Having high utilization along with derogatory marks from late payments is going to be a red flag. High utilization is a red flag in general, and makes a big difference on scores and risk assesment from lenders. Getting down to AZEO (or as close as you can) will definitely make a difference. And a down payment on the car will probably help as well.
On another note, leasing a car is far and away the most expensive way to go about it. Obviously paying cash is ideal, but an auto loan will still have much lower interest & fees than a lease overall. Dealerships make way more money on leases than they do on car sales, financed or not.
One of my lease is up in August and I'm planning on purchasing/leasing another car around mid July - early August. But there is something wrong with my profile and I'd like to get suggestions/advice as to what I should do. Here is my situation:
Basically, on my CR, I have two leased vehicles, MB and a Lexus. The MB is due on August and the Lexus will be due on January. The MB has perfect payment history whereas the Lexus, due to the pandemic, leaves me with 2-3 late payment remarks on it. The reason why I need to buy a car mid July - August is because I've given the Lexus to my parents (as a gift so that they wouldn't have to search for another) so that means I need a car before August 12th.
Is it different on each bureau? You mention "2-3 late payments remarks". Are there two late payments or 3? Also, are they 30 day lates? Are they on all three credit reports? The same on all three reports? How long ago were those late payments reported?
Aside from the late payments (which mostly happened during COVID in late 2020), my only other factors are high credit utilization. However, I am planning on paying off these credit cards by July. Lastly, my husband and I are planning on putting both of our names on the application. His profile is similar to mine, minus the late payments on the car (it'll be his first car in his own CR so I'll be co-signing for him).
What specifically is your utilization %? How much owed vs high credit compbined? It may not matter much if your reports' cycle paying down those accounts prior to your loan/lease apllication. Your husbank will likely be first on the app since his scores don't reflect any auto derogs regardless if he's had a prior auto loan.
Now the question is, since we're looking at an Audi/BMW in the high $50k-low $60k range, what do you think I should do? Should I merely pay off the credit cards and hope for the best or should I try to write goodwill to Toyota/Lexus financial for the late-payments or should I try to hire a credit repair?
Paying down your open revolvers will make a the largest impact to your scores within you immediate control . Utilization and payment history make the biulk of your scores however, payment history (and derogs) will age and lessen the affect so that leaves utilization having the most current affect. DO NOT HIRE A CREDIT REPAIR AGENCY. You can achieve the same (if not much better result) using the tools available to you as a consumer and MyFico member.
The reason I ask is, I don't know the significance of paying the high utilization down as far as boosting scores but I am trying to get prepared and get my ducks in a row. Our income is $150k+ combined, no kids, no student loans, no collections or anything. DTI wise, we're looking at our rent + the Lexus on my profile, which will be around 30% or so. We will be putting around $10k down to try to offset the "late payments" remark on the Lexus account.
With $150K in combined income and just rent plus the Lexus Financial lease, you should be good to go adding / replacing an open auto. $150,000 / 12 X 30% = $3,750 plus the new auto, monthly. If you're considering the $10K down is to help, I would see it as just lowering the expected payment. I don't see it being necessary aside from taxes/fees upfront.
Advice and suggestions greatly appreciated. Thank you!
BMW Financial and Audi Financial are both captive / subvened lenders so they have a little more leniency for their leases. If you are leaning more towards a loan, contact your local lender/credit union and see what they offer before you put your applications in with a dealer. If you could provide your scores here, I could be of more help.
@MOSHIE wrote:Thank you for your insight.
There are 2 (30) day late and 1 (60) day late. The reason is ever since the pandemic, I've been having a hard time in keeping things in order due to many personal changes in life. Amid these changes in life, I've made the mistake of forgetting to update the Autopay on the Lexus account due to having another bank account. Not only that but there was an incident where I've made the payment online but for some god-knows what reason, the payment didn't submit on their end (I did receive email confirmation from their website) which leads to this. Now honestly I'm paying monthly still but late (around 20 day late) so I do have late charges that I'll need to pay at the end of the contract BUT I am planning on catching up to current (no late at all) on early April.
At some point, you should send Lexus Financial a copy of your received confirmation showing the payment made.
How recent are the other 1x30 / 1x60 day lates?
The payments made late but before the next statement date shouldn't have an affect on your score or future approval wil a different lender.
Yes it sounds odd that the Lexus would have these lates but not the MB. But it is what it is.
As far as utilization goes; I have about $15k in CC debt which means I'm at 92% (according to Myfico). Come July I'll have these paid off in its entireity save for one card to leave with a balance. So that means my DTI will consist of $23xx rent (both in our name so I don't know if they just count this 50/50 between me and my husband) + Lexus. Something that bothered me was; since I'm getting the car BEFORE turning in the MB, will the bank count the payment of the MB into the calculation or wil disregard since it will be turned in soon?
DTI will be based on reported debt. You could list half the rent on your application and the other half on your husbands application as that debt is stated, not reported.
The Mercedes Lease will factor so long as it's still reporting but I don't see it as a roadblock. Two open autos are justifiable.
I've made serious negligence and mistake with the Lexus account, yes. As it shows, the most recent reporting was 30 days, so relatively fresh. I hope by the time I make these payments that it'll significantly help my scores.
Age will help. Even 6 months.
My husband has a pretty thin file which just consists of CC but hopefully it works out and I have that spare $10k to put towards a down-payment. Regarding lease/loan, we'll be fine with either/or. We work together and we are within walking-steps to our jobs so we don't drive much. If we get a lease, by the time we turn it in again, our credit will be in a significantly better position vs now. My scores are around high 500-low 600 (with high UTIL). I also hope that as I'm paying off these cards, some will come with CLI that will reduce my UTIL even further.
This is the key. That $10K equity off the bat will go a long way with making a lender feel more comfortable extending credit..
Unfortunately, your scores are reflecting the UTI mostly at the moment. Evenwith perfect payment history, the impact is dramatic.
I was planning on hitting Audi/BMW financial because as I'm at the dealership, I'm aware that I can better rates but I also know that I'll probably have better chances of getting a deal picked up through a dealership, if that makes sense?
Maybe, maybe not. If you were apping right now, then yes. The dealership would throw their weight behind your app with the captive finance source to sell the car. When you have made progress on your debt, your chances will improve greatly going with an outside source (for financing).
Thanks for your input!
@MOSHIE wrote:
@fury1995 wrote:
@MOSHIE wrote:At some point, you should send Lexus Financial a copy of your received confirmation showing the payment made.
How recent are the other 1x30 / 1x60 day lates?
The payments made late but before the next statement date shouldn't have an affect on your score or future approval wil a different lender.
DTI will be based on reported debt. You could list half the rent on your application and the other half on your husbands application as that debt is stated, not reported.
The Mercedes Lease will factor so long as it's still reporting but I don't see it as a roadblock. Two open autos are justifiable.
Age will help. Even 6 months.
This is the key. That $10K equity off the bat will go a long way with making a lender feel more comfortable extending credit..
Unfortunately, your scores are reflecting the UTI mostly at the moment. Evenwith perfect payment history, the impact is dramatic.
Maybe, maybe not. If you were apping right now, then yes. The dealership would throw their weight behind your app with the captive finance source to sell the car. When you have made progress on your debt, your chances will improve greatly going with an outside source (for financing).
Thanks again for your input.
So to comprehend what you're saying here properly is that, the lates shouldn't matter that much to a different lender in the future? The lates, according to Myfico, were 2 months ago. On December, it was notated as 60 days late, then January back to 30 and then just yesterday to "not more than 60 days." I am planning on paying 2 months worth this month to catch up to current and hopefully I can try to speak to a CSR or something to possibly asking them if they're willing to take one off or something. Better than nothing.
Thank you for the info regarding the reported debt vs stated debt! I forgot about the fact tha rent is not reported in CR directly.
I used the "simulator" in the Myfico app, and for whatever its worth, if I keep my course now and pay off just 80% of the utilized credit, my scores will jump to 680-700 (one installment loan will be paid off also) so I hope that helps. I took your advice of not utilizing a credit repair agency and will just use the money I would have spent on that, towards paying another balance or for an extra $1k for down-payment.
I am willing to go up to $10k but I won't say that right off the bat when I'm at the dealership.
I do have another question, if my husband has a relatively thin file, would this be a factor also in making it difficult for them to pick up a loan?
Thank you!
Your husbands score will be the larger factor moreso than the content of his file.. as a co-app. Lenders usually look for reasons to approve a application, not declinbe. That's why they ask for co-buyers, down payment etc... it's so they can get you the application to fit their lending guidelines.
@MOSHIE wrote:Understood. Worst case scenario his scores aren't that great due to UTIL what would you think the bank would have us do? You know...assuming that by then my util will be less than 10% and scores will have jump close to 700s and co-signing for him.
Sorry for the thousand of questions. Just nervous about it is all. You've been tremendous help!
He has one trade line, correct? Is he generating a credit score? I was under the impression he has a score based on your previous posts. If he has a score, it's based on that one trade line and that trade line is reporting what for utilization? That account will be paid down below 30%, correct? If not, it's important you get that one down as well. His score will be a very large influence on your joint approval, especially with subvened financing.
Your combined app (married and joint) for the new auto will use both scores. His score should be higher based on the data from you so far. That will put him in primary position and likely get you tiered up using the higher of the two scores (for married applicants)... and your combined income will be factored against your combined debt. You need to focus on the UTI for now. The lates on your account will organically age. 6 months will hjelp but not erase. I don't see any large roadblocks to getting an approval with:
$10K down (equity)
Joint app with one app having no derogs
Trading/turning in one existing open auto (exchanging one payment for another)
Debt is within guidelines (not a factor)
Income is sufficient (not a factor)
Current experience at requested amount (new lease/loan is relatively equal to existing lease/loan)