A specific question..

[ScoreBooster]

I'm going to File BK Ch. 7 and might redeem my car. I was never late on this loan and this is a clean TL on my report.

Does anybody know how such an account will be evaluated by FICO? As far as I know, it will be reported as "IIB - redeemed" or "IIB" and a $0 balance. Does FICO (the scoring-system) consider this account any different than a paid, never late account? I'm asking because from what you can see on the report, the only indication that it was in BK and not completely paid is under the "REMARK"-section, so I'm wondering if my FICO (or especially my Auto-enhanced FICO) will be negatively influenced.

Or does such an account get a special "reporting-key"?

Thank You all in advance!

[ScoreBooster]

Anyone?

[haulingthescoreup]

I'm going to move this to Bankruptcy, since you're not getting any joy on Understanding.

Hope this will get some more specialized responses for you!

[ScoreBooster]

Thanks! I have to admit though that it's not an "every day"-question.

[granny031350]

this will be viewed as a derogatory account by FICO.  It should report as IIB/0 balance.  Any payments made after the fact will probably not report.  If you redeem through 722 redemption or some other company, then those payments will report as a new TL on your credit report and will not reflect IIB.

[ScoreBooster]

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@granny031350 wrote:
this will be viewed as a derogatory account by FICO.  It should report as IIB/0 balance.  Any payments made after the fact will probably not report.  If you redeem through 722 redemption or some other company, then those payments will report as a new TL on your credit report and will not reflect IIB.

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So there is a special reporting-code? I'm curious to know HOW it is determined derogatory. The remar itself shouldn't influence the scoring and there are no lates on it..

[granny031350]

Any account listed as IIB is derogatory and will lower your score.  When you redeem, you repurchase the vehicle at fair market value and you are forgiven the difference in your chapter 7.  So the original loan is IIB/zero balance (derog) and the new loan reporting is a new TL with ontime payments would be a postive account.

[ScoreBooster]

Now I'm really confused! This is a statement from a guy named Stephen Snyder, the founder of the After Bankruptcy Foundation:

"A lot of other lenders look at your whole credit picture to determine whether or not to give you a loan. But many auto lenders care about only one thing...how you handled your past AUTO credit. That's what a FICO Auto Industry Option Score gives car dealers—a way to pinpoint how you've handled what
matters to them the most.

So, even if everything else on your credit reports went down the toilet after your bankruptcy, if you didn't include your auto loan in your bankruptcy and never defaulted or missed a car payment, your Auto Industry scores will probably be better than your traditional FICO scores!

What a Former Auto Finance Director Revealed to Me

I recently spoke with a former finance director, and this is what she told me...

"So many people I have helped couldn't believe their scores were so high with the FICO Auto Industry Option score. They had included all their credit card debt and their mortgage

in their bankruptcy, but they reaffirmed their auto loan. What's good about the auto score is that it truly helps the auto lender concentrate on what is important—how the customer handles his/her auto loans.

By our dealership having the auto enhanced FICO, it helped 30% or more of our customers get better rates."

There are two things that confuse me here:

1. How can you NOT include your Auto-Loan in BK since it's a debt?

2. How can you reaffirm a loan that wasn't included in BK in the first place?

3. How can the reaffirmation help your credit if any account IIB (this category applies to a reaffirmation, too) is considered derogatory?

It really is disappointing to read information like that from a guy you would expect to know what he's talking about - assuming you're right.

BTW, in my redemption, there won't be a new TL - I'm going to redeem in cash.

[granny031350]

It is true that auto lenders know if you had previous vehicles repossessed.  And they do have the auto enhanced score.  However you have to do what is best for you and not what is best for steven snyder.

To reaffirm means the debt never happened in Bk.  You own it all over again

To redeem means you pay it off at FMV and the difference is forgiven.

When you file BK, ALL of your debts are included in your BK.  On your credit report, the auto loan is reported as IIB/Zero balance EVEN if you still owe on the account.  You can continue to make all of the payments but they won't be reported to the FICO score.  However, auto lenders can run a payment history (auto enhanced) and see if you paid it off etc and that is what steven snyder is referring to.

However on your FICO, the debt is included and no longer reported.   So if it was included, not reaffirmed and you decided to let it go back to the dealer, then it would still say IIB/Zero balance on your credit report but the auto dealer would enter it into their auto enhanced system. etc

You need to do what is best for you .  As I read in your other post, your mother is also filing here shortly so go ahead and redeem the vehicle, discharge the difference and move on with your fresh start.

And when you go to purchase a vehicle in the future, try going through a credit union etc that bases their decision on your FICO score and not on a dealer's entry into their system.

[ScoreBooster]

Thanks for the advice!