Preparing for Auto Loan early next year. Need advice.

[jay8347]

Hello everyone

I plan on applying for a $20000-$25000 auto loan around May of next year and wanted to be prepared way ahead of time. I make around $45k a year. I currently have an auto loan with a $4888 balance and plan on paying it off in February. I've never been late on any payments and i'm actually paying it off a year early. My TU score is 724,my EX score is 723, and my FAKO Experian score is 675. The only negative mark I have is on my credit report is on Experian for an old verizon bill from 2004 which went to collections. It has since been paid and should fall off my report by October. The only other credit I have is a Chase Visa credit card with a CL of $2000 and a current balance of $967 which I plan to pay off by September. I've also never been late paying the bill, but i've carried a high balance on it for the last few months which screwed up my score a bit. The plan is to charge around 20% of my limit and pay it off in full every month. My question is should I be doing anymore than I currently am to secure the best loan when the time comes? I'm afraid I may not have enough revolving credit since I only have one CC which has only been active since 2008. I've only applied for one CC since then and I was denied due to my high credit utilization at the time and the ding on my Experian report. Will paying off my current CC balance help my score enough? Should I apply for another card that hopefully checks my TU or EX score? Any help would be greatly appreciated.

[curlylox777]

I would suggest getting a 1 additional secured CC to add to your revolving credit. Secured, so that you are definitly approved as applying will initially lower your score(5-10 pts) either way. Use this card only with the intention to help raise your credit score, by charing small amounts(no more than 20%) and paying it off in full each month. You are already in a good position so this will only benifit your credit score in the 6-10 month picture. Your score will also go up some points when both those other dings fall off your report.

You are okay with just one CC, but with 2 CC's you would have 2 revolving accounts, and 1 installment loan thus being able to raise your score at a faster pase in comparison to just having 1 revolving account on record. 3 accounts in good standing is optimal for raising your score.

Plus, since you are looking to apply in about 10 months time, you're giving yourself a realistic timeline to improve score even more than what your currently at.

[Anonymous]

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@jay8347 wrote:

Hello everyone

I plan on applying for a $20000-$25000 auto loan around May of next year and wanted to be prepared way ahead of time. I make around $45k a year. I currently have an auto loan with a $4888 balance and plan on paying it off in February. Good I've never been late on any payments and i'm actually paying it off a year early. My TU score is 724,my EX score is 723, and my FAKO Experian score is 675. The only negative mark I have is on my credit report is on Experian for an old verizon bill from 2004 which went to collections. It has since been paid and should fall off my report by October. The only other credit I have is a Chase Visa credit card with a CL of $2000 and a current balance of $967 which I plan to pay off by September. I've also never been late paying the bill, but i've carried a high balance on it for the last few months which screwed up my score a bit. The plan is to charge around 20% of my limit and pay it off in full every month. Why? My question is should I be doing anymore than I currently am to secure the best loan when the time comes? See below I'm afraid I may not have enough revolving credit since I only have one CC which has only been active since 2008. But you/do will have a paid off car history. I've only applied for one CC since then and I was denied due to my high credit utilization at the time and the ding on my Experian report. Will paying off my current CC balance help my score enough? Should I apply for another card that hopefully checks my TU or EX score? Any help would be greatly appreciated. I would apply for a both a Capital one product and a target card.

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What can you do to be a better candidate?

a- a larger downpayment. you can never have too high a downpayment, unless you want to pay so much of the loan down that you are now financing less then the bank finances.

b-consider credit unions, if you have a military affiliation NFCU or USAA.

c- your scores and history seem fine yo apply now for a cap one card and a target card. you will probably get both.

[jay8347]

Thanks for the helpful advice. a. The plan is to put down around 7-8k if possible. No less than 5k. b. Would I need to open a bank account with the credit union prior to applying for a loan with them? c. I definitely plan on applying for a card once my balance on my Visa is paid off. I've heard a few bad things regarding Capitol one, including them not reporting your credit limits to the credit bureaus. If that's the case, it may look like I'm maxing out my card, right?