Auto Loan question

[Anonymous]

Hello all, new to this forum but need some expert advice.

The last time I checked my FICO in September of 2008, it was 674.  I had $14,000 debt in credit cards at the time (had to pay for college tuition, supplies, and other things on my own).  As of today, I've reduced my credit card debt to just under $7,000.  I've been at my current job for 11 months now and make about $37K/year.  I know that I will be able to pay off my credit card debt in July and I hope that I do because I am looking to buy a new car (I need it!).  My questions are as follows:

1. I've heard that you should not check your FICO score often because it will ding your score.  Is this true, or would I be able to check it next month if need be?

2. When applying for an auto loan, do lenders only look at your FICO score or other factors as well?

3. How can I make sure that I get approved for the amount that I am asking to borrow?

Thanks in advance!

[Romeoo47]

To answer your question

1) What you heard is a myth.  It doesn't affect you to individually check your own FICO scores.  It does affect when you apply for credit.  So yes you can check your FICO as often as possible and it should not affect you come next month

2) I don't think there is any lender that bases their approval on FICO alone.  They take into consideration factors such as DTI ratio, income, years of employment, any baddies on your report, auto credit history, etc.

3) This one is a tough one because a lender's decision to approve and the amount is based on their lending criterias and your individual risk profile.  The only guarantee to make sure you get the amount that you want with the terms that you want is to have good-excellent credit, a strong auto history, and/or a substantial down payment. 

I hope this helps and good luck!

[Anonymous]

Congrats on getting out of CC debt this year!  Big accomplishment that many people are fighting.

1.  Checking FICO does not affect your CR or FICO in any way.  Nobody other than you has the ability to see these "soft" inquiries of your CR and score.

2.  Lenders use FICO as a tool, but your income and past credit references will play every bit as important of a role.  The fact that you have paid your CC's off will be good.  If you have had a past auto loan that you paid off, this would also be a plus.

3.  You are doing all the right things.  Paying off current debt, which will improve your FICO and debt to income ratios.  You also need to think about your down payment.  You may want to pay the CC debt off, then continue to use the money you were paying to CC's to establish a nice down payment.  Sizeable down payments improve your potential rates, approval and protect you from negative equity in the future.

4.  Once you have paid off CC's, be sure you are using the difference to put into savings.  Don't trade CC debt for Auto debt and be without a savings plan.  You need to be able to maintain your debt and save.  If you can't, you have too much debt (too much car).

You know the right things to do....because you are doing them.  Good luck

[Anonymous]

Thank you very much to both of you for the speedy replies!!!  I really appreciate that there are people out there that can provide great information! 

As far as saving up for a down payment, that was exactly my plan.  As soon as I pay off my credit cards, I will use that money to save up for a down payment.  I will also be selling my current vehicle and I can expect to get $9K for it.  If I do get the $9K and use that as a down payment, it will equal to roughly 23% of the total cost of the vehicle.

I've learned my lesson and I know that debt can get out of hand  I've calculated a "worst case scenario" as far as percentage rate (9%) for the monthly payments for a vehicle and I know that I will be able to make the payments and save money as well.

Thanks again everybody!

[Anonymous]

Glad to see you have a plan.  It's cliche, but true...."failing to plan is planning to fail"

Good luck and good hunting!