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Regular Contributor
Posts: 146
Registered: ‎04-05-2017
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Refinanced car. Will it help wife's score?

We've just refinanced one of our two financed cars. Wife's car is only in her name but my car was in both until yesterday when we refinanced to just my name. Can we expect that acount and debt to be subtracted from her credit debt on credit report? And can I assume that it should help her score go up. She's currently in the high 500s to low 600s (FAKO). She has excellent pay history and utilization. Just one baddie (JC Penny $1700 collections). I assume her bad score is due mainly to high debt (both cars, student loan, totalling @60k) and low income (she's on SSDI).

Last App 5/18/17

Pulling weeds until March 2018
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Posts: 6,359
Registered: ‎04-11-2016

Re: Refinanced car. Will it help wife's score?


PrinceCorwin wrote:

We've just refinanced one of our two financed cars. Wife's car is only in her name but my car was in both until yesterday when we refinanced to just my name. Can we expect that acount and debt to be subtracted from her credit debt on credit report? And can I assume that it should help her score go up. She's currently in the high 500s to low 600s (FAKO). She has excellent pay history and utilization. Just one baddie (JC Penny $1700 collections). I assume her bad score is due mainly to high debt (both cars, student loan, totalling @60k) and low income (she's on SSDI).


Her bad score probably has more to do with the collection than anything else.  High installment loan debt doesn't do much in terms of adversely impacting your score.  FICO scoring with respect to installment loans has to do with installment loan utilization which is calculated the same way is revolving utilization.  Take the total owed across all installment loans and divide that amount by the total combined original amounts of the installment loans and you arrive at a percentage.  Unlike revolving utilization which can move dramatically (say 100 points depending on profile) from going from 1% utilization to 100% utilization, moving between that range for installment loan utilization may impact a score up to 25-30 points at most. 

 

So basically, you need to calculate her installment loan utilization before the refinance and calculate it again after it.  Based on the change (plus or minus) you can then get an idea of what may happen to her FICO scores.  If the utilization change isn't significant, the scoring change may not be significant.

 

The other thing is that she'll want to grab her true FICO scores.  You can get all 3 of your FICO 08s for $1 at Credit Check Total.  I'd have her do that now, then pull them again once that loan reports closed on her report next cycle.

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Posts: 755
Registered: ‎02-23-2017

Re: Refinanced car. Will it help wife's score?

Income isn't computed into one's credit score.

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