Help!!!

[Anonymous]

So, let me begin my story... try to follow along!!!

After years of terrible credit, my wife and I finally got back on track. I'm talking sub 500 for me and low 500s for her. It took some time and effort, but we finally got up over 620 and in July purchased a beautiful home. We make decent money (combined about $130k) and are in good shape right now. Except for this:

We refinanced an RV we had through a finance company (charging 15%) this October and our scores were 638 her and 631 me. We had a mixup on our reporting when we refinanced it, and our original lender reported us 5 months late and a $900 balance. We challenged it, and they had it removed. We're in good shape, right? WRONG!

Having not missed a payment or opened a new account in 5 months, we needed to get an auto loan because our car is dying. We wanted a lease and went to our dealer who we know well and trust very much. They pulled our credit from TU and we're at a 605 her and 611 me!!!! They won't give us a lease and our rates would be super high.

My question is: how can our scores go down 30+ points after 5 months of payment and no new activity? The RV loan now shows on-time payments with no lates and account closed status...

We have worked too hard to see our scores go down. It's demoralizing after the work and sacrifices we've made. Any thoughts/suggestions?

Thanks, folks!

[webhopper]

Sell the rv you can't afford it, have a mechanic work on her car... A lease is the most expensive way to get from point A to point B.

Just my humble opinion...

[Anonymous]

Welcome!  Is it possible they pulled an auto enhanced score?  The refinance on the RV may have pulled your regualr FICO, or the other way around.  Have you gotten your FICO from this site?

[boomhower]

Have you pulled a report to see for yourself how the RV loan is reporting?  The score dropped for a reason, whether it's the RV or another trade line.  Unless as mentioned above one of the pulled an enhanced score.

[Anonymous]

Actually, we can afford it. Payments for 13 months all on-time. From 345 a month down to 220. We're doing very well. Saved enough to put 5k down on a new vehicle and keep some extra in savings for an emergency. We've budgeted in a reasonable amount for a loan, and will have no problems... Except for securing the loan!

As for the scores, the auto-enhanced were about 4-8 points higher. We've had our friend (mortgage underwriter) look at the scores pre-refinance and post-refinance and she can't figure the reason for the drop. We did a detailed report from this site, and we're stumped. No inquries (aside from the dealership), cc balances about 15% of CL, and no lates in the last 18 months on anything! We've paid a couple of derrogatory items off and had them deleted at our friend's advice, and we figured we'd be in the 650's.

It's FRUSTRATING

[webhopper]

Well, sure you can afford the payments, but can you really afford a toy that you can't pay cash for? It's my opinion that if you can't pay cash for a toy then you cant afford it.

Imagine if you had sent all the money that you had paid so far into a savings account and then purchased an rv with cash? Financing an rv because you can afford the monthly payment is something that poor people do. Poor people look at how much per month. Rich people ask how much can I afford to pay in cash for this toy?
You'll never have a financial cushion if you do the things that poor people do.

Your fico goes down if you have a lot of installment debt. They figured out that those fixed payments put you at more risk, and decreases your ability to really accumulate any kind of wealth. Fewer installment Loans = higher score. Also, your account age went down by refing that rv. Which probably hurt your score as well.

[Anonymous]

It could be possible your scores were rebucketed, do a quick search on the matter.  When you deleted your negative items, it puts you at the back of the line so to speak as far as having a clean report.  It also could be you AAoA went down and the new account could still be hurting as well.

To webhopper, I know what you are trying to say, but everyone's situation is different.

I know many people who are well off that finance cars, rv's, etc., with dirt cheap interest rates to leave their savings and mainly their investment accounts alone.  If you can make an 8-10% return per year with that money in the market, I have no problem borrowing money at .9%, 1.9%, or even a slightly higher interest rate.  Also having an installment payment that low really will not make any difference (except in debt to income ratio and with a payment of $200+/- the principal shouldn't be extremely high).  If they say they can afford it, it's their decison.  He came here asking for advice about his score, not a financial lesson.  My 2 cents.

[webhopper]

@longhorn11
You are right, won't argue, but the OP was paying 15% to a finance company for what is basically a toy, and they signed up for that instead of walking away and saying "I can't afford this". It basically means that they sold their financial security for the cost of an rv. It's just not something that I would ever do and I'd divorce my spouse for doing something like that. Obviously the OP is not dumb.I'm just offering my perspective on his "real" problem. This post isn't really about his score.

[Anonymous]

I totally understand.  I think we're of the same mindset.    I was just saying if he and his wife think they can handle it, more power to them.  

[webhopper]

Yep! I just wish someone had told me when I was doing those sorts of things though. Some people have never been given that perspective, they only have the habits they got from their parents and'/or what they see other people doing. I hate being a naysayer, but what I posted was really with the intention of helping, even I it wasn't really what the poster was asking.