Need advice on approval chances & more.

[Anonymous]

Need advice on what to do, both the husband & I's cars gave out last week. Needing to purchase at least one vehicle for now and carpool until he is able to swap out his motor. Looking to buy used somewhere between 20-25k and have a down payment of 2k. My concern is whether we should apply jointly or separately to better our chances of approval. Our scores are as follow:

DH: F8 - EQ593 - TU595 - EX599 - AUTO8 - EQ603 - TU599 - EX606 - AUTO9 - EQ653 - TU635 - EX636

MINE: F8 - EQ585 - TU586 - EX594 - AUTO8 - EQ591 - TU582 - EX598 - AUTO9 - EQ615 - TU584 - EX606.

I made about 43k last year and I have held this job for almost 2 years. 

DH made about 30k and has been at his job for 1 year. 

Any help is appreciated. 

[Anonymous]

For starter's I would look at the Cap One Pre-qual and both of you fill out seperate application's and see what rates are displayed for the both of you. It is a SP so it won't affect your credit and should give you a good idea of where you stand.

Secondly, I would highly recommend looking at a cheaper vehicle...what kind of used vehicles are you looking at in the 20-25k range? You can typically buy a late model (2014-2017) used car such as a Hyundai Elantra, Chevy Cruze, Etc.. with low miles, under factory warranty, for the 12-15k range. I wouldn't jump into a 20-25k range used car with those scores, as the rate will most likely be in the 10% range and you will pay a ton in interest over the course of the loan.

Depending on your actual credit history, I have seen people with less than perfect scores, score very well with captive lender's internal scoring systems and thus recieve pretty decent rate's given the scores.

[Anonymous]

Thanks for responding!

We're in California, and are were thinking of 2015-2017 Honda Accord. If not possible a Honda Civic. 

Husband has 1 secured card with Cap One. CL $500 and he recently brought the balance down to $200. Waiting on CBs to update. 

1 - $100 medical bill collection from 2013 (paid off.) That is all he has, no lates - no derogs. 

Currently only have 2 secured cards. OpenSky CL $300 - $0 bal & Cap One CL $200 - $170 bal (paying it off in full on the 15th.)

I unfortunately made poor credit decisons early on and they are still haunting me. 

1 charged off Macy's CC that should be falling off this year as it will hit its 7 year mark. 

2 paid medical collections ($50 each) - 1 VS CC paid settled for less - 1 gas collection paid in ful. 

I know dumb decions but you live and you learn. 

Can you go into a bit more detail on what you mean by captive lenders?

[Anonymous]

Captive lender's would be lender's such as Ally/Well's Fargo/etc...I think given the detail's you posted, you would be best trying Cap-One prequal...I would really stay away from such an expensive used car given your situation and buy something cheaper until your scores increase.

[Anonymous]

Understandable. 

So for now you suggest we apply separately? 

If we are both approved, would it be a good idea to then submit a joint application? 

[Anonymous]

I would probably apply jointly after the detail's you've given. See what Capital One will prequalify you at... they will give you an APR range based on the vehicle you selected at a Cap One Auto Dealer. The APR can/will drastically go down by simply adding a trade-in (you say your car went out, see if the dealer will allow you to trade it even if it isn't worth anything), the APR can also go down with the more money you put down, sometimes as little as an extra $100 down will decrease the rate. Play around with the figures and see what they come up with.

[Anonymous]

Again, thank you for your helpfulness! 

One more question. 

Like I mentioned earlier, DH just brought his balance down by almost $300, and I also paid down one CC almost $300 as well. 

But it doesn't appear that CBs have updated just yet. I was told by OpenSky they would be reporting on Feb 2nd, and based on previous reporting, it looks like Cap One reports for my husband around the 9th of every month. Should we wait to see an update on our scores before attempting the pre-qual?

[Anonymous]

That would be up to you, and your situation in how soon you need a vehicle. If you can wait for the CC's to report then yes that would be best, I would suggest paying them down more. Search the forums and read up on the AZEO method to maximize FICO scoring.

If you have for example 3 CC's:

CC 1: 2000 limit/0 balance

CC 2: 1000 limit/0 Balance

CC 3: 1000 limit/ $50 balance at statement cut

you will maximize your score... by simply having all CC's paid to 0 balance, and one CC showing a less than 9% balance of that specific cc limit.

[Anonymous]

Sorry for the double post, but the ideal situation for you would be to get by for about 6months+ with what you have and not finance a vehicle.

With a little work you could most likely see significant score increases in as little as 6 months.

Ideally you would have 3 CC's (secured/unsecured)

an installment loan reporting a less than 9% balance of original amount (research the old Alliant SSL technique, I think there are other CU's that are doing this but you will have to look into that)

and lastly following the AZEO method.

In addition, sending out PFD for the collections (pay for delete) and GW (goodwill letters) to get those lates/ charge offs/ collections off your report.

[Anonymous]

Okay, I think we might as well attempt to give it another week or 2 to see some sort of update. Currently we're having to borrow parents' cars and carpooling back and forth, it's been a crazy mess. But if waiting might gives us a better chance its probably worth it. 

Have you ever seen someone with a similar credit history be completely denied? That is one of my biggest fears, because we really need to be able to get to and from work...and we don't have enough saved to buy a reliable used vehicle cash.