How do I get a better loan?

[Anonymous]

I'm relatively new to credit. I have a few student loans, 1 CC, and just bought a car in april.

I was pre-approved through capital one for 8%, but this car didn't meet their age criteria (2005). So instead, my loan is 5 years at 10% through Ally. I was told that the age of the car caused the rate to be higher. I still think I could do better. The car cost $16,500. I gave a large down payment and I paid extra these first 2 months, so my balance is down to $12,000. I want to refinance through a credit union before I get slammed with too much more interest.

The problem is, my credit scores took a big ding when the auto loan was reported. Down about 20 points to ~650 average. That came as a surprise to me, since I thought this loan would help my scores (???)

Will my scores rebound quickly? Should I wait before refinancing? Could I bounce back quicker if I got another credit card, or would that just hurt more?

[cdtotten]

The new loan dropped your score for a couple reasons:

1. Inquiries - this is the minor side effect... usually between 0-10 points depending on your credit report.

2. New account - this is the larger affect. A new account will lower your score for the first year, with diminishing penalties as the year progresses.

3. Lower AAoA - your overall age of accounts will be lower by adding a new tradeline, which can bring your score down.

You already had student loans, so you had an active installment loan, so no real bump there.

Your score will rebound over time and the trade line will help you in the future when you go to purchase your next auto. Previous auto trade lines are huge.

I wouldn't add a new card unless you need it, will just lower your score even more unless your util is really high and that would help bring it down.

[Revelate]

You want more than one card from a FICO perspective anyway, 2 is really the absolute minimum, 3, jury is still out if it's better or not.

You've already taken the hit for the auto inquiry / new tradeline, I'd recommend going and opening up a new card now and that way all the negatives are done with for a while, and your score can recover from both and start gaining again after that.  You're likely looking at six months anyway.