First auto loan FICO8

[Anonymous]

Hi guys ,
I really need an advise..
My FICO 8 Auto scores are 566 572 and 590.
My total credit card Debt is around $7000.
Available card limit $2000
No late payment
No collection
Never used loan before
Credit age : new 1 year
9 open 1 closed accounts
Pennsylvania Lenders want to charge me 24% for an auto loan which means I have to pay almost double for a car that’s $17.000.

Here’s the question.. Does my Fico 8 auto (Experian )go up , be around 630 if I pay all my cards off this month.?
Or what do you suggest me to use a better loan ?
Thank you.

[pipeguy]

While I can't say how much your scores will increase by paying down your debt some, you are currently running at 78% utility (you owe 78% of your available credit lines). Not only are you paying interest on that balance each month, but lenders see "subject X" as overextended which is a high-risk red flag.  The good news is that Fico scoring has no memory and once you pay your balances down (and your scores increase) that's it, no one will know or care what they "were". 

Given that you said you have no lates, no past dues, no collections or other issues, your listed scores are very low even with your short credit history. Fico scores in the 500's are generally found with listed collections, missed payments and bankruptcy filings.

As far as the car loan, do NOT buy any vehicle with a 24% APR loan, or a 17% or a 14% and I would suggest anything over 9% (prime rates are running 2.5% to 3.5% depending on term and amount) "Prime" does not mean you need 760 scores for an auto loan, major credit unions offer prime rates for 700+/-. 

I don't know your age, but I suspect its young because of your 1-year credit history and I also don't know your income, however, if you are unable to pay down $7000 in credit card debt - all obtained within the last year - I would suggest that adding a $432.53 a month car payment on top of that might not be the best idea right now. That payment is based on $17,000 for 48 months using a 10% APR. 

Ideally, you should NOT carry any credit card debt, meaning you pay off each month what you charge. I also understand that many/most people carry some credit card debt - which is how all those nice lenders make billions of dollars every year. Pay off $5000 of the $7k you owe which will get you in 22%+/- utility area and your scores will increase, it'll be even better if you get under 9% - before you look at adding a $17k car loan. If it takes you a year to do that, you'll gain another year of credit history too.

Good luck! 

[Anonymous]

First off , thank you so much for your time and answer.
Monthly income is between $3.500-4000.
I’m 36 years old the credit is new because I got my green card 2 years ago. Also I’m able to pay it down even off. I got some cash in my hand and I’ll borrow some from my mother in law to pay it off.. here’s the situation I’m an Uber driver and I need a car ASAP because the car I used to drive is trashed due to an accident.
I have 2 options
1- buying a car around $7k and I know this car is gonna make me have a lot of mechanic issues because of high mileage and driving long hours that means I’ll waste my money.
2- pay my credit card debt and wait 2 months to buy a nice car with a Better interest. I’m just scared that if my FICO 8 auto doesn’t go up fast in 2 months. I was looking for peoples experiences. looks like it’s a gamble and I’ll play one of them
My Fico 9 auto is pretty good but I think no lender is using that

Thank you for your answer again

[Anonymous]

My regular Fico 8 score is 605 , 602 , and Experian 636.
Simulator says that pay down $3350 , your scores will be around 675 , 682 and Experian 706. But I don’t think that FICO 8 Auto will go up more than 15 Points. I wish there was a way of simulator to check FICO auto out.

[FirstAscent]

I just wanted to add that not all lenders use the auto enhanced scores. Search around for what different banks and credit unions pull. Some use FICO8, FICO9, older versions, auto, non-auto. 

I'd suggest paying down your credit card debt as much as possible, but not a zero balance, then wait for that small amount to report to the bureaus, see which score is your best score, then find out which bank pulls that score. That's what I just did =)

If you don't have any negatives you "could" potentially see a pretty big increase in scores just by simply paying down your cc debt. 

[Anonymous]

Thank you brother, so do you know any lender or bank who use FICO 9 for auto loan ? I almost searched it all week but found nothing.

[FirstAscent]

PenFed credit union does but unfortunately I don’t think anyone can just be a member. I’m not with them so I’m not sure what the requirements are

Also, whatever you decide to do, I’d still recommend paying down you credit card, you’ll be surprised how much of an impact that has and I think you’ll have some decent FICO8 scores afterwards

[pipeguy]

Given your income and the advantage of being able to write off your car expenses against "business income" I would pay off whatever I could on that $7000 and then never carry more than 9% total utility in the future. Carrying high balances includes paying interest to those creditors. I'd use one card exclusively for insurance, gas, upkeep, and including car washes which will document your business expenses - keep a log of your expenses and the card will document the load then pay in full every month.

All you have to do for perfect utility reporting is to allow 1 card to report $10 on your statement, everything else can be paid to zero. Another suggestion is to use one card for business and 1 or 2 for other things, it's easier to track and easier to not overspend.

Since you have the funds, pay everything off now (except for $10 on one account), wait until everything reports and your scores will zoom up. Then apply for a DCU membership and ask if you qualify for a car loan at the same time. If your scores are in the 700 range, which they should be, you'll get a $17k loan at 3% or so (60-month loan $307, 48-month loan $378, 36 months $496). Considering that you'll wear out a car quickly because you drive for a living, I'd consider the 36 or 48-month loan over a longer one. 

[Anonymous]

I'm not sure what your specific uber rules are but you need to have a car that is less than 10 years old or something right?

I know you need a 4 door car but how classy does it NEED to be for uber passengers?

I'm not even sure if the numbers work out to buy a car to drive uber.. What will you really make after you take your expences into consideration such as car maintenance and your auto loan? I'd really crunch those numbers if I was you..

But anyway I think you should probably look at cars like 1 or 2 year old KIAs and the like to get the cheapest car that will serve you the longest, including maintenance costs..