Can I be approved?

[Anonymous]

First off... I'm learning a ton from these forums and working to fix my score, so thank you to everyone who contributes!

Here's my situation (see below for the list)... My FICO from this site shows 653.  I just paid down some of my credit cards ($287 balance on $1200 limit and $267 balance on $1000 limit).  The updated balance isn't showing on my credit report yet, but should in a few days. I'm waiting until the balances update to buy all 3 scores.

I have 3 collections from private student loans that total just under $60,000.  Will that automatically cause a denial?  They show late as of May 2011, but these specific collection entries appeared in May 2014.  I was sued in June so a lawyer is handling 2 of them and I won 1 magistrate case today for around $11,500.  I don't even know if all of this info is relevant.  Does the amount of the collections matter?  

I'm most worried about the fact that I'm self employed. Do they always ask to see proof of income?  Of course I report my income on my taxes, but with all of my deductions it looks like I make a lot less.  I can provide bank statements but I have no idea what they need to see. I've read that some people don't have to show pay stubs.  Is that true?

Am I a lost cause right now for a car loan?  I can have $2-3k down payment and am looking at used vehicles that are around $16-19k.  Would a bigger down payment help?  What places should I try first?

Thank you for any help!  I'm scared to even try because I don't want to be denied but I'm also trying to wait because I want my score as high as possible.  I'm just not sure how much longer my car will last.

Credit Score: myfico 653 (lower cc balances not showing yet though)
AAoA: 10 years, oldest 14.5 years
# of positive trade lines: 19
My fico report says I have 39 accounts (many of these are student loans showing separately even though they're paid in 1 payment each and are billed as 1 payment). I have 3 major credit cards. One of them is closed by my request. The other 2 have balances around $270 each on $1000 and $1200 limits. All store cards have $0 bal.
# of negative trade lines: 16 accounts with negative indicators. Nothing has been late for 2 years though.   I hope I'm looking at the right area on my report for these positives and negatives.
Income: around 60k+...it can vary
Lenght of Employment: self employed 3 years
Previous Loan Experience: car loan for $5700 paid off in 2006. Never late. Is this too old to help me?  My student loans total around 98k and are all on time for 2 years.
Debt-to-Income (DTI): 20%
Year of Car: 2012
Miles: 20-30k. Still looking.
Purchase/Refinance: purchase
Requested loan term (XX Months):
Down payment amount: 2-3k or more if it can help
Co-borrower/Co-Signer: no
Other:

[Remember0]

On your taxes, lenders really care most about the AGI line on the 1040...does that reflect the 60k of income? If you put self employed, yes, you will almost always be asked for your tax returns/bank statements. If it is not misleading, you can consider putting down employed as a Manager or something at the client you are currently working for perhaps? Again, not recommending lying, don't do that. Only do so if it would not be misleading.

The collections can make things a little harder, but I think you'll be okay for an auto loan. If you can wait, I might try DCU first after the lower balances report. If DCU doesn't work out, I'm pretty sure a lender like Capital One would approve you. But like I said, with a 650 FICO score, I'd try DCU definitely. The down payment will definitely help if worst comes to worst and you have to rely on a dealer to arrange financing, but I don't see it coming to that.

[Anonymous]

Thanks so much for your reply!  It's just shy of 60k but that's including my husbands income because we filed jointly, so that doesn't much help me.  I can show bank statements and wouldn't be misleading if I applied as manager, so I will consider doing that.

I just bought my other scores : EX 647, TU 651, EQ 657.

My score went up 4 points from those credit card payments with EQ.  I don't know about the others because I didn't have the scores at the time.  I wanted to start applying as soon as possible but I'm just not sure if it's the best idea or if I should wait a few more months.  I don't want to be denied and have my score go down for nothing.  How long does it generally take to increase your score just by paying on time?  The estimators for each 3 bureaus came back with significantly different information so I don't know what to believe.

The date assigned for the collections is showing as Feb 2012 so it's possible they didn't just pop up in May like I thought.  Does that make a difference?  i kept getting alerts via Protect my ID which made me think that it was new.  I got 37 alerts of potentially negative information added to my account in May.  Is that normal?  Can they really report negative information 9 times per week (3 loans, each 3 times per week)? Does the age of a collection matter, or just that it's there?  Does the amount of it matter in the eyes of the lender?

Because I just won the court case for one of the collections (the other 2 are pending), does the designation of "collection" change to something else?

From everything I read, Capital One was one that I was going to try.  I was looking into DCU and wasn't sure if I would apply, but it probably can't hurt.  Would applying at the dealer be a bad idea?  After I try the others, of course.

It seems like 660 is the score that goes into "good" from "not good."  Will those few points make a big difference for me?

I truly appreciate your help!

[Remember0]

IMO it doesn't matter if you filed jointly. As long as you have the 1040s that show 60k of AGI, you're good. Plus you have bank statements just in case they want proof you alone get 60k. I think you're set on those lines.

Just paying will take a long time. What could make a difference is util. Say your util was 50% at the moment, if you paid it down such that all cards except 1 reported 0 balance and 1 card reported < 10% of it's CL as balance (that strategy maximizes FICO), then you might see a small bump as soon as the 0 balances reported.

Um, no idea personally if that's normal. My hunch is no. Could be that they are updating the same account maybe? Either way, I'd pull your EX report (1 free every year @ annualcreditreport.com ) and make sure you don't have like 39 collections accounts haha.

When you say won lawsuit, what do you mean? Like you don't owe the debt anymore? Ask your lawyer, but if you don't legally owe the debt, I fail to see how they can even report it to your bureaus at all since reporting is a collection activity. Again ask your lawyer before doing any kind of dispute and definitely don't contact the CA without your lawyer's advice.

Meh, 657 -> 660 isn't a huge deal. Might bump you down one tier at some finance companies, but that's only going to be like 2-3% higher in terms of APR. I think you'll still get good rates.

I don't think an app to DCU would hurt. Yes it's an extra 1-2 INQs, but by the time you're done, you'll have a bunch if you let the dealer try to beat your rate. Plus they seem to be generous to people with credit profiles similar to yours.

Finally if you don't mind the INQs, there's no loss in having the dealer try to beat your rate. If however you are happy with either the DCU or CapOne approval and do NOT want the INQs, I strongly recommend freezing all three bureaus before going to the dealer (because saying no don't pull my credit, I'll use my own financing isn't enough to stop what seems like a bunch of dealers from pulling anyways). But the key here is ideally you have your own approval at a good rate that the dealer then has to try to beat. If you just walk in w/ no idea what you qualify for, they might fleece you on the rate.

[Anonymous]

I have all 3 reports from this site and the collection is on each one 3 times because there are 3 loans that made up my loan payment.  It's also on there 3 times as an inactive negative.

On the 3 reports from Protect my ID in March it's on there 9 times!!  3 as collections, 3 as AES/NCT inactive negative, and 3 times as National Collegiate Trust/inactive negative.  I don't know how accurate the scoring is on that site, but in March my scores were EX 576, EQ 584, TU 584.  If they're correct maybe they rose so much now because 3 of those dropped off and aren't currently showing on my reports on myFICO.

My util is 20%.  One of the credit reports says that's bad, and another says it's good (you can see why this is frustrating to someone trying to figure this out and fix it).  I can pay more to get to the ratios you mentioned which means another month until they update since they just did over the weekend.  I'm so impatient!  When I played with the score calculator the score didn't rise at all when I selected pay in full and pay mostly off.  It seemed odd but who knows.

With the collections, I'm being sued on all 3 right now.  One went to the magistrate and the other 2 are at the county level because they're over $12,000.  I handled the magistrate case myself because it didn't make sense to have my lawyer do it and charge me $600.  It was stupid easy to win because junk debt buyers just assume you will settle and came unprepared.  I'm not paying a junk debt buyer.... I just can't do it.  They can appeal the case and if they do my lawyer will handle it because it goes to the county level at that point (which I can still beat myself but it was worth the money so my cosigner stops freaking out).  I don't know how often they appeal but I'm confident I'll win all of them anyway.  I don't know if they have to be dismissed with prejudice to mean I don't owe the debt or not, but it doesn't necessarily mean it's taken off my report either way.  The negatives will still be there, but since they're almost 4 years old it might not be hurting me as badly?  The paper I received today just says dismissed in favor of defendant.  The statute of limitations to collect is up in May 2015 but I know they can still try to collect after that time, they're just not legally able to do so.  They should be off my report by 2018 but I can't wait til then to get a car!  I hope all of that makes sense.  I'll ask my lawyer though.

I was hoping to not include my husband in anything because he pays the rent, and I don't want to have to include that on the app because rent is $1450.  He makes more than me but his credit is worse at the moment.  In addition to bank statements, do they accept documents showing payments sent to me via Paypal?  Square and Etsy are deposited into my bank but Paypal isn't because I use their debit card.

It's all of these unknowns that are scaring me and making me not apply!  I was hesitant about DCU because I don't want to change my banking, though I don't even know what's required of me if I use them.  I haven't researched that far yet because I'm paranoid about being denied.  I'll just have to get all of my paperwork in order and go from there.

Thank you for your help!!  You're the best!

[Remember0]

Paypal merchant statements should be fine for verification purposes with most banks.

[Anonymous]

***UPDATE***

I thought it would be helpful to update this in case others are in a similar situation.  I'll also add this to the auto loan approvals when we pick a car.

On Thursday night I decided to apply for Capital One. I got an instant approval on the web that said to call so they could verify information.  When I called they only verified who I was and asked me 4 questions based on my credit report.  They didn't ask for income verification which was awesome.  I thought for sure they would because I'm self employed.  I was ready to send in my tax returns but I'm happy I didn't have to deal with that and any possible complications.

After I got off the phone verifying my information I noticed an email that said:

We’ve received your Capital One Auto Finance loan application. We are currently reviewing your information and we will email or call you within three business days to provide you with a status update.   We apologize for the delay and are committed to providing you with a hassle-free loan experience. Thank you for considering us for your auto loan needs!

9 minutes after the email above I got an approval email with the terms.  3 minutes after the terms email I got the email with the FedEx tracking number.

Up to $25,200  (I asked for $21,000)

5.10% - 2014 and newer

5.66% - 2013

6.23% - 2011-2012

7.18% - 2007-2010

My approval and terms were on the website along with the required information needed, fax cover sheet, space to enter dealer info, etc.

When I checked the next day I logged into the site but it would no longer show me the approval and required items, and said it was currently processing.

I called right away and the phone system said my phone number verification was needed (it was already checked off the night before).  The man said I had to wait for the You're ready to shop email, which the site already said when I was able to see everything!  He said I wasn't fully approved yet.  I couldn't believe it and knew it was too good to be true!  I know better than to get excited, but I did anyway.  An hour or so later all of the info was on the site again.  I don't know what caused it, customer service was zero help with information, but I now have the packet in my hands!  It's possible they were just in the system to print out my stuff?, but to say I wasn't yet approved was annoying because I already had the approval email with terms, and could access everything on the site the night before.

I was considering applying with DCU but I'm just not sure if it's worth the trouble and if they would be able to do much better based on the rates I see posted on the forum.  I'm considering having the dealer run my credit to see if they can beat the score but I don't know if that's likely or worth it.  The dealer I'll probably go to uses First Commonwealth, F.N.B Corporation, Ally, Chase, and Cap One.

My auto score thorugh Equifax showed 650, which was a bummer because my EQ shows on this site as 657.  I only had 1 auto loan that was paid off in 2006, so maybe it's low because it's so old and was less than $6000.

[Anonymous]

Another Update!

I let the dealer run my credit and he showed me my credit score... it came up as 689!  I was very surprised because my Capital One approval shows 650.  His screen said it was 08 Auto.  He told me I was Tier A, but I don't know what that means.

I realized too late that the finance guy tricked me.  I'm not 100% sure but I can't help but feel that way, so don't let this happen to you!  He said all of the banks came back at around 7% and I told him my blank check was for around 6% (I didn't just come out and tell them in the beginning because I wanted to see what they could get me first).  I handed him the check and he said "Oh you don't want 72 months?"  Um NO.  I very clearly told the salesman I wanted 60 months max.  The finance guy said "well that changes things... let me see what I can do."  Cap One was 6.23% and he said they could match it and I said no, I want them to do better.  They went to 6.19% (Wells Fargo).  At one point he said he almost got me 5% and was giving a lady hell but she wouldn't budge.  I'm just really annoyed I didn't fight harder for a lower rate.  Lesson learned.

He also said that people who come in with the Cap One checks usually have pretty high rates.  He was dancing around it and basically said no offense, but people with those have bad credit and high rates.  He looked shocked when I said it was around 6%.  I wish I could just move on from the whole thing because I got a car and it's over with, but I keep thinking about how slimy they were and what I could have done differently.  He also tried to trick me into the stupid warranty by saying "So you're ok with the $450 payment then?"  I said no to the warranty yet he tried to trick me anyway.

My response to gap insurance and the warranty was no thanks, I read too much on the internet and I'm your worst customer right now because everyone says to skip all of the extras.  Of course he then came down in price on all of it, just like everyone says.  At the time they seemed nice and we were joking around, but looking back they are nothing but slimebags.  In the end I wish I would have gone to the no haggle dealership.  They price cars to move and there are no surprises.  I got a 2012 Escape Limited with only 16,000 miles so I can't complain too much but it still bothers me days later!

[CreditDunce]

Thanks for posting the updates.  It really helps when people follow up with how things turned out.

Personally, I would still check with DCU to see if they can beat the rate.  At least if you aren't planning on app'g for anything else.  If you refinance in 30 days or so, the dealership doesn't get to keep any kickbacks for the loan. 

I am not sure what the chances are, but it would only cost 2 HPs with EQ.   One of which should be coded as an autoloan and not count with your other INQ's.