Good (Fair) Lender for Marginal Credit

DanTheMan77 · ‎03-12-2014

Looking for some advice regarding an auto loan. I have about $1,000 that I can either use for a downpayment or to pay down CC's to lower my utilization. I was previously approved for a Capital One Blank Check loan, but I was looking at used cars that didn't fit the requirements (2007 or newer, less than 70,000 miles, franchise dealer only). I'd like to keep my payment under $350/month, but also need a nice car for work. I'm planning on buying a house next year and will need a reasonable payment to make the future DTI work. I was thinking an older Acura (TSX or TL), but I'm not set on that. I also don't want to lease. I drive 20,000+ miles per year. If anyone has recomendations on finance companies with reasonable interest rates that allow for slightly higher mileage (70,000-100,000 miles). Any help would be greatly appreciated.

Credit Score: 655 (myFICO)

AAoA: 7 years

# of positive trade lines: 4 (currently high (95%) util, balances total $2,500.) I could pay this down, but then I wouldn't have a downpayment. FICO should also bump to 675+ if I pay down CC's.

# of negative trade lines: 0 (none currently negative, 2 accounts show late payments. Most recent late was more than 4 years ago).

Income: $70,000 (salary)

Lenght of Employment: 2.5 years (15 years in field, continuous employment)

Previous Loan Experience: Current auto loan with Toyota Financial - wifes car but loan is in my name (36 months, 12 months remaining, never late). Short sale on home in 2009.

Debt-to-Income (DTI): 15% (no mortgage or rent)

Year of Car: uncertain (2005-2010)

Miles: uncertain (50,000-100,000)

Purchase/Refinance: Purchase

Requested loan term (XX Months): 60-72 months

Down payment amount: $1,000 (not sure if best used as downpayment or to pay down CC's)

Co-borrower/Co-Signer: None

Other: Bankruptcy discharged June 2011. No baddies post BK.

Remember0 · ‎03-12-2014

So preliminarily, I know that DCU will finance older/higher mileage vehicles. They don't have any cutoffs except the loan must be paid off before the vehicle is 12 years old. Generally look for local banks/CUs if you want to finance a relatively older vehicle.

That util is really killing your FICO. At DCU having a 675+ EQ FICO would allow you to get 1.99% for 65 months. Worst case, if they pull below that, their next tier puts you at like 5%.

I'd really try to get that util down, it'll greatly help. To get it to 50%, we need the balance to be ~1300, meaning you'd have to pay down ~1200. That'd still leave you with a decent down payment of 1k (can you swing the $200?). For a car <12k ish, a 1k down payment should help grease the wheel enough imo if you don't fall for dealer extras like gap or warranty. Personally I'd probably work on getting those cards to under 50 and apply to DCU. If it gets to under 50, I'm hoping your FICO will be just above DCU's 675 threshold. If you could pay it off, then I'm almost certain you'd qualify for DCU's 1.99%, but there is a small risk as the downpayment available is 0. Tough call, but I think it's worth it to at least get it down to 50%.

Out of curiosity, what bureau is that FICO from?

Remember0 · ‎03-12-2014

Another thought...which issuers do you have credit cards from? Split up the balance and credit limit by issuer if you wouldn't mind.

Paying down a few so you get to a <50% util, then working on CLIs with issuers that do softs (Cap One, AMEX, GERMB) can work as a 1-2 punch helping lower your util even more. That way maybe we can find a way for you to keep a 1k downpayment and eat your cake too (lower util so higher FICO)...

Last out-of-the-box idea: Does your wife have a credit card which you aren't currently on with low balance? Or vice versa: are some of the cards reporting on your credit report only authorized user cards (wife/relative is the true holder) with a high balance?

DanTheMan77 · ‎03-12-2014

655 is the EQ score from myfico. CC's are as follows: Capital One - $1000 limit, $950 balance; Capital One - $500 limit, $450 balance; Amazon (GE) - $1000 limit, $950 balance. No other cards between my wife and myself. Maybe I'll pay them down to 50% and see what it does to my score?

Remember0 · ‎03-12-2014

Don't just pay them down indiscriminately imo. I'd start by sending maybe $300 to that Capital One card with a $475 balance. After it posts, ask for a CLI on that card. If they initially deny, go through the EO (see the Cap One EO thread here).

Then I'd send maybe $500 to GERMB and after it posts, ask for a CLI...that way you are reducing util 2 ways and holding on to much of your down payment.

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Another question: Are all these cards in your name? Or are some in your wife's name? Or are they joint (different that authorized user)...I'm assuming they're in your name. Maybe your wife can apply for a card like Chase's Slate and transfer tha balance from one of these cards to further reduce util (and interest...slate has a 18 month 0% promo).

DanTheMan77 · ‎03-12-2014

They're all in my name... my wife doesn't work and never re-established any accounts after our BK. I've tried to get her to apply for a couple of cards, but she won't. She's afraid we'll get in over our heads again.

Remember0 · ‎03-12-2014

Well no need for this particular case I guess. I mean it would help, but I think with getting your util down below 50% and some CLIs, you can get what you want at a <5% APR. Unless one of your cards' APR is FAR higher than the other, in which case work on paying off the highest APR, I'd go with the pay down a little, and try for a CLI strategy.

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But your wife should seriously consider starting to establish some good lines. Even if she just gets two ccs, and uses one (alternating between the two every other month month) for coffee once a month, PIFs, and does nothing else, it's fine.

If not for this, it'll definitely help when it comes to the mortgage in a year (assuming you guys are going to tender a joint application)?

DanTheMan77 · ‎03-12-2014

@Remember0 wrote:
Well no need for this particular case I guess. I mean it would help, but I think with getting your util down below 50% and some CLIs, you can get what you want at a <5% APR. Unless one of your cards' APR is FAR higher than the other, in which case work on paying off the highest APR, I'd go with the pay down a little, and try for a CLI strategy.

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But your wife should seriously consider starting to establish some good lines. Even if she just gets two ccs, and uses one (alternating between the two every other month month) for coffee once a month, PIFs, and does nothing else, it's fine.

If not for this, it'll definitely help when it comes to the mortgage in a year (assuming you guys are going to tender a joint application)?

yeah, i know she should, she just dosen't want to. i think i have her convinced to get a couple of secured cards. it won't really matter for the mortgage, she won't be on the app since she has no income.

Remember0 · ‎03-12-2014

Gotcha, then it really is of secondary concern.

As far as the auto loan, I'd save at least 1k for a down payment. But do try to reduce your util by paying down + CLI. Maybe even apply for ONE new card after you get your util down. A suggestion: look at Comenity's no hard inquiry cards. Google Comenity soft inquiry pre-approval trick. I think it'll significantly help your FICO. Hopefully you'll get safely above 675 so you can get 1.99% or even less.

DanTheMan77 · ‎03-12-2014

How does DCU treat a second auto loan? I already have one in my name and this will be second.