650 Credit decline

[Anonymous]

I just received news that I was decline attempting to borrow 14k from Navy Fed Credit Union with a guarantor who has a 715. I have 650, but big issue is a successful bankruptcty discharge from July 2010-my 12 month year old position pays me just under 70k, and I owe 30 dollars on 2 credit cards with combined 1500 credit limit-with no other debt.  When I spoke to the loan officer, she read me the standard statement that said I have outstanding debt.  I said this is impossible.  I stated that I do have a bankruptcy, but all past debts have been discharged and my current status has a 715 guarantor (my fiance).   I am going to ask for an appeal.  If this normal?  If my bankruptcy is always going to show to lenders as being "outstanding debt" it will be 8 years before I can get a car.  The whole point of getting a moderate used vehicle is to help rebuild my credit.  I thought credit unions would be more flexible than banks, but I guess not.

[cdtotten]

If you have a BK less than 2 years ago, then I don't see you getting approved for a car unless you are at a buy-here, pay-here lender sorta situation. That is a serious derog that recently happened

[Anonymous]

Even with a co-signor who has 715-720 credit?   So I should either do financing where I purchase the car or wait another year?   That sucks royally. 

[Anonymous]

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@Anonymous wrote:

Even with a co-signor who has 715-720 credit?   So I should either do financing where I purchase the car or wait another year?   That sucks royally. 

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A BK is a pretty serious derog and, while 715-720 is good, it's not spectacular.  For someone with a very recent BK there are other ways to help rebuild credit, assuming that rebuilding credit truly is your only reason for getting the car.  If, however, you just want/need a car, just put it in your fiance's name and make the payments.  

[cdtotten]

A co-signer can not overcome some obstacles. Co-signers are helpful when either a) your income is borderline to make the payment b) your credit is borderline/or short history and need something to prop it up. Just because the banks have someone to turn to if you fall through on your obligation, doesn't mean they want to take that step unless they feel the risk is appropriate. With a major derog recently, they must feel it is not worth it. And 715 is a good score, but it isn't great.

[Chad3304]

The statement saying you won't get financed for a car until after 2 years post bk discharge is incorrect. There are many people who get approved just days after discharge. Of course its higher interest rate then, but with a 650 if you were to go to a dealer you should be able to get a decent rate. Or maybe try a local CU, all the ones I'm associated with only required 6 months post. So DO NOT go to any buy here pay here bull crap dealers.

[tooleman694]

Yeah I bet you can get some decent rates with that 650 score.

[StartingOver10]

I was/am in your situation. I have a recent BK (discharge Jan 09; hence my screen name: startingover10). I surrendered my vehicle in my BK so I had to get one right away as a "no vehicle" household won't work where I am.

This is what I did and it worked for me: I bought a half-way decent beater for cash and drove it for two years. In Jan 2011 my score was in the low 700's just like your score. I went to the dealership with heavy research on the vehicle I wanted (used '09 Toyota Venza). The dealership was the regular local toyota dealer (after shopping online for more than three months). BTW, I walked out of 4 dealerships before settling on that one because the sales reps started the payment game with me. So go to a reputable dealership with a decent sales staff. BUT, be prepared to negotiate with the F&I guy. This was the first, and last, time I did not use a credit union. I was able to trade my beater for what it was worth (researched before hand, got close to the actual value of it $3500) plus a down payment of another $1000.

 After negotiating with the sales rep, the F&I guy started out with a crazy high rate of 15%. I said no. He dropped it to 12%, I said no. He dropped it to 10% and added the warranty and gap as a condition of the rate - I said no. I also pointed out that he can NOT legally add the warranty or gap as a condition of the loan. At that point I walked out. He then came after me and offered 7.15% and was willing to drop the warranty and gap as I didn't want either of them).  I took that rate because I had a recent BK that was exactly 2 yrs old and not much of a down payment (the $4500 above including my trade). There is no co-signer. I will be able to refi with my CU next year as they need 3 yrs from a BK. Naturally, I have paid more than the min payment so the value is more than the loan. My payment is reasonable for me.

Sometimes you have to take baby steps. The rate is not steller, but its not bad either for a recent BK. But when you have filed BK, you have to prove yourself again and at least it is a single digit rate. The point is, find out the underwriting criteria and fit your situation to it. If it takes a little longer, it is better than making a mistake.

[Elated]

Great post as well as excellent advice StartingOver...I was in a similar situation myself almost 3 years ago when my previous home went into foreclosure. Now, I am in the process of purchasing a new home that I will close on in January. I purchased a brand new vehicle a few months ago, (the day before I applied for my mortgage). I have a 9.99% interest rate on a 2011 vehicle...this was great considering I had a 16.78% interest rate on the 2011 Toyota Camry I traded in for it. I had that vehicle for only 10 months (I bought it brand new too). Also, I have just recently (in the last week), received nice CLI's on many of my credit cards.

I do have to say, that patience is a virtue.

Also, by the way, how are you liking that Toyota Venza? After I close on my new home I plan on purchasing one...they have excellent interest rates right now if you apply at Toyota Financial Services (0.0 to 0.9%) on new vehicles. This would save me thousands of dollars in interest and I will finally have the vehicle I truly want! After that, no more credit apping or buying cars for me!

Sorry, I didn't mean to go off on a tangent...and again, excellent advice.

Best of luck to you in the future...just keep doing what you are doing!

[StartingOver10]

Thanks Elated! Congrats on the new house! You are right....patience can work wonders when you are rebuilding

BTW, love the Venza.