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short credit history, low income

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Anonymous
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short credit history, low income

I graduated college about a year ago and have been unable to find another job; I've been stuck working part-time retail for the last few years, and even though I've graduated, they refuse to give me more hours. I currently have a car but I've had to put in about $1200 worth of work to keep it running in the last five months or so, and it NEEDS another $1500 (at least) done soon in order for it to keep running (it has an oil leak and the timing belt needs to be replaced). It's either shovel that money (which I don't have all at once) or get a new car, but to get a new car I definitely need a loan and I don't know if I'll even be able to get one!

 

Credit Score: uncertain (I just tried to check it but FICO couldn't verify my identity???), estimated in the mid-late 600s

AAoA: 2 years, 9 months

# of positive trade lines: 0

# of negative trade lines: 0

Income: $1,100-$1,200 (gross)

Lenght of Employment: 3.5 years

Previous Loan Experience: student loans ($12,041 total)

Debt-to-Income (DTI): 29% (11%, if you don't include my off the books rent)

Year of Car: Unknown

Miles: Unknown

Purchase/Refinance: Purchase

Requested loan term (XX Months): 60-72 months

Down payment amount: $0, planning to trade in a 1998 Dodge Stratus with 130,000+ miles

Co-borrower/Co-Signer: None

Other: My only official monthly debt is $120 student loan payment, currently on forbearance so I could save up money (which I had to spend on car repairs). I live with my parents and pay them $200 a month for rent but have no other bills. I belong to a credit union (where I've been established since I opened a youth account as a child) and plan to apply there first. My parents refuse to cosign.

Message 1 of 3
2 REPLIES 2
StartingOver10
Moderator Emerita

Re: short credit history, low income


@Anonymous wrote:

I graduated college about a year ago and have been unable to find another job; I've been stuck working part-time retail for the last few years, and even though I've graduated, they refuse to give me more hours. I currently have a car but I've had to put in about $1200 worth of work to keep it running in the last five months or so, and it NEEDS another $1500 (at least) done soon in order for it to keep running (it has an oil leak and the timing belt needs to be replaced). It's either shovel that money (which I don't have all at once) or get a new car, but to get a new car I definitely need a loan and I don't know if I'll even be able to get one!

 

Credit Score: uncertain (I just tried to check it but FICO couldn't verify my identity???), estimated in the mid-late 600s

AAoA: 2 years, 9 months

# of positive trade lines: 0

# of negative trade lines: 0

Income: $1,100-$1,200 (gross)

Lenght of Employment: 3.5 years

Previous Loan Experience: student loans ($12,041 total)

Debt-to-Income (DTI): 29% (11%, if you don't include my off the books rent)

Year of Car: Unknown

Miles: Unknown

Purchase/Refinance: Purchase

Requested loan term (XX Months): 60-72 months

Down payment amount: $0, planning to trade in a 1998 Dodge Stratus with 130,000+ miles

Co-borrower/Co-Signer: None

Other: My only official monthly debt is $120 student loan payment, currently on forbearance so I could save up money (which I had to spend on car repairs). I live with my parents and pay them $200 a month for rent but have no other bills. I belong to a credit union (where I've been established since I opened a youth account as a child) and plan to apply there first. My parents refuse to cosign.


Actually it really sounds like you need another mechanic if your current one is charging $1500 for an oil leak and timing belt.

 

What follows here is a mix of my opinion and some reality then some hope at the end:  Getting a new used vehicle when your income is $1200/month gross is highly risky for both you and the lender. If you don't have a current car payment and no other debt yet you are unable to save for car repairs then there is a serious doubt you will be able to make a payment on a new/used vehicle. The CU will have to take into account a rent payment as if you make a rent payment. The loan will be longer than you will be at home most likely so when they underwrite they will look at your financials and see that you haven't been able to save even with no car payment. Based on what you posted, it is very likely you would not be able to make consistent on time monthly payments for the entire loan which would create additional credit issues for you and blow your chances for establishing good credit for many years to come.  Your parents are doing the responsible thing both for you and for them  by not co-signing for your new vehicle.

 

I am not saying don't get another vehicle. I am saying get one at a later time once you have established credit and an income. You can establish credit by getting a card or two and using it sparingly for six months or so. You can establish income by approaching your job search in another way than you have this past year. If you work at it, like a job, you should be able to get one quickly depending upon your field of specialty. Once you get a job in your field then obtaining a new vehicle will be a slam dunk. You could be in an entirely different position within 30 to 60 days if you plan it right.

 

 

Message 2 of 3
Anonymous
Not applicable

Re: short credit history, low income

Well, I know nothing about cars but that estimate is with labor included, if that matters, from a local business I and my family have been going through for years.

Anyway, I have never made a late payment on my loans before and it's not that I haven't saved anything; I just put the loan on forbearance in order to save a little more in anticipation of getting a new job and moving out there after. But repairs and other costs ate into that extra savings. I also have zero intention of moving out until I have another job; $300 car payment I can easily handle, but not a high rent. I don't know if that will matter to a lender or not, though.

 

I think you're right, though. I thought it over the night and I think it would be better to wait at least until I har a better job (or a second job, since no one seems I be keen on hiring a grad with a useless degree) and building ups stronger credit history in the meantime. Thanks for your input.

Message 3 of 3
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