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Will this Auto Loan be a plus or negative?

New Member

Will this Auto Loan be a plus or negative?

I am looking to buy a house this year and want to get the best rate possible.  Right now my FICO score is 668.  This is due to high balance to limit.  I will be paying these off in the next two months.  Using the FICO estimator, after their paid off it suspects the score to end up in the 698-740 range.  Here is my status:

Credit Cards

  Discover             3000 limit        Balance 0

  Capital One        4500 limit        Balance 4200

  Capital One        2500 limit        Balance 2200

  HSBC Best Buy 1150 limit         Balance 0

  Old Navy             500  limit         Balance 0

Installment Loans

  Student Loan        71 Monthly     9000 Balance

   ATV Loan           198 Monthly     7000 Balance

   Ally Auto             494 Monthly   18500 Balance

 

If I trade the vehicle in (08 chevy silverado, crew, z71) for a newer, cheaper vehicle (12 jeep wrangler) will this give my score a boost at all seeing as my monthly payments will be cheaper?  I know the inquiries will take a hit and the AAoA but what do you think the overall affect will have in say 6 months? 

 

Previous Scores - TU 668, EQ 676, EX 649 = FICO 668 (2/17/12)
Current Scores - TU 668, EQ 676, EX 649 = FICO 668 (2/17/12)
Goal Scores - >740 ASAP
Message 1 of 7
6 REPLIES
Super Contributor

Re: Will this Auto Loan be a plus or negative?

To boost your FICO scores, you should focus on only your revolving debt. Don't touch your installment loans. Pay the smaller Cap1 card off and leave a small balance ( less than 9% , maybe $300 ) on the larger cap1 card. FICO weighs revolving debt much more significantly.

You don't need new inquiries and accounts for Auto financing if you want to buy a house in the next year. Work out the auto refi/trade after you are in the new house.
March2010 FICO® ~ 695 TU, 653 EQ, 697 EX
Message 2 of 7
Moderator

Re: Will this Auto Loan be a plus or negative?

Since we don't have your income we don't have enough info to calculate your ratios.  Have you calculated your ratios yet, both front and back end?

For the front end use the tax, ins, P&I and MIP/PMI (if applicable) for a house/property in your desired area of purchase.

 

If you have a too much installment debt, it will show up by affecting the amount you can purchase by affecting your front end ratio.

If so, you can help it by paying off the ATV or selling it.

Message 3 of 7
New Member

Re: Will this Auto Loan be a plus or negative?

I brought home 60k for 2010 and 67k for 2011.  I also just got promoted and will be bringing home a little more this year.  Sorry for not including this earlier and thank you for you help!!!!

Previous Scores - TU 668, EQ 676, EX 649 = FICO 668 (2/17/12)
Current Scores - TU 668, EQ 676, EX 649 = FICO 668 (2/17/12)
Goal Scores - >740 ASAP
Message 4 of 7
New Contributor

Re: Will this Auto Loan be a plus or negative?

Are you going conventional or FHA for the mortgage? 

 

 

Message 5 of 7
New Member

Re: Will this Auto Loan be a plus or negative?

Haven't gotten that far yet.  Started with FICO score and getting it to best possible place.  Once its there and while its on the way I will research the financing possiblities.  I just didn't know if the $100 off the vehicle monthly payment would have an affect on the mortgage calculation.  My first priority would be a nice home versus having a nice vehicle.  With both leaving me in the "comfortable" range of monthly payments.

Previous Scores - TU 668, EQ 676, EX 649 = FICO 668 (2/17/12)
Current Scores - TU 668, EQ 676, EX 649 = FICO 668 (2/17/12)
Goal Scores - >740 ASAP
Message 6 of 7
New Member

Re: Will this Auto Loan be a plus or negative?

This has been moved to the Mortgage page under "front end, back end, ratios?" since it mainly pertains to that now.  Thanks!!!

Previous Scores - TU 668, EQ 676, EX 649 = FICO 668 (2/17/12)
Current Scores - TU 668, EQ 676, EX 649 = FICO 668 (2/17/12)
Goal Scores - >740 ASAP
Message 7 of 7