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Registered: ‎04-29-2013
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How soon will credit appear improved?

So here's my story...

 

Both me and my husband have some credit card debt. I also have some student loan debt (well not some, but A LOT), and some of my credit cards accrued balances to pay for the rest of my school books in 2008 when the economy tanked.

 

Right now between 4 cards I carry balances totally around $5600.00. In the very near future (about a month or two), we want to get a new truck. We currently just have a little car. The reason we want/need a truck is because go camping a lot and our little car does not like all the bumpy dirt roads we end up driving on. SO...we want to get a truck to make it easier on us. However, we realize that right now, having so many credit card payments does not help our chances of getting approved for a loan. But we have decided recently just to sell our car so we don't have two car payments when we get the truck. We've also discovered recently that we have a ton of equity in our car (about $5300 after paying off the balance of the car). Initially our plan was to use the $5000 as a down payment for the new truck. But then I thought about it some more, and realized that doing so would help us in the long run...years from now when we want to sell the truck. But it doesn't help us right now. So what we want to do is use the extra income from selling the car to pay off all my credit cards! Well...it would come very close to paying off everything. Plus it would give us a lot more wiggle room to handle a new truck payment (which we're estimating would cost us around 100/mo more than what we're paying now for our little car. And we'd be saving around $300/mo just by paying off the cards.)

 

My parents have a car I could drive temporarily until we are able to get a truck. So my question is this... let's say we sell our car this week (it is currently up for sale), and pay off the credit cards by next week or so. How long after doing this should we wait to get our truck loan? I am thinking a month or two, just so that the lenders have time to report to the bureaus that those cards no longer carry balances.

 

Also, should we consider closing a couple of those cards? Or should we keep them all open? I don't want to hurt my score in any way. I'd rather keep the history if possible, but would it look better if some were closed so that potential car dealers/lenders aren't nervous about us racking up all that debt again?

Regular Contributor
Posts: 226
Registered: ‎02-20-2013
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Re: How soon will credit appear improved?

[ Edited ]

toepick83 wrote:

So here's my story...

 

Both me and my husband have some credit card debt. I also have some student loan debt (well not some, but A LOT), and some of my credit cards accrued balances to pay for the rest of my school books in 2008 when the economy tanked.

 

Right now between 4 cards I carry balances totally around $5600.00. In the very near future (about a month or two), we want to get a new truck. We currently just have a little car. The reason we want/need a truck is because go camping a lot and our little car does not like all the bumpy dirt roads we end up driving on. SO...we want to get a truck to make it easier on us. However, we realize that right now, having so many credit card payments does not help our chances of getting approved for a loan. But we have decided recently just to sell our car so we don't have two car payments when we get the truck. We've also discovered recently that we have a ton of equity in our car (about $5300 after paying off the balance of the car). Initially our plan was to use the $5000 as a down payment for the new truck. But then I thought about it some more, and realized that doing so would help us in the long run...years from now when we want to sell the truck. But it doesn't help us right now. So what we want to do is use the extra income from selling the car to pay off all my credit cards! Well...it would come very close to paying off everything. Plus it would give us a lot more wiggle room to handle a new truck payment (which we're estimating would cost us around 100/mo more than what we're paying now for our little car. And we'd be saving around $300/mo just by paying off the cards.)

 

My parents have a car I could drive temporarily until we are able to get a truck. So my question is this... let's say we sell our car this week (it is currently up for sale), and pay off the credit cards by next week or so. How long after doing this should we wait to get our truck loan? I am thinking a month or two, just so that the lenders have time to report to the bureaus that those cards no longer carry balances.

 

Also, should we consider closing a couple of those cards? Or should we keep them all open? I don't want to hurt my score in any way. I'd rather keep the history if possible, but would it look better if some were closed so that potential car dealers/lenders aren't nervous about us racking up all that debt again?


Paying down your credit card debt leaving a very small balance on only one card would be best.  What is your total combined credit limit?  Dont' close them unless they have annual fees, and wait til after you apply for the car loan.

 

As far as paying your credit card debt vs having a larger loan on a new truck.....unless you get a really poor deal on your loan terms, i would imagine your interest on the credit cards is much higher and would cost more in the long run.  It also depends on how long it would take you to pay that credit card balance down, 1 yr vs. a 5 or 6 yr car loan, and what the interest difference is.

 

Paying down your balances should really help your scores though, helping you get better loan terms.  What are your current scores?

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Registered: ‎09-13-2012
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Re: How soon will credit appear improved?

[ Edited ]
Welcome to the forum!

IMO, pay your cc debt down. Any leftover should be on the cc with the best terms ie APR. it should take no more than 2 mos from the pay off to give the cbs's enough time to reflect the paid status. Pull your reports before car shopping and if you belong to a cu they will probably have much better terms than dealer financing.

Edit: agree not to close the accounts just SD them.
New Member
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Registered: ‎04-29-2013
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Re: How soon will credit appear improved?

EQ is currently 708, TU is 660 and Experian I think is 675

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Re: How soon will credit appear improved?


toepick83 wrote:

EQ is currently 708, TU is 660 and Experian I think is 675


Do you have a CarMax? thought about selling to them?

Who is current auto loan with?

Do you have truck picked out? new/used? if used, how much, year, etc.

I second the question to if you are members to a CU

If you have the money don't leave a balance on ANY of the cards... since you have been carrying a balance, any balance left will still be charged interest and the poster that told you to leave a small balance is confusing the concept that if you pay your cards in full BEFORE the statements cut, you shoul leave 1 card that you let report a balance but then you would still want to pay in full ALWAYS if you can before the due date.

 

Fico Scores: EQ- 662 DCU., TU 704 Best Buy, EX 700 Chase (1/5/15)
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New Member
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Registered: ‎04-29-2013
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Re: How soon will credit appear improved?

Thank you for the help so far!

 

I have thought about selling to CarMax, but haven't gotten as far as getting the details just yet. I'd hope to get more than just the trade in value so right now we are trying to sell it ourselves

 

Currently our auto loan is through our CU at 4.5%

 

The truck we want is a Toyota Tacoma 2005 or newer, depending on the price. It must be a double cab, have 4 wheel drive, and be automatic. We don't have the exact one picked out just yet because we can't buy one right this second. We have been looking though. We don't want to spend any more than 18-19,000 (out the door price) once we pay off our credit cards. We are willing to justify paying 18-19k for a truck because what we want is a Toyota and they are pretty dang reliable and hold their value very well.

Mega Contributor
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Registered: ‎04-09-2011
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Re: How soon will credit appear improved?

I would also pay the cc debt off. That would produce a score increase and probably get you better terms on your future auto loan. Good luck to you!



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Epic Contributor
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Registered: ‎10-23-2007
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Re: How soon will credit appear improved?

[ Edited ]

toepick83 wrote:

Thank you for the help so far!

 

I have thought about selling to CarMax, but haven't gotten as far as getting the details just yet. I'd hope to get more than just the trade in value so right now we are trying to sell it ourselves

 

Currently our auto loan is through our CU at 4.5%

 

The truck we want is a Toyota Tacoma 2005 or newer, depending on the price. It must be a double cab, have 4 wheel drive, and be automatic. We don't have the exact one picked out just yet because we can't buy one right this second. We have been looking though. We don't want to spend any more than 18-19,000 (out the door price) once we pay off our credit cards. We are willing to justify paying 18-19k for a truck because what we want is a Toyota and they are pretty dang reliable and hold their value very well.


Double fantastic, you have a good truck picked out (Toyota) and you already have a great relationship with a Credit Union... Once you decide on a truck and probably since it will be little older, they will be best rate, hope you get a credit card with them too while you are at it... nice low fixed rates are great to have sitting around even if you don't need them :smileyhappy:

I have sold a few cars to carmax, certainly if you can sell yourself you can get a bit more but walking out the door with a check minus your loan payoff in under an hour is nice too! don't rule it out... sometimes they surprise you, You talk of "Small car currently" My partner sold his Yarius and I sold my Honda to CarMax, they gave me $3k less than I had paid 2 years prior in another state from a CarMax!!! small cars (at least here in CA) are HOT and the value is shocking sometimes! (over $2k better for him and about $1500 for me on trade in offered WHERE WE LEASED NEW CAR!!)

Fico Scores: EQ- 662 DCU., TU 704 Best Buy, EX 700 Chase (1/5/15)
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Posts: 949
Registered: ‎03-22-2012
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Re: How soon will credit appear improved?

[ Edited ]

Definitely pay off the credit cards.

 

Pay down as many as you can to zero. Leave a balance on only one card if you run out of money to pay them all off.

 

Your credit card companies only report to the credit reporting agencies once a month. You will be safe to apply for a truck loan one week after the last payment due date for the last credit card payment you made. Even if you pay them down before the payment due date, you must wait until one week after the payment due date.

 

EDIT: Don't close any of your credit cards unless they carry an annual fee. Just use each one lightly every 3 to 4 months to keep them active.



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Registered: ‎04-09-2011
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Re: How soon will credit appear improved?


jamie123 wrote:

Definitely pay off the credit cards.

 

Pay down as many as you can to zero. Leave a balance on only one card if you run out of money to pay them all off.

 

Your credit card companies only report to the credit reporting agencies once a month. You will be safe to apply for a truck loan one week after the last payment due date for the last credit card payment you made. Even if you pay them down before the payment due date, you must wait until one week after the payment due date.

 

EDIT: Don't close any of your credit cards unless they carry an annual fee. Just use each one lightly every 3 to 4 months to keep them active.


I believe you mean statement closing date :smileywink:




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