Auto Loan through CU or elswhere

[Anonymous]

Hello,

I am going to try to apply for an auto loan, thanks to this website and 2 days of researching during my car shopping phase I realized how important it will be to check my credit. After checking my reports I decided to hold off another month or so to see how much I can improve.

Below is my situation and what scares me about applying for a loan, any advice would be greatly appreciated.

TU - 607

Equifax - 606

I make a safe $50k/yr between my day job and a side business

I have roughly 10k saved for a down payment and am aiming for a 20k loan. I may not need the full 20k but I'd like to qualify for at least that.

I had 54% utilization between 3 of my credit cards, I have paid them all off as of 6/13/10, and I am hoping this boosts my score a bit. My debt to income shouldn't be an issue as far as credit cards go.

I purchased a house 9 months ago, no missed payments, everything is good. When I qualified my score was 622, it looks like it dropped down to my current score and stayed after the purchase. I've heard it’s hard to qualify for anything prior to a year of good payments on a house purchase. I hope this isn't true!

I have 4 late payments on my credit report dating 2 years back when I didn't realize how important it was to pay bills on time.

I have 1 collection for a $43.00 medical bill marked as paid, no idea how this got here, its news to me as of 6/14/10. I am considering disputing this

Now for the scary part!

I have a merchant account that was on a 48 month lease. This has been "Charged off as bad debt" for a total of 1888.00, I won't get into the story here.

I have 5 years total credit history, im 24 years old and have a few other accounts and a student loan paid off all in good standing with no late payments.

What my chances are of qualified for anything? Where should I begin? I am not a member of a credit union.

[fused]

Welcome to the forums!

What are the credit limits on your three cards? What were the balances before you paid them off? Can you tell us when your merchant account charged-off?

[Anonymous]

Glad to be hear, thanks!

The following cards previous balance before paid off,

Bank of America - $570 before paid off with a limit of $700.00

Capital One - $130.00 before paid off with a limit of $300.00

Chase - $900.00 before paid off with a limit of $2000.00

As for the merchant account with "charged off as bad debt" it says date closed NOV, 2009.

[Anonymous]

I am right in the middle of this process.

I think it's a good idea to wait a month, but I think you can call up or walk into a credit union (or USAA) and just tell them your score, ask them if they think you'll qualify, and ask them what scores you'd need to be approved or for what percentage rate.  It takes very little time to do this, there won't be a negative impact on your credit, and you might gain some useful insight.

Your income sounds fine, but they also care about your housing costs, I assume because it represents a significant portion of your budget.

Loan amount sounds good.  If possible, it might be worth considering setting aside a bit extra in the budget to pay the loan off sooner and/or as a cushion to keep up the payments in case.

Definitely a good idea to pay off those balances.  That directly impacts your score, and also your DTI.

The charged-off as bad debt item may well be a problem.  I just got approved by two different sources for an auto loan, but I was turned down in March by the same two sources, and I think the primary reason was two items showed as unpaid on my CR, one for $341, one for $180.  Even after resolving those, and getting them to report a zero balance on my CR, one of my loan sources wanted a letter of explanation.

Again, a good reason to talk to your loan sources now.  It could be that all your efforts will be for naught with that $1888 item on your CR.  It may be that you'll need to settle that somehow.  It seems to me that even if it remains on your report, if it shows a $0 balance, lenders are much happier.  I could be very wrong on this, but that's my theory.

Good luck!