Poor Credit Score, College kid.

[Anonymous]

Good Morning guys,

I've got some car loan advice I need.

I'm a college kid, who is generally pretty smart with his money, but my credit score is subpar (580 range)

Mostly because of an amazon credit card i had no idea i signed up for, i thought it was a gift card or something, then used that for about 30$ worth of stuff on amazon and the credit card bill was sent to my parents house when i was at school, they didn't show them to me, they went late and into collection, and I believe that is the only blemish on my credit score but it is big one I think.
I've paid my student loans on time, which are joint with my mother, although I think she pays them technically.

But I have a steady job while in school (30+hrs) and have been working there for 5-6 months now, also have a side photography business which brings in some cash every month.

If I were to put maybe 4,000$ down towards a say 8 or 9,000$ car loan, would that help my odds of getting approved. I think my dti should be OK, because i only have rent to pay for, technically and am bringing in close to 2k a month. Or will my bad credit score and short bad history not let this occur?

I just would rather get a loan, so I can build
my credit score and get something better than what 4000$ would, so some advice before I talk with a bank would be great.

Thanks

[Anonymous]

I'm not an expert and don't have a solid answer, but I think you might be okay. Putting 4K down on an 8K car with 24K in yearly income is great. It's the credit history which could hurt you. If you had a better history with that down payment and income you should be set. 

[ExplicitElicit]

Welcome!

Seems like you have everything going for you besides that CO from Amazon. Everything you've stated seems pretty straight forward, any dealership should be able to get you approved (however most banks have minimums on the loan amount, usually $5,000 min loan). Be prepared though that you IR isn't going to be great. IMO, I'm not sure you're already apart of a credit union (if not I would look into something local) and apply for membership. I think you'll have the best luck of getting a lower IR through a CU. Just be open and honest about what happened.

Have you paid that $30 collection account? If not do that asap!

[Anonymous]

How do i go about paying that collection? and Unfortunalty it is more than 30$ now due to late fees and stuff i never saw. It's in the 2-400 if i recall the last time i checked credit karma.

[ExplicitElicit]

More than likely its been sold to a collections agency, if you're using CK you should be able to pull EQ and Tu report for free. Pull it and look at the company reporting for CO. IT should have contact info, if not google should do the trick. If you need any further help let me know. 

[dabrian]

Pay 1k for a beater and hold on to your cash.

[Anonymous]

Been driving a beater for a good while now, sick of it.
And a makes sense about the Collection agency, i'll try to contact them

[Anonymous]

As stated with that large of a % down you'll get a loan.

You'll have e hold your breath at the rate for a few reasons in addition to the poor score, even if the score appear higher or you just has none...the fact is there the profile is thin and new ( again plus the little that's on there, is blemish) so the rate was gonna be elevated either way.
Back to that shortly

Next issue is, as mentioned by @EE...many general lenders aren't that interested in low dollar amount loans, which narrows the competition, which allows those doing those types of loans to go high

Also, based upon the amount, the age of the car eliminates some lenders who pass on vehicles of a certain age, period...the older the collateral,the more JUICE on the loan...

Just sharing with you, how many different directions the reasoning for hacking the rate can come from, all due to risk, either of credit, history, age or just not enough profit in small lending....so one is left with "certain" types of lenders/products....

That being said IMO this is the ONLY time in car buying when I'm ok with sucking up the high rate
a) The amount borrowed is low enough that the damage can only be so much (better now than with a multi thousand dollar debt on a depreciating asset)
b) Because of said low overall debt one can limit the damage by adding to the required loan payment, effectively lowering one's rate thus minimizing the high rate... again because an extra $50-$100 bucks per month at low dollar amounts "disappears" the loan rather quickly.

* As importantly do NOT squander away the ability to use double use your college years

Meaning as you're building your life with your education allow your credit to grow in the background...double using the same TIME

You've gotta get some CCs reporting on your profile ( cleaning up the CO goes w/o saying I won't bother with that) you've gotta build positive data over time, so you may as well build before you need AGAIN ( as in this car loan😉)

Since you have cash and a job a few secured CCs + this new auto loan (as well as the on-time student loans) will do WONDERS towards build positive data for your profile....Revolvers, like CCs have a huge impact because they help demonstrate monthly discipline whereas install accounts are fixed and not as fluid.

If Mom/Dad has a decent CC account they could add you on as an AU ( just for score manipulation purposes only...no issuing of a card necessary) perfectly legal and allowed, so worries ( did same thing for my 21 & 19 y.o. and 15 y.o. will be next)

If you're added on to a low/no usage card that's preferably been open say 3-5 years ( you're young) it would arbitrarily add bulk and history to help your score...this could help you secure a few CCs of your own thus beginning your process of self growth

Then say armed with 6-9 months of history you may be able to refi out of that high rate car loan ( again possibly not because the loan amount isn't attractive enough for many lenders and again HOW you pay can effectively lowering your rate anyway)

Remember, just because you get the cards doesn't mean you have to create debt...just pay for gas or Netflix or something and allow the overall history of several TL add up over you college years and by the time you're out and ready for bigger better things

You profile is thick, proven and graded as low risk compared to a NEW to credit profile that did nothing while in school....this is huge in terms of possible security deposits on apartments or the decision to say yes/no in the 1st place...let alone when it's mortgage time etc

Good Luck

Lots of nice cars in that sub 8-10k range
Enjoy

[Anonymous]

I know its been a few days since your last post but I thought I would chime in.  I strongly suggest you visit the rebuilding section of this site, you will find plenty of information on how to address your credit issues which can have a tremendous impact on your future.  Unfortunately kids are not taught anything about credit in school (this is a subject every student should be educated on) and since credit dings hit you for 7 years they can have a huge impact on what you can and cannot do and what it costs to do it.  One thing you should do for sure if get your free annual credit reports from all three agencies to know exactly what is and is not on your credit report and then visit the folks in rebuiliding and they will get you on the right track.