excellent self employment income - what is the best way to document that to a lender?

Moderator Emeritus
llecs
Posts: 32,880
Registered: ‎08-04-2007
0

Re: Approval potential?

Lenders won't look at closed accounts with a balance unfavorably assuming it isn't late or is a CO, and you have other open accounts aside from the closed ones. You would want to PIF ASAP though.

 

#2 is a big score drain. I'd pay it down ASAP.

 

Same with #3. Lenders view high util as a negative.

 

I wouldn't open any CCs. I only foresee a score drop util changes aside.

 

Closed CCs reporting a balance and CL do factor into util.

 

If you paid down util I bet you could see close to a 100 point gain. Certainly worth considering before buying a car. 

 

The above concerns credit only. DTI would be another factor. YMMV. I think approval is possible, just not at the best rates.

New Contributor
tisch0791
Posts: 57
Registered: ‎03-31-2012
0

Re: Approval potential?

The balances on the closed accounts aren't charge offs, just continuing to pay them off.  That is all I see reported on the Experian report, and it's accurate.  A question -- if I remove myself as an AU from my husband's closed Chase account, would that make a difference?  I'm suspecting it might do more harm than good, since it would change my utilization ratio due to the one card that is currently overlimit.  I've read somewhere in the forums that once you remove yourself as an AU on any cards, the history is wiped from your report.  Thanks for any insight! 

New Contributor
tisch0791
Posts: 57
Registered: ‎03-31-2012
0

Re: Approval potential?

Oh and I have self employment income.  What will lenders need to document that?

Moderator Emeritus
llecs
Posts: 32,880
Registered: ‎08-04-2007
0

Re: Approval potential?


tisch0791 wrote:

The balances on the closed accounts aren't charge offs, just continuing to pay them off.  That is all I see reported on the Experian report, and it's accurate.  A question -- if I remove myself as an AU from my husband's closed Chase account, would that make a difference?  I'm suspecting it might do more harm than good, since it would change my utilization ratio due to the one card that is currently overlimit.  I've read somewhere in the forums that once you remove yourself as an AU on any cards, the history is wiped from your report.  Thanks for any insight! 


If you were to do the math, add up the balances and divide it into the sum of the CLs, factoring in the AU. Then redo the calc without the AU. If util increases, then there's a risk for a score drop. If util drops, then there's a chance for a FICO increase. The age and AAoA impacts FICO too. If this account is your oldest overall or your oldest CC, then there's a high risk for a score decrease. IF the account is older than your AAoA then there's a chance for a score drop if AAoA drops when it disappears. If younger than AAoA, then a chance for an increase if AAoA increases when it's removed. Finally mix of credit plays into this. If you have 3 other CCs or revolving accounts aside from this AU, then there's no impact to your mix if removed. If not, there's a chance for a score drop. It gets dynamic figuring the impact of an AU.

 

 

Moderator Emeritus
llecs
Posts: 32,880
Registered: ‎08-04-2007
0

Re: Approval potential?


tisch0791 wrote:

Oh and I have self employment income.  What will lenders need to document that?


If you file on Sch. C, lenders typically will look at your net income rather than gross. I'm employed as well as self-employed. I was allowed deductions like computers, car, utilities, rent, etc. My mortgage lender used the net amount on Sch. C for the biz income and wouldn't consider the gross (rightfully so...I can't claim that if I'm paying that amount to employees, vendors, etc.). They subtracted the net income in the case of a net loss from my W-2 income.

New Contributor
tisch0791
Posts: 57
Registered: ‎03-31-2012
0

Re: Approval potential?

Ah ok I can obtain that information.  Now, here's where I'm going with this.  If my husband and I do a joint application, here is what they would find on his credit report: 

 

1.  Mortgage - there is a string of lates on the mortgage due to a variety of issues with the lender.  However we are now in a modification agreement with them and our loan payment has dropped over $400 a month along with the interest rate.  This is the big baddie on his report.

2.  Cap One Opened 2/2007 Bal. 1732 Limit 2000.  Never late.  Just old balance trying to pay off.  High interest doesn't make it easy.

3.  Chase Visa Opened 5/2005 Closed 7/2008 Bal. 2504 Limit 5247. This is the one where I am an AU on the account. Never Late.

4.  One auto loan still open and reporting.  Other loan was just paid off on August 1st and all auto loans are paid as agreed.

 

I know the mortgage is the worst thing here.  However he has both employment and self employment income, long employment history (16 years at current job) and netting over $100 K.  Good payment history on everything else.

 

As for auto loan chances, because of his income, I wasn't sure if it would benefit us to apply jointly given the mortgage flag.  However I believe our scores are in the 650ish range (I haven't pulled the trigger on myfico yet, but my mortgage lender provides them for free) and my husband's is currently showing 649.  it does not say which agency that came from.  Mine is most likely in that range too. 

 

Granted I know other factors would go into approval, but assuming the worst case scenario on a new car with the down payment pretty much being any rebates or incentives from a dealer, I'm trying to forecast what to expect.  Our other option is to trade the car we already have that is paid off, which is valued around 12-14K on Kelly Blue Book.


myFICO is the consumer division of FICO. Since its introduction 20 years ago, the FICO® Score has become a global standard for measuring credit risk in the banking, mortgage, credit card, auto and retail industries. 90 of the top 100 largest U.S. financial institutions use the FICO Score to make consumer credit decisions.

>> About myFICO
FICO Score - The Score that matters
Click to Verify - This site chose VeriSign SSL for secure e-commerce and confidential communications.
Fair Isaac Corporation is a BBB Accredited Financial Service in San Rafael, CA
FOLLOW US Social Media Facebook Twitter Pinterest Google+