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Established Member
Posts: 37
Registered: ‎02-22-2016
0

Preparing credit for Tesla auto loan

[ Edited ]

Hi there,

 

I have a Model 3 reserved (excited!) and will probably need to take delivery in about a year from now. In the meantime, I'd like to prep my credit so that I can be sure to get the lowest possible prime rate on a loan.

 

My specific question is regarding credit card limits - I'm in a position to ask for an increase on my Amex, and could probably soon ask for an increase on a few other cards as well (current limits in my signature). Are there any known guidelines around what is an optimal level of total credit limits across all credit cards as a % of income?

 

AGI is roughly $83k. I am happy to hold off on increasing CLs if it would be a potential flag for an auto lender to have too high available credit vs. income, but presumably to at least some degree it's a positive to have somewhat high CLs, right? I assume so because that would indicate responsible use of a high CL. I'm just not sure where this threshold is.

 

I don't carry a balance on any of the cards, and this would be my first auto loan (had a lease years ago that is no longer reflected on any of my reports). Also do not have a mortgage. I do have a student loan (paid in full) with history reflecting on my report.

 

TU: 797 (Credit Karma) EQ: 787 (Credit Karma) EX: 709 (FICO)

Experian score is lower due to a 6+ yr old student loan charge off which will be removed prior to applying for the auto loan in a year. TU and EQ scores bounce up by about 10 pts. if I check CK after paying off all of my balances for the month. No negative marks on TU or EQ.

 

Thanks!


Amex HHonors Surpass: $25k | Chase Sapphire Reserve: $16.75k | Chase Sapphire Preferred: $1.25k | Chase Freedom - Signature: $5k | CapOne QS - Signature: $6.5k | CapOne QS: $4.65k | Neiman Marcus: $2.5k
Valued Contributor
Posts: 1,145
Registered: ‎12-16-2014
0

Re: Preparing credit for Tesla auto loan

I don't think you have anything to worry about.  Unfortunately I suspect you will have far more than a year before your 3 is built.  I have a family member who works for Tesla and he tells me that the first year of production will be taken up by employees, VIPs and they are far from starting production.

 

In terms of your credit your in good shape, I wouldn't worry about increasing CL as long as you don't use them.  Having higher CL rarely hurts, if it does it would be for a mortgage, car lenders don't get that deep into your report.  They are looking for scores, baddies and debt to income ratio.  I would establish a relationship with a good credit union or two like Penfed, DCU or NFCU.  Not sure what financing Tesla will offer but most likely a good credit union can beat them, afterall they don't need to provide any incentives to move those cars, at least early on.

NFCU Go Rewards 18k, NFCU Go Rewards AU 22k, NFCU CLOC 15k, NFCU N Rewards 2k, Amex ED preferred 12k, Amex BC 1k, USAA CL 2k, Hawaiian Air Barclay 1.2k, Venture One 10.1k, Target 3.5k, Citi Costco 2k, Citi AAdvantage 7k, NFCU Platinum AR $2.4K, Penfed Platinum Rewards $5.5k. PayPal 2.2K

Gardening till 2018, Goal of 700's by the end of 2017
MyFico Scores March 2017: EQ 673 TU 675 EXP 683
Established Member
Posts: 37
Registered: ‎02-22-2016
0

Re: Preparing credit for Tesla auto loan

[ Edited ]

workingfor850 wrote:

I don't think you have anything to worry about.  Unfortunately I suspect you will have far more than a year before your 3 is built.  I have a family member who works for Tesla and he tells me that the first year of production will be taken up by employees, VIPs and they are far from starting production.

 

In terms of your credit your in good shape, I wouldn't worry about increasing CL as long as you don't use them.  Having higher CL rarely hurts, if it does it would be for a mortgage, car lenders don't get that deep into your report.  They are looking for scores, baddies and debt to income ratio.  I would establish a relationship with a good credit union or two like Penfed, DCU or NFCU.  Not sure what financing Tesla will offer but most likely a good credit union can beat them, afterall they don't need to provide any incentives to move those cars, at least early on.


Solid tips, thanks!

 

I did get one of the first in-person reservations day-of, but I'm on the east coast which is prioritized after employees, after west coast, etc. so you're probably right unfortunately.

 

I'll definiitely look into the credit union option.

 

Anyone have any ideas re: any other potential downsides to increasing CL on a specific card to what essentially works out to around 30% of my annual income? This would bring my total CL across all cards to around 76% of annual income.

 

Things I can think of would be inability to get more credit from Amex in the future on a new account (although presumably I could call them and transfer some credit over), the potential flag mentioned above re: mortgage lending, etc. Definitely do not want any kind of flag for mortgage lending; I'm trying to optimize and get to the 'perfect' level of CL (if such a thing exists) to guarantee approval for the best prime rates on loans. I do not currently have any debt and don't carry a balance, so this is purely about the limits themselves.


Amex HHonors Surpass: $25k | Chase Sapphire Reserve: $16.75k | Chase Sapphire Preferred: $1.25k | Chase Freedom - Signature: $5k | CapOne QS - Signature: $6.5k | CapOne QS: $4.65k | Neiman Marcus: $2.5k
Frequent Contributor
Posts: 253
Registered: ‎11-19-2016
0

Re: Preparing credit for Tesla auto loan

I would certanly try PenFed.  They go as low as 1.49% for 36 months and it doesn't look like there is any reason for them to not give you the going rate.  From my understanding, everything workingfor850 said is 100% correct.  Available revolving credit likely won't affect your scores in any meaningful way, if at all, provided they are comfortable with your DTI ratio and revolving utilization.  

 

Speaking of scores, you may want to check your actual FICO 08 scores as the Credit Karma scores can be nowhere near the Vantage 3.0 scores (which lenders do not use).  VS3 can be quite forgiving for negative information and at the same time seriously penalize for minor things like new account openings on thick files and inquiries.  To put that into perspective, my actual FICO 08s are in the 730s where I pretty much qualify for anything but my Credit Karma scores are currently in the 640s.  My wife's FICO 08s are in the 770-780 range and she always has 700/710s on CK.  There are many examples of people with real 600-700 scores having 700-800 Vantage 3.0 scores that don't understand why they get denied when they have "excellent" credit.  With that said, PenFed uses a NextGen score that is likely slightly higher than your FICO 08, and most auto lenders will use a specific auto industry FICO score.  Regardless, those should be much closer to your FICO 08 scores than the Vantage 3.0 scores.  Best of luck!

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