topic Re: finance a car or open a new credit card - what to do first? in General Credit Topics

finance a car or open a new credit card - what to do first?

GettingUnStuck — Mon, 31 May 2021 06:30:06 GMT

Hello readers and thanks very much for being here to lend a hand with valuable advice. I have read some forums, but still find it very hard to make sense of so much data, and am confused.

I have summarized the situation in the table below. The scores are expected to rise a bit in a few days, as I have just paid down all credit cards using my California state tax refund and some accounts reflect a zero balance while others do not.

After my 21 year old car died in 2017, I started using Lyft as I was not able to afford a card due to support obligations to ex husband. Lyft is very expensive and I badly need a car. Currently I am not making support payments to ex husband and would like to buy a car. It would be my first car loan - my prior car was bought very used, for cash.

I would like to help my son establish a US credit history and for that reason would prefer him to co-sign the car loan with me. However, he does not have any individual accounts - he is only an authorized cardholder on mine. As a result, his scores are very good, but he has no income history in the US (just finished college in Canada and about to start a minimum wage summer internship in the US) and I wonder whether applying with him as a co-signor would hurt my chances of getting reasonably good rates. Or maybe not - maybe his good scores would give me a boost. How can I find out?

I currently have American Express Delta Skymiles with a 1K credit limit. I try using it the most because of the miles. I also have Capital One card which I use where American Express is not accepted. It does not offer rewards. Cap 1 bombards my son and me with offers of their other cards that have rewards. They also offer autofinancing prequalification.

Besides being confused as to whether I should put my son as a co-signor on the application, I do not know whether now is a good time to apply for a new non-AmEx credit card or whether I should wait until financing a car. Further, should I ask American Express to increase the limit? There are quite a few expenses I have to put on Capital One where AmEx is not accepted, and as a result I am spending money without any cash back whatsoever.

Thank you for reading all the prose and reviewing the table. I will update the scores as they (hopefully) go up a bit in the coming days. The scores in the tabe are Vantage model 3.0. I am reading on this forum that I should disregard them. I am not sure what I should put instead, so for now these are here as some reference point. I have signed up for Equifax 3 report monitoring, Memorial Day promotion, and intend to cancel it on June 5.

Thanks,

Trying to Get Unstuck.

	Mother, permanent resident, lives in California, good history in recent years but seriously bad history earlier due to being taken advantage of in divorce	Son (potential co-signor), US citizen, just finished college in Canada, starting an internship in California, short and flawless credit history, but only as an authorized cardholder of Mother's cards
bankruptcies	none	none
Equifax Score VantageScore 3.0 scoring mode	739	739
Equifax Inquiries	0	0
Equifax Collections	0	0
Equifax AAoA	14 Years, 5 Months	2 Years, 1 Month
TransUnion Score VantageScore 3.0 scoring mode	632	737
TransUnion Inquiries	1 Synchrony Bank Care Credit 12/02/2019	2 (neither resulted in his own line, alas, even though Cap 1 bombards him with pre=approved offers): SYNCB/Care Credit 10/28/2020PO (said that they could not verify his identity) CAPITAL ONE 07/08/2019
TransUnion Collections	5 (FCO 2016, Discover, Wells Fargo, Bank of America, Chase - all large collections from 2015)	0
TransUnion AAoA	8 Years, 10 Months	2 Years, 1 Month
Experian Score VantageScore 3.0 scoring model ??	629	735
Experian Inquiries	1 (Nordstrom: removal date Aug 2021)	0
Experian Collections	2 for $2,164 total: T-Mobile $294 from 2018 Fair Collections FCO for a broken lease, $1870 from 2016	0
Experian AAoA	8 Years, 10 Months	2 Years, 1 Month
# of positive trade lines:	6 (AmEx, Cap 1, Synchrony, Nordstrom, 2 Comenity accts)	4 (all 4 as an authorized user on Mother's first 4 cards; no trade line of his own)
# of negative trade lines:	4 (B of A, Discover, Chase, Wells Fargo, for a total of almost 60K, all first late in 2015) + see collections	0
Income:	200K/year	about to begin a minimum wage internship in the US; no history of US income
Length of Employment:	2+ years at current job	0
Previous Loan Experience:	child support to daughters from a subsequent marriage; closed in good standing in Sept 2020, in the past paid $4470/mo over many years	None
Debt-to-Income (DTI):	2%	n/a (no debt, no income yet)
Year of Car	2016-2018
Miles:	Under 30K
Purchase/Refinance	Purchase
Requested loan term	60 months, but are flexible, can take fewer
Down payment amount	4K but less would be better
Value of the car	19K - 23K

Re: finance a car or open a new credit card - what to do first?

tcbofade — Mon, 31 May 2021 10:21:34 GMT

If you've been on the job for two plus years, any dealer in America will finance a car for you.

Adding your son to the loan might help him, but it won't help you.

Go to whatever bank you use and apply for a car loan there BEFORE visiting the dealership. If your bank can finance you with a rate you're happy with, you've got the hardest part done. If they can't, the dealership CAN do it, but be prepared for an ugly interest rate.

Good luck!

Re: finance a car or open a new credit card - what to do first?

Anonymous — Mon, 31 May 2021 14:20:27 GMT

I have found that auto loans are easier to get approved for than CCs. If you want/need the credit card I would app for it first then apply for the car loan before that card reports, you will only have a hard pull showing which should have minimal impact on your scores.

The scores you posted are indicated as Vantage Scores... I would not trust these scores as they can vary greatly from your FICO scores. If your FICO scores are high 600s to low 700s you should likely be able to get approved for a new CC and the auto loan. If your FICO scores are low 600s, I would wait before applying for any CCs. Even with low 600s FICO scores you can likely get a car loan, although the rates are probably not going to be the most favorable.

Re: finance a car or open a new credit card - what to do first?

GettingUnStuck — Mon, 31 May 2021 14:39:43 GMT

@tcbofade wrote:
If you've been on the job for two plus years, any dealer in America will finance a car for you.

Adding your son to the loan might help him, but it won't help you.

Go to whatever bank you use and apply for a car loan there BEFORE visiting the dealership. If your bank can finance you with a rate you're happy with, you've got the hardest part done. If they can't, the dealership CAN do it, but be prepared for an ugly interest rate.

Good luck!

Thank you very much! I have been banking with Wells Fargo for decades. I also recently opened two new checking account for bonuses (already received the bonus at Capital One): Capital One 360 checking and Bano of the West Paribas (brand new).

Would you suggest I apply at one of these, all three of these, or monitor these boards for what seems to be more attractive options elsewhere - Pentagon, Navy, etc? Thank you for your recommendations!

I will go alone for now and son will eventually finance his own car when he is employed, with me as HIS co-signor if needed.

Re: finance a car or open a new credit card - what to do first?

tcbofade — Mon, 31 May 2021 14:50:12 GMT

I believe that Capital One has an auto loan preapproval tool.... if you already bank with them, start there.

If that fails, try Wells Fargo.

Good luck!

Re: finance a car or open a new credit card - what to do first?

GettingUnStuck — Mon, 31 May 2021 14:50:45 GMT

Thank you for your response aj2121. I do not NEED a credit card. I WANT to move away from a no-rewards to rewards non-AmEx car, but I do not NEED it. I NEED a car. But I get your point about applying virtually simultaneously, first for the card and then immediately for the loan, to end up with only one hard pull. Question: what if my CC application is rejected? Still one hard pull?

I see from your response that I should buy FICO scores. Given that I have just paid down all my CC balances, should I wait before purchasing the product or will the product provide continuous updates? Also, do you recommend I call each CC company to find out on what date they are reporting? Or, can I figure it out myself from the date when they cut their statements?

Thanks,

Getting UnStuck.

Re: finance a car or open a new credit card - what to do first?

KatSoDak — Mon, 31 May 2021 15:17:48 GMT

In January I co-signed for an auto loan for my daughter and her husband.

I talked to the finance guy at the car dealer before agreeing to a hard pull or any action on their part at all. My condition on co-signing was none of the car dealer multiple HPs could happen.

Because I'm a WF Bank customer I said "go with them" when the finance guy told me they were one of the potential lenders. My reasoning was I would be able to have oversight on the loan in the WF mobile app I monitor for my accounts anyway.

So the dealer did one HP to verify my credit and WF did one HP when the loan was presented to them.

(My SIL has poor credit but a good income. My DD has no credit and is a SSHM with only household income so logic said I would co-sign for SIL rather than DD. He did not qualify without a co-signer.)

The interest rate was higher than the last used car loan I had through WF, btw, because of my SIL's poor credit. But we got the deal done, the payments are reasonable, he's building back credit AND he paid 25% of the loan in advance last month so my utilization isn't as high which makes the credit hit a bit less for me.

Re: finance a car or open a new credit card - what to do first?

Anonymous — Mon, 31 May 2021 15:29:32 GMT

@GettingUnStuck wrote:
Thank you for your response aj2121. I do not NEED a credit card. I WANT to move away from a no-rewards to rewards non-AmEx car, but I do not NEED it. I NEED a car. But I get your point about applying virtually simultaneously, first for the card and then immediately for the loan, to end up with only one hard pull. Question: what if my CC application is rejected? Still one hard pull?

I see from your response that I should buy FICO scores. Given that I have just paid down all my CC balances, should I wait before purchasing the product or will the product provide continuous updates? Also, do you recommend I call each CC company to find out on what date they are reporting? Or, can I figure it out myself from the date when they cut their statements?

Thanks,
Getting UnStuck.

There will still be multiple hard pulls, the difference is more leniency for auto approvals, so the hard pull from the CC will likely not affect your aproval. However, CC underwriting is more inquiry sensitive and the hard pull from an auto loan could potentially keep you from getting the CC approval. Unfortunately, HPs will remain on your account even if it is a denial.

You can sign up for a free trial of Experian's CreditWorks Premium and get all 3 FICO8 scores for free, just remember to cancel within 7 days to avoid being charged the recurring fee. In my experience MOST credit cards report on the statement date. Several members here have noticed that Experian has been lagging behind on reporting, sometimes not reporting for days or even weeks after the statement cuts, so it can be hard to know exactly when things will update. You can always use a service like WalletHub or CreditKarma to see daily TransUnion report updates (don't pay attention to these scores as they are VantageScores) so you will know when your TU report has all of the updated information reporting and then you could do a 3 bureau pull.

Re: finance a car or open a new credit card - what to do first?

Slabenstein — Mon, 31 May 2021 15:30:26 GMT

@GettingUnStuck wrote:
Thank you for your response aj2121. I do not NEED a credit card. I WANT to move away from a no-rewards to rewards non-AmEx car, but I do not NEED it. I NEED a car. But I get your point about applying virtually simultaneously, first for the card and then immediately for the loan, to end up with only one hard pull. Question: what if my CC application is rejected? Still one hard pull?

I see from your response that I should buy FICO scores. Given that I have just paid down all my CC balances, should I wait before purchasing the product or will the product provide continuous updates? Also, do you recommend I call each CC company to find out on what date they are reporting? Or, can I figure it out myself from the date when they cut their statements?

Thanks,
Getting UnStuck.

If you apply for a credit card, you take the same number of hard pulls regardless of whether you are approved or denied. Depending on the issuer, they may pull a single bureau, two, or all three.

If you are considering buying FICO scores and want to see what your scores would be after certain profile changes (such as lower cc balances) post, then you would need to buy the scores after those changes post. Whether the scores update daily or monthly will depend on the product you're buying. However, you do have some options for free or inexpensive FICO scores, if you just want to see where you stand:

1) Your Amex card already provides you with a free monthly EX FICO8. I'm not sure where it is on the app, since I don't use it, but on the desktop it's in Account Services>Profile>View FICO Score. Be aware that Amex provides both EX8 and TU VS3 on their site, depending on where you look, so you want to make sure you're looking at the FICO score.

2) A free monthly EX8 is also available at creditscorecard.com from Discover.

3) For a $1 trial, you can see all three FICO8's, your EX2 mortgage score, and a few other EX FICO scores, at www.creditchecktotal.com, which is an Experian site. Just make sure to downgrade to the free membership before the end of the trial so you don't get hit with the full monthly fee.

You should be able to call your issuers to see when they report, but you can also look on your credit reports from ACR and other report sources to see when the date of the last update was. For most issuers, this will be the statement date (as it is for both Amex and Cap1).

Re: finance a car or open a new credit card - what to do first?

GettingUnStuck — Mon, 31 May 2021 15:57:31 GMT

On AmEx, I only see TransUnion VantageScore 3.0 and TransUnion credit report (below). I am going to call them and ask where to find EX FICO8.

Credit Report Period

05/31/2021

Score

632

Balances

65207

Payments

210

Credit Accounts

Open Accounts

Closed Accounts

Delinquent

Inquiries (2 years)

Derogatory

Public Records

Re: finance a car or open a new credit card - what to do first?

GettingUnStuck — Mon, 31 May 2021 16:14:22 GMT

AmEx: found it in the app. FICO 599 as of April 23rd, when all my cards were maxed out. They told me to wait for a week for the update. They also told me that they report on the 23rd themselves.

Further, I was able to get a free FICO score from Discover. It is sobering, but I will check back in a month and hopefully the lower balances will cause at least some improvement.

As of May 31st, 2021 based on Experian® data

606

15Total Accounts

17 yearsLength of Credit

0Inquiries

91%Revolving Utilization

0Missed Payments

Your FICO® Score 8 based on Experian data

606 Fair

Key factors affecting your score

What's helping

+ Long credit history

What's hurting

+ Negative items

- High credit usage

The FICO® Score evaluates balances in relation to available credit on revolving accounts. The extent of a person's credit usage is one of the most important factors considered by a FICO® Score. People who keep their ratio of balances to credit limits lower are generally considered less risky to lenders than those with higher ratios. Note, consolidating or moving debt from one account to another will usually not change the total amount owed.

Your FICO® Score compared to U.S.
average by age

Very Good739 Good669 Fair579	You (606)
Exceptional		850
Poor	300
	18-25	26-35	36-45	46-55	56+

Re: finance a car or open a new credit card - what to do first?

GettingUnStuck — Mon, 31 May 2021 16:30:55 GMT

Cap 1 has prequalified me for a month. The rates are around 6%. I will study what they have and then apply again when the month expires, when the FICO score migh be better. Furhter one, I cannot get the FICO score signficantly better until next summer when most my big BADDIES leave the report, so there would be no reason to wait further. Thanks!

Re: finance a car or open a new credit card - what to do first?

tcbofade — Mon, 31 May 2021 16:56:12 GMT

6% looks awfully good to me.

If you need a car NOW, I'd take that offer and run with it.

Good luck!

Re: finance a car or open a new credit card - what to do first?

Anonymous — Mon, 31 May 2021 18:01:58 GMT

@tcbofade wrote:
6% looks awfully good to me.

If you need a car NOW, I'd take that offer and run with it.

Good luck!

^^^ I second this advice. 6% is a good rate for your scores. I'd take it and refinance next year after the remaining baddies fall off.

Re: finance a car or open a new credit card - what to do first?

GettingUnStuck — Mon, 31 May 2021 19:01:01 GMT

thanks so much, guys! I will start looking. This rate is for Honda Civic. For Honda Fit, the rates are even lower (witn the same 4K down payment). I need to make a decision on which car to buy - I guess will head over the auto forum to discuss. I am clueless atm, but do want to be able to drive uphill and have heard that Honda Fit might not be powerful enough for that.

And then next year I will refinance. Very glad to have found you as advisors.

Thanks,

trying to get unstuck

Re: finance a car or open a new credit card - what to do first?

USMC_Winger — Mon, 31 May 2021 19:15:54 GMT

@GettingUnStuck wrote:
AmEx: found it in the app. FICO 599 as of April 23rd, when all my cards were maxed out. They told me to wait for a week for the update. They also told me that they report on the 23rd themselves.

Further, I was able to get a free FICO score from Discover. It is sobering, but I will check back in a month and hopefully the lower balances will cause at least some improvement.

As of May 31st, 2021 based on Experian® data
606
15Total Accounts
17 yearsLength of Credit
0Inquiries
91% Revolving Utilization
0Missed Payments
Your FICO® Score 8 based on Experian data
606 Fair
Key factors affecting your score
What's helping
+ Long credit history
What's hurting
+ Negative items
- High credit usage
The FICO® Score evaluates balances in relation to available credit on revolving accounts. The extent of a person's credit usage is one of the most important factors considered by a FICO® Score. People who keep their ratio of balances to credit limits lower are generally considered less risky to lenders than those with higher ratios. Note, consolidating or moving debt from one account to another will usually not change the total amount owed.
Your FICO® Score compared to U.S.
average by age
Very Good739
Good669
Fair579
You
(606)
Exceptional 850

Poor 300
18-25 26-35 36-45 46-55 56+

90% and above utilization on a single CC is considered maxed out. Once you reach 89% or less on all your CCs, you'll see a few FICO points improvement. Other thresholds where you'll see further improvement in your FICO scores are at 69%, 49%, 29%, and 9% aggregate revolving utilization and when the highest single revolving utilization drops further down to 69%, 49%, and 29%.

Are you or your son eligible for Navy Federal Credit Union membership? If you or your spouse, parent, grandparent, sibling, child (including step-child or adopted), grandchild, or household member currently serves or has served in the U.S. armed forces or is currently a member of Navy Fed, you qualify. Current Dept. of Defense (DoD) employees and contractors at DoD facilities and DoD retirees also qualify. If so, that would be your best bet for qualifying for your next CC to replace your Cap. 1 CC with a good rewards card the soonest and your son establishing his own credit history. While you might get approved for a Navy Fed CC when your overall revolving utilization is at 49% or less, you'd have a much better chance at getting approved if your overall revolving utilization is at 29% or less.

You want to help your son establish his own credit. You've already done a great job by adding him as an AU on CCs with perfect payment histories. However, co-signing on an auto loan isn't your and his best next step. If your son still has his student email address and he is part of your household and has access to some of that income (such as for any of his housing, groceries, and utilities expenses plus his CC expenses), he can claim your household income (or his portion of your household income that covers his expenses) on his CC application, so he can probably qualify for a Discover IT Student CC, even without an income history. Once he has 3 months of employment history and income, he can start applying for the two best secure CCs: Discover IT secured and Navy Fed secured nRewards cards, if he's eligible for Navy Fed membership.

Co-signing on a CC for someone who is not your spouse is rarely a good idea, but if you decide to go that route for your son, then US Bank allows co-signers for CCs. You should probably skip the other two banks that allow co-signers for CCs, B of A and Wells Fargo. They'll remember you for a long, long time.

Re: finance a car or open a new credit card - what to do first?

GettingUnStuck — Mon, 31 May 2021 19:43:51 GMT

@Slabenstein wrote:

3) For a $1 trial, you can see all three FICO8's, your EX2 mortgage score, and a few other EX FICO scores, at www.creditchecktotal.com, which is an Experian site. Just make sure to downgrade to the free membership before the end of the trial so you don't get hit with the full monthly fee.

You should be able to call your issuers to see when they report, but you can also look on your credit reports from ACR and other report sources to see when the date of the last update was. For most issuers, this will be the statement date (as it is for both Amex and Cap1).

Signed up for www.creditchecktotal.com

FICO Score 8:

Experian - 606

TransUnion - 635

Equifax - 743

FICO® Auto Score 2

620

FICO® Auto Score 8

621

I now cannot believe I used to spend time watching those useless Vantage scores. This IS informative. Thanks!

Re: finance a car or open a new credit card - what to do first?

Anonymous — Mon, 31 May 2021 19:52:04 GMT

@GettingUnStuck wrote:
thanks so much, guys! I will start looking. This rate is for Honda Civic. For Honda Fit, the rates are even lower (witn the same 4K down payment). I need to make a decision on which car to buy - I guess will head over the auto forum to discuss. I am clueless atm, but do want to be able to drive uphill and have heard that Honda Fit might not be powerful enough for that.

And then next year I will refinance. Very glad to have found you as advisors.

Thanks,

trying to get unstuck

I used to work for a Honda dealer, we had quite a few customers that loved the Fit and would not consider any other alternatives. They have a lot of utility, space, and visibility for their size. I have driven several Fits and they don't feel underpowered at all to me, now if you live several thousand feet above sea level in the mountains, then you might feel it is lacking for power. A Civic with a turbo engine will keep more power at higher elevations.

Re: finance a car or open a new credit card - what to do first?

GettingUnStuck — Mon, 31 May 2021 20:11:35 GMT

@USMC_Winger wrote:
90% and above utilization on a single CC is considered maxed out. Once you reach 89% or less on all your CCs, you'll see a few FICO points improvement. Other thresholds where you'll see further improvement in your FICO scores are at 69%, 49%, 29%, and 9% aggregate revolving utilization and when the highest single revolving utilization drops further down to 69%, 49%, and 29%.
I should be able to maintain a lower utilization now. I was paying my debt to the IRS - paid! I also, for the next two months, am paying two rents as I left before the lease expired, but starting in August things will be easier. So the utilization (lower) should help.

"Are you or your son eligible for Navy Federal Credit Union membership?" - unfortunately, we are not.

"You want to help your son establish his own credit. You've already done a great job by adding him as an AU on CCs with perfect payment histories. However, co-signing on an auto loan isn't your and his best next step. If your son still has his student email address and he is part of your household and has access to some of that income (such as for any of his housing, groceries, and utilities expenses plus his CC expenses), he can claim your household income (or his portion of your household income that covers his expenses) on his CC application, so he can probably qualify for a Discover IT Student CC, even without an income history. Once he has 3 months of employment history and income, he can start applying for the two best secure CCs: Discover IT secured and Navy Fed secured nRewards cards, if he's eligible for Navy Fed membership."

I will find out if he still has his student email address! And yes, he has access to some of my income. I did not know about Discover - will research now. Many thanks!

Re: finance a car or open a new credit card - what to do first?

Slabenstein — Mon, 31 May 2021 20:20:54 GMT

@GettingUnStuck wrote:
thanks so much, guys! I will start looking. This rate is for Honda Civic. For Honda Fit, the rates are even lower (witn the same 4K down payment). I need to make a decision on which car to buy - I guess will head over the auto forum to discuss. I am clueless atm, but do want to be able to drive uphill and have heard that Honda Fit might not be powerful enough for that.

And then next year I will refinance. Very glad to have found you as advisors.

Thanks,

trying to get unstuck

My friends have a Fit, and it can definitely go uphill, lol.