Auto Loan with New Credit History

Anonymous · ‎02-20-2016

Hello all,

7 years ago I got into credit trouble and swore off credit. Now I am trying to reestablish credit. Since its been 7 years my credit is blemish free but I found I had no credit history.

So I applied for a Wells Fargo card (where I bank) and was surprised to be approved for a cash back card with a $2500 limit. And I also opened a Capitol One secure card. Today I pulled a TU report and was surprised to see I have a 742 score. I am sure this must be inflated because I've only had the cards for about a month.

Anyway, this got me thinking. I'd really like a new vehicle, was recently promoted, and can easily afford a new vehicle. But not sure when my credit will be good enough for a decent auto loan of about $10,000. I assume with only a month of credit history I won't be approved for a loan but want an idea of when I will be ready.

Advice?

flan · ‎02-21-2016

@Anonymous wrote:
Hello all,

7 years ago I got into credit trouble and swore off credit. Now I am trying to reestablish credit. Since its been 7 years my credit is blemish free but I found I had no credit history.

So I applied for a Wells Fargo card (where I bank) and was surprised to be approved for a cash back card with a $2500 limit. And I also opened a Capitol One secure card. Today I pulled a TU report and was surprised to see I have a 742 score. I am sure this must be inflated because I've only had the cards for about a month.

Anyway, this got me thinking. I'd really like a new vehicle, was recently promoted, and can easily afford a new vehicle. But not sure when my credit will be good enough for a decent auto loan of about $10,000. I assume with only a month of credit history I won't be approved for a loan but want an idea of when I will be ready.

Advice?

You can certainly *get* a loan, but it is not likely to be at favorable terms. You can ask at your bank if they'll give you an idea of what you'd qualify for without doing a credit pull. If you wait until your new card is 6 months old, you'll get better terms.

Also: is there good stuff from the past reporting? Old accounts tend to stay for 10 years, unless they're negative. that often suprises people who have taken a break from credit activity.

Anonymous · ‎02-21-2016

Nope, no old good stuff. And there wouldn't be anyway.

The only thing listed are the two cards at 0% utilization.

Anonymous · ‎02-22-2016

I agree that waiting about six months is good. Put some of your purchases on your credit cards, keep the utilization low, and pay in full for six months or so. I did this for six months in preparation for an auto loan, and got one at 4.2% for $12,000 over 48 mos. I don't think that's so bad for such a short history, thin file, and low income. In case you're curious about the lender, it's called Up2Drive. I couldn't recommend them more. Even though I'd never heard of them, they were extremely easy to work with. Well-presented documentation, easy to use website, fantastic customer service reps who are happy to help a first-time lender out with the process. The dealer had never even heard of them, but the process was smooth. They reached out to me when almost no one else would at terms I could live with. Expect to shop around a lot and take many inquiries, even after building your credit a bit. But definitely give this company a shot. No, I'm not paid to advertise them. I'm just really that happy with my experience. Best of luck.

I would also recommend DCU. They offered me a similar rate, without me even opening an account with them. The reason I didn't go with them was because they asked for proof of income, which, as a waitress, made me sweat a bit. But they seem like a good company to deal with, too, that will extend a hand to thin-file borrowers.