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Auto loan for short credit history

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Anonymous
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Auto loan for short credit history

Hi, all! I am new to this forum! Hope you guys are having a wonderful morning.

I made capital one credit card with $300 limit and want to establish my credit (new immigrant). Supposedly, I can have my first FICO score in beginning of Janurary 2017 which is in about 3 months. 

I am wondering whether I can get an auto loan with competitive interest rate (perhaps 5-8 percent) with 6 months old credit history. I have no collections or any bad marks and made on-time payment and plan to do so. 

This is information about me and the car.

Score: N/A until Jan. (but Vantage shows 663)

Inquiries: 8 hard inquiries (I was not noticing how the credit scoring system works)

Car

Model: 2015 Hyundai Sonata

Price: $12000 (with 40,000 miles on it)

Down Payment: Plan to make $2,000

 

I have an account at local CU and had business with Statefarm insurance for a year and half. 

Do you think I can get approved for an auto loan in Janurary when I have my FICO score?

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1 REPLY 1
Anonymous
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Re: Auto loan for short credit history

With only one tradeline in your file, and only a 6-month history on it, and it having a very low limit - I'd say your chances would be better if you achieve a few things first:

 

--Ask your CU for a small personal loan, even just $500 or so.  Then pay on it for a few months.  This establishes another line of credit, and it will be an installment line (the same type as the much bigger car loan you are wanting).  Ask them if they can use the same pull to consider you for a credit card as well, to increase your credit mix.

--Add another 4-6 months of solid history with your Capital One card.  As you approach your loan application month, allow a small balance to report (don't have a zero balance on your report when you go to apply for the car loan).

--Ask Capital One for a credit line increase (if your card is unsecured).

--Keep going on your perfect payment history and keep your utilization low.

 

At 6 months (January) you might be able to get a loan, but it likely wouldn't be with the interest rate you are seeking - extremely thin files (like yours, which only has one tradeline in it) are still considered high-risk regardless of score/payment hitory, and so interest rates are higher on those.  If you can wait another 6 months and bulid your file a bit in the meantime, you will easily qualify for prime rates (your FICO score will be based on nothing but positive information).  Prime rates on auto loans are generally under 3%.

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