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What to do as a first large credit purchase?

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New Visitor

What to do as a first large credit purchase?

Hey there!

 

Background: I am relatively young (28) and have a clean credit history, yet no mortgages or even a car loan to my name. I make 54k per year, am single, college educated and have $0 debt. My credit score is around 700, and I have been pre-approved for both a home up to 250K  and even more recently approved for a lease on a new 33k vehicle.  Problem I am having is that it seems like a risky time to buy a home as home prices in my area have ballooned to 2008 prices within the last year and a half, so I am nervous to get in.  My old beat up truck is on the verge of collapse, hence the shopping around for a new car.  

 

Question:  Is taking on a car lease going to affect my credit adversely? I have experienced major fluctuations in my credit score just because I didn't pay off a CC in full (not a late payment, just having a balance) I've heard of car loans being considered bad debt, and home loans being considered good debt, which is where my credit question arises.  Is taking out this car lease going to affect my ability to get a mortgage or affect my credit in any negative way? (assume I will be making all lease payments on time without hiccup.)


Thanks for your consideration.

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Valued Contributor

Re: What to do as a first large credit purchase?


@TwhyS wrote:

Hey there!

 

Background: I am relatively young (28) and have a clean credit history, yet no mortgages or even a car loan to my name. I make 54k per year, am single, college educated and have $0 debt. My credit score is around 700, and I have been pre-approved for both a home up to 250K  and even more recently approved for a lease on a new 33k vehicle.  Problem I am having is that it seems like a risky time to buy a home as home prices in my area have ballooned to 2008 prices within the last year and a half, so I am nervous to get in.  My old beat up truck is on the verge of collapse, hence the shopping around for a new car.  

 

Question:  Is taking on a car lease going to affect my credit adversely? I have experienced major fluctuations in my credit score just because I didn't pay off a CC in full (not a late payment, just having a balance) I've heard of car loans being considered bad debt, and home loans being considered good debt, which is where my credit question arises.  Is taking out this car lease going to affect my ability to get a mortgage or affect my credit in any negative way? (assume I will be making all lease payments on time without hiccup.)


Thanks for your consideration.


Welcome to the forums.

 

At a salary of 54K why are you interested in leasing?  I get shopping if your vehicle is starting to fail but why "rent"?  Keeping it close to 20% of salary is ideal (YMMV).

 

For your up to 250K mortgage how much cash are you putting down?  How much cash do you have set aside for life emergencies, etc.?

 

If you anticipate finding a home in the next 6 months then I'd hit up craigslist and find a beater to get from A to B until after closing.  I would cease any credit seeking until the mortgage is closed.



Message 2 of 4
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Re: What to do as a first large credit purchase?

I am thinking lease, because I dont see much down side I guess.  I will have lower monthly payments than if I were purchasing, and I get to perpetually drive new vehicles. Sure I won't own anything at the end, but I will always be driving a new and reliable car, and If i do go sour on the never owning thing, I can always finance the residual at the end of the lease... it just seems easier.  

 

I was planning on putting 20k down on the home (and I also didn’t want to spend more than 200k (I want a fixer uper) problem is, 200k hardly buys anything right now.

 

The 20k would wipe me out savings wise. That would even included what little I had invested in an IRA.

 

I agree on not doing anymore pulls on my credit, I wish I would have stopped them before they pulled the one for the lease, I was fairly certain I would qualify.  

 

Main question is still unanswered, does having a car lease out (or for sake of argument, a car loan) affect my credit negatively? 

Message 3 of 4
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Valued Contributor

Re: What to do as a first large credit purchase?

No, seeing that you does not have any loans reporting it will not hurt you.  Most of all it will help raise your scores.

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