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05-25-2013 08:58 PM
Im seeking advice on this, please help! I'm looking forward to buying a car towards the later part of June. My credit union, who pulls Experian told me my score was 624, qualifying for 5.25% ($25K/60mos.). They also explained that if I could reach 680, they could offer 4.25-4.50%. I only have a Cap1 secured ($500) and a share secured loan ($1000) through my CU, but I've been really good wiping out the old "baddies" on my reports over the last 3 mos. So I'm wondering what would raise my score quicker over the next 30 days, if I increase my Cap1 limit from $500 to $1000 keeping the UTI under 25%?..OR opening up another $500 secured card with my CU so my report would have another credit line with a really low UTI? Thanks in advance....
05-25-2013 09:14 PM
Will adding funds to increase the limit, while lowering uti below 9% make a point difference as well? Also, when is it a good time to add another credit line?
05-26-2013 07:52 AM
Opening a new credit line has the potential to lower your score.
Reduce the UTL on your Cap One card to less than 9%
+1. You DON'T want to add new accounts prior to applying for a loan, since there's the potential ding for the inquiry, depending on who's pulled. In any event, like dodfire said, reducing your util is the way to go.
Something else to consider. That 5.25%, in looking at the scheme of the big credit picture, isn't a bad interest rate. You could always take that offer, work more on your credit and then at some point when you reach that 680 (or higher) score that your CU wants, do a refi for the same loan length (remaining months), just getting you a better interest rate.
05-26-2013 08:08 AM
I personally would just take the 5.25% it really isn't a bad rate. In a year you will see you credit score go up anyway. Part of FIco scoring is the mix of credit. So now you can add an installment loan to your credit profile. Don't refinance in a year or so on the suto loan because it won't benefit you that much because auto loans are like mortgages as they are top heavy on the interest toward the beginning of the loan. So in a year you will see that you haven't paid a much toward principle as you think. I ran the numbers for you. An auto loan 5.25$% for 60 months is $474. Auto loan for 4.5% for 60 months is 466. Not much difference, some might argue that 8 dollars is 8 dollars for some it might be but for me not so important. For the hoops you would have to go through with no guarantee anything you would try could get your score up 50 points in less than a month. That is up for you to decide. GL on whatever you do.
05-26-2013 01:31 PM
Your credit union has horrible rates. Especially since they would only go down to 4.50% with a 680 FICO showing.
With a 680, you should be able to get at least 2.9% or better from a CU. Going 60 months on $25,000.00 note, is WELL worth looking for the best rate you can find. Put as much money down as you can also. If you don't, you will have to pay for GAP insurance, and you will be upside down the day you take the car off the lot....