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Hello! At the end of the year I'm looking to get a new car loan, my previous car was deemed a total loss because of an accident caused by icy roads.
So I do have some credit history with my last auto loan, made all my payments until my insurance paid off the vehicle. I have had some credit cards, which have now been closed by the "guarantor" so because of that I have no open credit cards, no available credit line or available balence.
I'm trying to pay of my remaining credit card debt before i apply for a new auto loan, my question is do I need to have an open credit card in order to be approved considering I already have credit history? Or should I just wait until after I get another car loan?
I just don't know if I need to have an active credit line or not now that I don't have any.
I'm sure its credit file dependent but I have opened around 6 different auto loans in the past without having a single credit card line or mortgage reporting on my file.
4 were with Honda Financial and last 2 were with Wells Fargo and Chase through dealerships. All were seemingly top tier ( low apr) from what i remember with scores in the high 600's
Not having an open revolving credit account on file means your Fico score is being penalized 20-30 points. The penalty is due to "lack of recent revolving account activity". However, opening a new revolving account in the months leading up to an auto loan is not advised. Your score would drop due to new credit under 12 months age and the HP.
Open revolving credit card accounts are not a pre-requisite for a car loan. Get the car loan before applying for a new credit card.