09-22-2012 05:39 AM
I am in the process of rebuilding my credit and I have 2 cc's, one secured Orchard Bank card with a $300 limit and other non-secured Capitol One card with a $500 limit. I use both cards regularly (with less than 20% utilization) and pay both off in full each month. As of this month, I officially have no debt to my name (as I just paid off the last collection after reading "Paid Collection" would help my score if even if the debt was old).
So now I am looking to see what would be the best course of action if I want to buy a car in the next 3-6 months. I have read that since I have low credit limits, even though I pay them off each month, I still won't look very good to lenders, because it will look like I don't have to manage much risk.
So my question is, for purposes of getting an auto loan, would raising my credit limit to $2k on the secure card help me? And if it will, how long after raising the limit should I expect to see the change, I don't want to apply for the loan prematurely.
Any help is greatly appreciated!
09-23-2012 08:34 AM
I don't know about your CC limits affecting a car loan.. Generally low CC limits affect future CC limits. But I would (personally) much rather have that kind of cash around for downpayments.
I'm looking for a $20-23k car in the next 3 months, and my goal is $8k cash for use as a downpayment (almost there too!).. Even though I have 2 secured cards I'd like to boost (currently $1k and $1.5k).
I feel like having that cash around for the car, will 1) help me get approved, and 2) help lower the impact of a high-interest rate loan I might get stuck with, by financing less to begin with.
Raising your credit limits won't affect your score. It could take an entire billing cycle for the updated balance to show on your CR though.
BTW - Having a collection marked as "paid collection" doesn't help your score. It's scored the same as an unpaid collection. You want that off your credit report for any FICO effect. Granted, it does look better in a MANUAL review, by a human. But to the computer that generates your score, it makes no difference.
*Bump* for more answers!