12-05-2012 03:36 AM - edited 12-05-2012 03:40 AM
I was wondering if it is possible to get a small car loan with a credit score of 588 EQ/606TU ? I need a "Major" loan [ i think that is what is called] to build my score. I currently have revovling credit cards which are paid on time but I am hitting a CC plateau. Is it crazy of me to think I could get a 10k loan for a 05 or 06 car? Plus I need a care that follows safety regs now My current car has a horrible rating for safety and I am BIG on that.
Any useful advice would be great! If any of you have had success with scores similar to mine, please let me know! Please tell me if you did in houtse financing, hrough your bank or online third party and how much did you put down.
Oh just wanted to mention I only make 1000 a mo. unfortunately "full time" jobs are hard to come by. Laast time I inquired about buying a car they told me I would need a cosigner because I don't make enough. With millions unemployed, do lenders think most "individuals" are making 2-3k a month?! [sorry for my rant,but just saying].
12-05-2012 06:59 AM
I think you will have a problem with your income...you are asking for a loan almost equal to your annual income, which doesn't create a tremendous amount of confidence with a bank. I agree that you need an installment loan of some kind to build your credit, but a $10k car loan may be a bit much. I would work on how to increase my income first, but everyone has their own plan.
Best of luck!
12-05-2012 10:04 AM
Don't ever get a loan for the sake of a score. Based on your scores, you'll be paying thousands in interest to have a loan to improve a FICO score that probably won't increase at all. There are plenty of examples of those who lost points just by adding a loan, present company included. Now if you need a loan for a car, then that's different, but never do it for a score. Loans are also a tiny part of your mix of credit and FICO scoring. You'll see bigger gains via adding a revolving acct or two if that's what is needed to improve your mix. There are many in here who hit into the 800s with no loans reporting.
Based on what you posted, I don't see approval as possible either. Your rate would be approaching, if not over, 20%. Interest paid would likely be in the $5k range. Your DTI would be at least 25% off an income of $1000/mo and that by itself is too high, and that's aside from your regular credit and housing payments, if any.
If I were in your situation, and I have been, I would save up and pay cash. Take the $250-$300 monthly that you would have paid in a monthly payment anyway and sock that away with the down payment you saved. Use the next several months to focus on rebuilding your credit and when your scores are in the upper-600s, then try again and you might be able to get a better car than now and save thousands in the process because your rate will be lower. And maybe the income situation would have changed in the time being.
I also noticed in your other post that you are interested in a mortgage. Buying a car now will eliminate any odds of getting a home in the future due to the impact of DTI. You would have to pay off the car first should you go through with the purchase and the income would be an issue too.
12-06-2012 07:12 PM
Naturally ^^^Ilecs said it best.
Given your present situation, it is not a good idea to get a car loan. In fact, given your present situation, you need to be concentrating on generating income rather than generating loan and interest expense.
I was near your scores when I was discharged from my BK in 2009. I had to have a vehicle for work as I had surrendered my vehicle in the BK. I got a beater for cash. It took me two years to rebuild from your scores to the upper 600's and lower 700's). That is when I financed a vehicle. The best thing you can do to increase your score is buy one for cash, a beater, and use it up while you are working on your scores and your savings. Revolving accounts are helpful to your FICO, but you probably need to go to the rebuilding section first to get rid of the negatives before you even attempt getting a credit card.
You can do it if you plan it. Just coming to the board is the first step. Some people have built up their credit much faster than I did (and I'm still working on mine). But, based on your post, your first priority is increasing your monthly income.
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