For the past couple of years I've encouraged my son, who's now 25, to establish his credit, but other than to have received, just over a year ago, a secured Capital One Visa, with a credit line of the $500 he put in, he'd flat out refused until just recently, which is to say that when Capital One raised his limit to $800 and removed the "secured" restriction, he applied for a Kohl's card and was approved for $1000, which he has used maybe twice, and paid off the balance each time he's used it. His utilization on the Capital One card is at but 10%. Prior to the Kohl's application his credit score (via Experian) was in the lower 700s. It is now in the upper 600s. Six-ninety something, he thinks. The inquiry from Kohl's knocked his score down a bit.
Needless to say, then, his credit file is thin, and as yet he is relunctant to obtain another card though he's receiving preapproved offers from such as American Express and Discover It. I'd like to see him apply for either one of the two, as both are offering zero percent interest and cash back rewards on the Discover for such things as gas; but is now the time to apply for anything?
His income is okay, but not great. $28,000, or there abouts, excluding a couple of thousand more he receives by way of bonuses, throughout the year, and his expenses are minimal. Excluding Capital One and Kohl's now, he has automobile insurance which is $76 on a car that's not running, cell phone $80, and his portion of shared rent, which is $500, utilities included. He is engaged, but unmarried, has no dependants and has been at his place of employment for more than 3 years and is expecting an 18% raise within the month that will accompany a promotion. The problem is, he needs a car now, but is hesitant to apply for fear of being turned down wherever he applies due to his thin credit file and current income.
I don't have a problem co-signing, should he need me to. The problem is, he doesn't want a co-signer. He wants to do this on his own but fears his chances of being approved are slim due to his thin credit file and low down payment which wouldn't be more than $1500.
I ask, then, of those who have far more experience in these matters than I do, what are his chances of being approved for an auto loan of around $13,000 that can't cost him more than $300 a month, all things considered? Should he apply? Where? Should he go ahead and apply to American Express or Discover prior to applying for an auto loan, in order to build up his credit file, or wait? I just don't know and would so appreciate some sound advice.
Thanks.
