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Some suggestions

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Valued Member

Some suggestions

Hi all,
 
My friend has just started his credit history by applying for a secured credit card. For 5 months now he's been making timely payments. He applied for a car loan for a small amount (5K-7K pre-tax, license and fees) and got denied by Cap1, roadloans and few other banks either because the loan amount is too small or he doesn't have any credit history.
 
So these are the options for him
  1. Wait for a couple of months till he gets a credit score and then apply again. Now he needs a car badly and I'm not sure if his situation will improve anyway then
  2. Get the 15% APR he's getting from his CU. Don't know if this is too high (See below)
  3. Pay cash for the car. The only reason he's getting an auto loan is because he wants to build his credit history. Is the 15% APR dinging him financially and not helping much? (he'll apply for (substantial) credit next time only when he plans to buy a new car in 2 yrs)

TIA,

OD

3 REPLIES
Moderator Emeritus

Re: Some suggestions



overdrive wrote:
Hi all,
 
My friend has just started his credit history by applying for a secured credit card. For 5 months now he's been making timely payments. He applied for a car loan for a small amount (5K-7K pre-tax, license and fees) and got denied by Cap1, roadloans and few other banks either because the loan amount is too small or he doesn't have any credit history.
 
So these are the options for him
  1. Wait for a couple of months till he gets a credit score and then apply again. Now he needs a car badly and I'm not sure if his situation will improve anyway then
  2. Get the 15% APR he's getting from his CU. Don't know if this is too high (See below)
  3. Pay cash for the car. The only reason he's getting an auto loan is because he wants to build his credit history. Is the 15% APR dinging him financially and not helping much? (he'll apply for (substantial) credit next time only when he plans to buy a new car in 2 yrs)

TIA,

OD




Installment loans (auto) might not count at all toward scores. I have 1 and it shows obsolete.
 
CC weigh heaver on scores.  He can start by applying for store cards....target..macy...walmart....if he gets them...use for small amounts ...PIF after it shows on the account....do it for 2 or 3 months....then be sure that account is bal $0....sock drawer them. You will see a raise in scores............DO NOT get a CAP1 card...this could hurt as they do not show CL only bal.
 
If he must get the loan from CU for the auto......have him make 2 full payments a mo.if he can....this will cut the int. that he is paying.


Message Edited by HappyDays on 08-30-2007 03:25 PM
Regular Contributor

Re: Some suggestions

get the loan and pay it off by making double payments. This will show an installment loan on his credit which helps by showing different types of credit.
EX. 780 TU 794.
Regular Contributor

Re: Some suggestions

If he has the cash for it then he should buy it cash. Later on he can start applying for some CCs or store cards.
For age and want, save while you may; no morning sun lasts a whole day.
--Benjamin Franklin