@Anonymous wrote:
September 2008 i was discharged of chapter 7 bankruptcy. I purchase a car in December 2009 with a very high interest rate 20.95% from AmeriCredit. The loan was 16,775 for 60/months payments 443. Now the balance is 9,404 after 13 pymts. Will refinancing lower or increase my Fico score. Will I lose the credit history of the loan by refinancing. Should I continue making the payments until the loan is pay off. That will take about 15 months because i add 300 to every payments. i will then have over 24 months of payment history. I need to make this decision soon because I will be looking to buy a house by September 2011. My Fico score are Equifax 652 TranUnion 688
Refinancing will lower your FICO score because of the new credit. Any damage is temporary (and minor <20 IMO) and you'll rebound your points by the one-year mark. If you are certain that the new loan would be FAR less than what you have now, then economics trumps FICO, especially since you'd have a lower reported payment. However, if you are planning to buy in less than a year and that date is firm, then you'd have to first firgure your DTI. If your DTI ratio is marginal due to the reported $443 payment, then it may be worth the risk to have a lower score in exchange for improved odds on a home. If income isn't an issue, then I'd wait out of fear the FICO wouldn't rebound in time. BTW, the length of payment history on AmeriCredit doesn't matter. If you paid it off tomorrow, you'd be in a better position come mortgage-time. In other words, if you paid it off tomorrow or 15 months from now, the end score result would be the same.
