Improving your credit score

[maiden_girl]

Hello! I am new to the forum. I've been reading some insightful information and thought to join because I need a bit of help of my own!
I'm 21 years old with a FICO score of 704 (Exp, Trans, Eqx). I only have two credit accounts that are active. One being a credit card with a limit of $750. And a store charge card with an unknown limit. I have only had active credit for less than two years. I have 16 hard inquires on my report (most of them are already over a year old). A few I recognize and a few I don't (I probably should file a dispute about that). Anyway some are scheduled to drop off my credit report in the next few months as I got the inquires from trying to obtain my first card to build credit. I've been trying to obtain an auto loan basically through anyone that would offer to finance me but to of no avail as I am considered a risky borrower due to my high hard inquires. I believe anything above two is considered "risky".

I have two jobs. One full time and one part time and I really need a vehicle to commute but I can't find anyone willing to finance a vehicle loan. The reasons are always the same. Too many inquires and lack of credit experience. I pay all my bills on time and have never been delinquent on any of my accounts. I don't have any current debt aside from regular credit card usage. I have never paid any interest on any of my accounts as I pay the balance in full each month. I'm wondering how else can I improve my credit experience and score for a chance at financing a vehicle? I don't want a huge car. Just a simple cheap used car under $12,000. Are there companies that take chances on new borrowers? Or offer special financing or something? I realize my age may play a huge factor in my credit history as well. Please help!

[arlibguy]

Where did you pull your credit scores. if I can ask? From MyFICO? You cannot purchase an Experian FICO score. For Experian, you would have had to receive it from a lender or there is a credit union in PA that offers EXP FICO scores for members. From the MyFICO site, you can purchase EQ and TU FICO scores.

While the inquiries might have slight weight, I have a feeling it's your thin credit file. I'm sure others will chime in. Are you planning to leave a down payment?

Where have you applied for financing, through a dealer? Have you tried a credit union or Capital One Auto? There are some other lenders that folks might recommend. If you really need a car, you might have to pay a higher interest rate.. I am not judging, but I have read posts from others on the auto forum that have paid upwards of 16 - 24% interest. I'd hate to see anyone pay that high of a rate, but many have talked about refinancing at a lower rate with a credit union or bank.

[maiden_girl]

I probably should correct my previous post. I'm able to qualify for dealer financing at smaller banks with APR ranging from 15-25%, not at any major banks like Chase or BofA. I would like a low APR and none of the banks I'm interested in will approve my application at that request. I don't want to have to refinance because the chances of being are to do so are slim. I was hoping for an auto loan with Chase because I bank with them and they offer the lowest APR in my state (California @ 2.5% on used dealer purchases). I have a sizable down payment. A few thousand but I don't want to put all that down. The most I am willing to put down is $1,000 to $1,500. Most banks wanted me to put down between $2,500 and $5,000 (once even $10,000 down on a '97 Camry at a well known dealership) before considering me "worthy" of a auto loan with them which is the reason I have held back on a purchase. That’s too much and they weren't even interested in discussing options once I established I wasn't going to put down more than $1,500.

Anyway what do you mean by not being able to purchase an Experian score? I purchased 3 bureau scores from Experian just the other day for 30 bucks. I was interested in seeing what the companies were looking at as their determining factor. Experian is selling reports and scores on their website. If they aren't selling accurate reports, they need to take that down ASAP.

[MarineVietVet]

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@maiden_girl wrote:

@I probably should correct my previous post. I'm able to qualify for dealer financing at smaller banks with APR ranging from 15-25%, not at any major banks like Chase or BofA. I would like a low APR and none of the banks I'm interested in will approve my application at that request. I don't want to have to refinance because the chances of being are to do so are slim. I was hoping for an auto loan with Chase because I bank with them and they offer the lowest APR in my state (California @ 2.5% on used dealer purchases). I have a sizable down payment. A few thousand but I don't want to put all that down. The most I am willing to put down is $1,000 to $1,500. Most banks wanted me to put down between $2,500 and $5,000 (once even $10,000 down on a '97 Camry at a well known dealership) before considering me "worthy" of a auto loan with them which is the reason I have held back on a purchase. That’s too much and they weren't even interested in discussing options once I established I wasn't going to put down more than $1,500.

Anyway what do you mean by not being able to purchase an Experian score? I purchased 3 bureau scores from Experian just the other day for 30 bucks. I was interested in seeing what the companies were looking at as their determining factor. Experian is selling reports and scores on their website. If they aren't selling accurate reports, they need to take that down ASAP.

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Welcome to the forums.

The scores you buy from the Experian website are not FICO scores. They are called "PLUS" scores and are not used by any lender.

No one has been able to buy their own Experian FICO score since February of 2009. Creditors can pull Experian and also there is a CU (PSECU) in Pennsylvania that supplies that information to it's members only. You can only buy true FICO scores at a few places. One place is here at myFICO.

At one time you could also purchase your Transunion score at transunioncs.com but no more. Wal Mart now offers a TU08 score to those who have their store card and the Discover version.

Equifax will still sell you a FICO score found here: www.equifax.com/web-myfico-products/

From a BK years ago to:
EX - 3/11 pulled by lender- 835, EQ - 2/11-816, TU - 2/11-782

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".

[maiden_girl]

That doesn't make sense. Why would they sell consumers inaccurate credit scores? Anyway I looked up my EQX score here (665) and TRANS (689) and its not really that far off from the ones I got from Experian (704). Smh. I'll never understand credit.

[StartingOver10]

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@maiden_girl wrote:

That doesn't make sense. Why would they sell consumers inaccurate credit scores? Anyway I looked up my EQX score here (665) and TRANS (689) and its not really that far off from the ones I got from Experian (704). Smh. I'll never understand credit.

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Well, it is a big source of revenue for them, that's why they do it. They sell scores that lenders don't use. They don't tell you that either. There is no correlation between the scores they sell and the FICO scores. So you just learned a valuable lesson...Just because it is sold by the same vendor doesn't mean the info is accurate.

As to your point of view regarding the down payment, you are looking to keep your down payment low and the lender is looking to reduce their risk. A $1500 downpayment on a $12k vehicle purchase is a very, very low deposit - especially after you add in taxes, title etc. When you are new to borrowing, which you are, then you are really an unknown risk in the lenders eyes. Your very first vehicle loan is considered a higher risk loan just because you have never had an installment loan before. In order to reduce the lender's risk, they want you to put down more money. It actually makes sense for them and for you. One of the worst habits to get into is putting down low amounts on an asset that depreciates rapidly - like vehicles.

If you go to a credit union, you ought to be able to get a loan for a much, much lower rate than what you are currently seeking. You will have to put down more money. Each CU has their own criteria, but normally they won't loan more than the trade in value on a NADA basis. So it is up to you to negotiate the vehicle price as close to the trade in value as possible. You don't want to be upside down the moment you drive off the lot anyway. Getting a CU loan is easier than getting a loan from Chase, in general. Good luck.

[ScoreBooster]

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@maiden_girl wrote:

I have never paid any interest on any of my accounts as I pay the balance in full each month.

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Now, this could be the good old credit-card pitfall you're in. May I ask when you usually pay off your credit-card? After you receive the monthly statement? If so, that could indeed influence your credit-score in a negative way. In 9 out of 10 times, the balance the CC-companies report to the bureaus is the statement-balance - so no matter if you pay it off every month AFTER receiving the statement, your credit-report is likely to show a higher debt. You need to make sure that you have a low balance (below 9% of your credit-limit) on your account the day the credit-card reports your balance to the bureaus - and 9 out of 10 times, that the billing-cycle closing date.

[maiden_girl]

I guess that makes sense. I will keep trying though and keep looking around. Thanks for the help! Oh and to the last poster, my highest balance on my credit card was 550 (full balance, not statement balance) on a 750 limit. That was months ago. I tend to keep my balances under 400 dollars these days. I haven't had 0 balances on my card in a while. I probably need to start keeping my balances under 7% UTI in order to witness a true change in credit.

[ScoreBooster]

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@maiden_girl wrote:

I guess that makes sense. I will keep trying though and keep looking around. Thanks for the help! Oh and to the last poster, my highest balance on my credit card was 550 (full balance, not statement balance) on a 750 limit. That was months ago. I tend to keep my balances under 400 dollars these days. I haven't had 0 balances on my card in a while. I probably need to start keeping my balances under 7% UTI in order to witness a true change in credit.

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Yes, the utilization that is reported is sooo important for a good score. It doesn't matter what your high balance was in the past (BTW, having a $0 reported on all credit-card accounts isn't the best thing either). If you have more than 1 CC, have the one with the lower balance report a $0 balance and the other account a utilization between 3% and 8%. I'm sure your score is going to improve significantly.

[Revelate]

20-30% down is not unreasonable in your situation, downpayment is absolutely king for used-car buying (higher risk than new car buying from a financing perspective, so you need to put more skin in the game to collateralize it). 15- 20% APR likewise is a possibility.

Unfortunately to date you have no installment loan history, no mortgage history, and most importantly: no auto loan history... as they may well look at the auto-enhanced score to your detriment in this case.  You're not a thin file per-se, but you definitely slim heh.

I know it sucks, but lead with your strength: namely that as a new borrower you've already managed to save up a respectable downpayment for the car that you're looking for, just make certain you get a lender that reports.  The most common thing for first-time buyers (or those of us who just paid cash for everything, silly me), is get whatever you can now, make 6+ payments, and then go refi and watch your rate drop 5-6 points if not more.  An auto-loan gets you the double-bonus of now having auto-loan history, but also counts as a quality installment loan.  

Possible other options though the credit union idea is a good one:

Lending tree  (picks up Cap One, Roadloans, a few new/subprime borrower ones)

Getting financed at a dealer (they have relationships with the finance shops and they *want* to get you to purchase the car)

I suspect you're going to be disappointed by the major gold-plated banks BofA / Chase... they just aren't looking to loan to people like you (or like me incidently), though you might be able to get Wells' subprime auto division to make you a deal as they did my case; however, you probably aren't as ugly credit-wise (or any other way either!) as I am