General Credit Topics

[mschwax]

I am 6 mos post bankruptcy. My credit score is an abysmal 572. I am working on improving it, and thankfully, maintained a good relationship with my credit union through the bankruptcy. I finished paying off the small vehicle loan I had left, and they are willing to work with me again. I will be getting an insuramce settlement in a few months, approximately $10,000. I need to purchase a new, used car- looking at about the $10,000 range.  Which option will benefit my score the most?

Option A) I put $5000.00 down on car, finance remaining $5,000 and make regular payments for the loan term, keeping the remaining $5000.00 as an emergency fubnd.

Option B) I put $5000.00 down, finance the remaining $5000 and then make periodic "extra" payments to pay off the remaining balance in half the time?

I appreciate any advice, thank you!

[pizzadude]

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mschwax wrote:

I am 6 mos post bankruptcy. My credit score is an abysmal 572. I am working on improving it, and thankfully, maintained a good relationship with my credit union through the bankruptcy. I finished paying off the small vehicle loan I had left, and they are willing to work with me again. I will be getting an insuramce settlement in a few months, approximately $10,000. I need to purchase a new, used car- looking at about the $10,000 range.  Which option will benefit my score the most?

Option A) I put $5000.00 down on car, finance remaining $5,000 and make regular payments for the loan term, keeping the remaining $5000.00 as an emergency fubnd.

Option B) I put $5000.00 down, finance the remaining $5000 and then make periodic "extra" payments to pay off the remaining balance in half the time?

I appreciate any advice, thank you!

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Do you have any auto loans or installment loans currently showing on your credit reports ?    I don't think that either option will necessarily give you a FICO score boost ~ but it would likely help to have a positive tradeline like this on your reports to help counter the negatives/BKs.

[mschwax]

Yes, I have several car loans and other small loans, all through the credit union, over the last 10 years. All were current, never a late payment and paid off in full. I had the last loan at the time of filing and while the judge would not allow a reaffirmation agreement, I continued to pay on it and just paid it off last week. The only negative credit items are for medical bills, which was the reason for the bankruptcy.

[pizzadude]

What interest rate are they going to be offering you ?   Honestly I don't think adding a new installment loan will really do anything much for your FICO score ~ have you considered just paying cash for the car and not having a car payment for a while ?