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Valued Member
Nella
Posts: 39
Registered: ‎03-12-2012
0

New Car Loan

I had to purchase a new car, my old one was going to die on me at any minute.  I received an interest rate was 8.9%. 

The dealer told me my fico was 591 (working on improving credit).  I want to purchase a home by the end of this

year (hopefully start working on it in Aug or Sept.)  What are the chances of my credit score getting to the minimum

of 620 by then? 

Starting Score: 550's
Score: Equifax 626 TU 613 Experian 671
Lender pull 01/22/2013 Eq 641 TU 636 Exp 670
Goal Score: 720
Closed Escrow on 03/05/2013!!!
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Moderator Emeritus
llecs
Posts: 32,869
Registered: ‎08-04-2007
0

Re: New Car Loan

Welcome to the forums!

 

I moved your post over here in anticipation you'd want to know how to bring your scores up to 620 and beyond for your future mortgage.

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FrugalRican
Posts: 2,876
Registered: ‎02-02-2012
0

Re: New Car Loan

More information is needed.

What else is on your report? Credit cards? Baddies?

Follow my financial journey: http://www.frugalrican.com


EQ FICO (01/16/2012): 656 - EQ FICO (02/16/2012): 743 - EQ (02/24/2012): 760 - EX (04/28/2012): 739 - GOAL 2013: 800+

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Valued Member
Nella
Posts: 39
Registered: ‎03-12-2012
0

Re: New Car Loan

Yes I have 2 secured cards, one with a limit of $300 and the other with a limit of $500.  Anything negative on my account was

back in 2006 through 2008.  A collection and a judgement.  I was told NOT to pay those as it will not affect my credit at this time.

 

My usage on the cards is at 28%...I wonder if I add more money to the secured card to increase my limit would that make a

difference.  Ive also been told that once I make payments on time with my auto loan for at least 6 months that should make

a huge difference as well. 

Starting Score: 550's
Score: Equifax 626 TU 613 Experian 671
Lender pull 01/22/2013 Eq 641 TU 636 Exp 670
Goal Score: 720
Closed Escrow on 03/05/2013!!!
Take the FICO Fitness Challenge
Established Contributor
jimbo831
Posts: 977
Registered: ‎02-08-2012
0

Re: New Car Loan

[ Edited ]

Nella wrote:

I had to purchase a new car, my old one was going to die on me at any minute.  I received an interest rate was 8.9%. 

The dealer told me my fico was 591 (working on improving credit).  I want to purchase a home by the end of this

year (hopefully start working on it in Aug or Sept.)  What are the chances of my credit score getting to the minimum

of 620 by then? 


Wow, I think 8.9% is pretty good for that score.  In January I had a similar score and the best I was offered was about 18%.  As for getting your score up, it depends on what is bringing it down so much.  I increased my scores from ~580 to ~680 in less than 2 months.  It is possible but will require a lot of work and a little luck.  The community here though will help you so much.

 

As for your situation, you will likely need to pay those things to get approved for a mortage, although I would wait until a LO tells you so.  In the mean time, you can start sending PFD offers for the collection.  Search PFD here for more info.  Judgements are a bit tricky, and they hurt your score a lot.  Many people have had luck here getting them vacated, but that will likely not happen until you pay it.  Best of luck to you.

 

Gardening with: PSECU Combo $1k, Chase Freedom $3.5k, Discover It $1.7k, Amex Costco True Earnings $2k, Capital One Platinum $500, Best Buy Store Card $2.7k

Starting Score: FICO: 587 EX, 594 EQ, 632 TU, 2/15/12; USAA FAKO: 525 EX, 541 EQ, 525 TU, 2/15/12
Current Score: FICO: 678 EX, 629 EQ, 658 TU, 3/27/12; USAA FAKO: 721 EX, 721 EQ, 576 TU, 3/9/12
Goal Score: 700 Across the Board and Amex Zync or Costco By The End Of 2012


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Moderator Emeritus
llecs
Posts: 32,869
Registered: ‎08-04-2007
0

Re: New Car Loan


Nella wrote:

Yes I have 2 secured cards, one with a limit of $300 and the other with a limit of $500.  Anything negative on my account was

back in 2006 through 2008.  A collection and a judgement.  I was told NOT to pay those as it will not affect my credit at this time.

 

My usage on the cards is at 28%...I wonder if I add more money to the secured card to increase my limit would that make a

difference.  Ive also been told that once I make payments on time with my auto loan for at least 6 months that should make

a huge difference as well. 



On the two cards, paying them down will give a greater boost than increasing your CL. If your util is at 28% and the total CLs are $800, then your balances are at $224 roughly. If you want to increase your CLs to get to an optimum level of 9% or less util, then you'd have to add $2,264 at least to your CLs. If you pay it down, you can hit that same 9% by paying $152, give or take. $152 is a lot easier than paying $2,264 to get to the same result. For max pointage, get one to report $0 and the other less than 9%.

 

The new loan likely dinged your score more than the 591. You will see a gradual increase over the year as it ages. It isn't due to the on-time payments but rather for the new impact of the new credit wearing off. You'll see some changes around the 6th-month mark with a likely bump again around a year. YMMV. If you add new credit, then that gain gets voided out.

 

Takes steps to get the collection and judgment removed.

 

I'd suggest reading the following:

Common Abbreviations

Credit Scoring 101 - great for knowing what is in your credit score and to see how your score is impacted.

What Steps Do I Take - great for learning the repair process.

and Example letters - PFDs, GWs, DVs, etc.

Established Member
pck
Posts: 11
Registered: ‎07-02-2011
0

Re: New Car Loan

I'm curious how much the judgement affected your auto loan.  I have slightly better scores then you (640ish) but a $2,500 unpaid judgement from 2008.  I'm interested in getting a new car, but didn't know if it was possible.  I'm curious, was this new or used?  If new, what manufacturer? What percent did you have to put down?

Valued Member
Nella
Posts: 39
Registered: ‎03-12-2012
0

Re: New Car Loan

Thanks for the help!  Very informative

Starting Score: 550's
Score: Equifax 626 TU 613 Experian 671
Lender pull 01/22/2013 Eq 641 TU 636 Exp 670
Goal Score: 720
Closed Escrow on 03/05/2013!!!
Take the FICO Fitness Challenge
Valued Member
Nella
Posts: 39
Registered: ‎03-12-2012
0

Re: New Car Loan

It was a used vehicle 2009.  But I was very surprised at the interest rate.  I have it financed through Wells

Fargo Dealer Services.  My judgement is for the same amount and same year. 

 

I am confident that you will be just fine.  Good Luck!

Starting Score: 550's
Score: Equifax 626 TU 613 Experian 671
Lender pull 01/22/2013 Eq 641 TU 636 Exp 670
Goal Score: 720
Closed Escrow on 03/05/2013!!!
Take the FICO Fitness Challenge
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FrugalRican
Posts: 2,876
Registered: ‎02-02-2012
0

Re: New Car Loan

Agreed.

 

Pay down those cards. At this point, your option is to deal with what you have laid out on the table since you want to buy a house 6 to 7 months from now. In other words, you're not in a position to ask for more credit and you already have two secured cards.

 

Pay those down. Get one to 0, keep the other one at around 1% to 9% of  your overall utilization for optimal results.

You just got your car loan, so to be on the safe side, wait between 6.5 to 7 months before you go hit the banks for pre-approvals.

 

Your scores should get a nice bump within the next six months with that car having 6 consecutive on-time payments and the combination of getting your cards down.

Follow my financial journey: http://www.frugalrican.com


EQ FICO (01/16/2012): 656 - EQ FICO (02/16/2012): 743 - EQ (02/24/2012): 760 - EX (04/28/2012): 739 - GOAL 2013: 800+

AMEX BCE (0/10K) --- BOA 1-2-3 (0/15.9K) --- Discover More (0/6K) --- Chase Freedom Visa (0/1.4K) -- Hyatt Visa Sign. (0/5.8K) -- Barclay's NFL Card (0/7.5K) -- Chase Sapphire Preferred (0/5K)


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