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markcolo
Posts: 2
Registered: ‎05-09-2007
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Auto Loan vs. Lease - does this affect your FICO Score?

I currently lease a vehicle.  I am thinking about buying a hybrid car for the tax credits, so I was checking my FICOs.  I noticed that the amount of debt shown on my current lease equals the total payments for that lease.  So would an auto loan show as a higher amount of debt, and negatively affect my FICOs?
 
 
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Tuscani
Posts: 6,182
Registered: ‎03-29-2007
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Re: Auto Loan vs. Lease - does this affect your FICO Score?

[ Edited ]


markcolo wrote:
I currently lease a vehicle.  I am thinking about buying a hybrid car for the tax credits, so I was checking my FICOs.  I noticed that the amount of debt shown on my current lease equals the total payments for that lease.  So would an auto loan show as a higher amount of debt, and negatively affect my FICOs?
 
 



Probably not. You may take a short term hit from the Inq and new TL but really have nothing to worry about.


Message Edited by Tuscani on 05-10-2007 06:49 AM
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markcolo
Posts: 2
Registered: ‎05-09-2007
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Re: Auto Loan vs. Lease - does this affect your FICO Score?

Thanks!  Hybrid here I come!
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Tuscani
Posts: 6,182
Registered: ‎03-29-2007
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Re: Auto Loan vs. Lease - does this affect your FICO Score?



markcolo wrote:
Thanks!  Hybrid here I come!



Whoo hoo! I commute 40 miles one way. Those are looking more and more attractive. Bike would be nice.. but being in MN I would need a winter beater. :smileyhappy:
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qsoundrich
Posts: 2
Registered: ‎05-24-2007
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Re: Auto Loan vs. Lease - does this affect your FICO Score?

I'm in a similar situation, but I am dealing with a new home mortgage as well. I've got a dirt start coming up soon, and I just signed the paperwork and had my credit pulled for the Mortgage. I'll be closing on the home in 6 months, and the Lender said they assume you will be continuing payments on another car after the lease is up. I'm comfortable with my 693 right now, but I want to make sure a new loan (60 month/ similar payment to lease around $430) won't adversely affect my credit between now and it's time to close on the house! Seems DTI should be okay due to them taking lease into account as continuing ad infinitum. So I should just expect a modest hit for the inquiry? My score is low due to revolving lines being too high of %. I assume installment account shouldn't hurt me too badly. Also if I shop for a loan, will I take a bigger hit. The mortage+auto inquiry at the same time could affect the score?
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Tuscani
Posts: 6,182
Registered: ‎03-29-2007
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Re: Auto Loan vs. Lease - does this affect your FICO Score?



qsoundrich wrote:
I'm in a similar situation, but I am dealing with a new home mortgage as well. I've got a dirt start coming up soon, and I just signed the paperwork and had my credit pulled for the Mortgage. I'll be closing on the home in 6 months, and the Lender said they assume you will be continuing payments on another car after the lease is up. I'm comfortable with my 693 right now, but I want to make sure a new loan (60 month/ similar payment to lease around $430) won't adversely affect my credit between now and it's time to close on the house! Seems DTI should be okay due to them taking lease into account as continuing ad infinitum. So I should just expect a modest hit for the inquiry? My score is low due to revolving lines being too high of %. I assume installment account shouldn't hurt me too badly. Also if I shop for a loan, will I take a bigger hit. The mortage+auto inquiry at the same time could affect the score?

Don't seek any new loans or credit until you close!
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qsoundrich
Posts: 2
Registered: ‎05-24-2007
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Re: Auto Loan vs. Lease - does this affect your FICO Score?

Tuscani, this advice, while sound, seems somewhat counter to what you said in your first reply on this thread. You stated that the OP wouldn't see a major hit to his credit score. I'm still 6 months out to closing and am looking to take on installment debt to replace my lease (that ends this month.) Would this be bad for me due to my high revolving utilization?
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3rd325
Posts: 37
Registered: ‎06-05-2007
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Re: Auto Loan vs. Lease - does this affect your FICO Score?

A lease shows up like an installment loan. Most of the time it will be marked "lease" but has the same effect as an installment. 
 
qsoundrich  If you payoff your lease with an installment there would be only two issues that might arise.
1. If your installment loan has a higher payment that could cause problems. If it is a lower payment that would be good. These would pertain to your DTI. Ask your loan officer if DTI is an issue.
2. As far as credit goes. A new trade will lower it a little but as the account ages you credit will go back up.
 
 
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MM1234
Posts: 165
Registered: ‎03-18-2007
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Re: Auto Loan vs. Lease - does this affect your FICO Score?

[ Edited ]
qsoundrich - The remark about not buying or leasing anything makes good sense. Even tho you have 6 months to go, you can use that time to get your score up a bit more by paying DOWN more debt - AND - not taking on any new loans or leases.

If you can get your score up a bit more you may even get a better rate.

Message Edited by MM1234 on 06-07-2007 07:36 AM

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