10-02-2012 12:16 PM
I have had some success with pay for deletes and negotiations and have raised my score over 100 points the last year. I am currenlty at 660 and 640 and only have a student loan reporting 9 months, a secured card $500 reporting for just over a year and antoher cap one un secured reporting for 4 months. All CC's have no balance. 3 positive trade lines
I also have some late payments that Icant get removed from over three years ago and two paid collecitons that I cannot get removed and one charge off.
My questions is, I am in the market for a new vehicle, will this loan help my score or hurt it in the first six months? Any other suggestions?
10-02-2012 12:24 PM
IMO your AAoA will take a hit, so that will probably lower it with such a new account. But shortly it will go back up. I've had mine 9 months and has slowly crept up. It will be good in the long run to have an installment account, so I'd say go for it if you don't have any plans for a mortgage or anything too soon.
10-02-2012 12:25 PM
your going to see a drop right off the bat - your going to have added at least 1 inquiry (usually it ends up being more when you shop for an auto loan and they don't ALWAYS get counted as one) then you're also going to take a hit on the average age of accounts since it will be new.
Over time you'll get those points back how quickly isn't really a set time frame. But after a year you should be better off then you are now as long as you didn't add any new negative info. 6 months might do the trick.
I will say this, don't think though by adding the car loan its going to improve your score - whats going to improve your score is really the time between the present and the last bad info.
You already have an installment loan (SL) so its not like adding one will help your credit profile. If you can pay cash or don't really need a new car, why not just wait and save up some more money till you do need a new car or till you can pay cash. Worse case scenario every month you wait, the closer you'll get to a better auto rate by having a lower score.
10-02-2012 12:29 PM
with those borderline scores.... I'd probably go with the mortgage first, then go with the car loan unless you are in DIRE need of a car immediately.
10-02-2012 12:30 PM
It will help with age due to another TL and will add an installment account. However it will go against you initially, lower AAoA, add an Inq. Also watch your DTI since you will be mortgage shopping.
10-02-2012 12:41 PM
If your looking to get a mortgage, don't buy a new car unless you NEED to without a doubt, and even then I'd say buy a used car cash and/or a bus pass first.
Even if you make 100k a year and the house is only 100k, that DTI is a real bitch. But also they go back several months and look at your bank statements and they want to see as much money in reserves as possible.
If your car craps out, you could buy a used car that will last long enough cash for the same amount as a down payment on a new car, but then you don't even mess with your DTI ratio plus every month between now and when you close, you won't be paying a car bill which means a higher bank account balance which looks better than not.
Any mortgage lender will tell you not to make any big purchases within 6 months of apping for a mortgage because of the initial drop in score, as well as it affecting your savings and DTI ratio.
I'd go for the mortgage first then once you have it buy the car - save that money and put it towards the down payment on the house not the car as interest on a house is FAR more expensive in the long haul than a car.
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