Advice needed re: Auto Loan & Credit Line increase

Anonymous · ‎08-15-2007

Hello-

I am planning to trade in my car in two months and buy a new one. I am trying to do what I can to improve my score (654 yesterday, EQ) before applying for the loan.

1) Auto:

What is the best thing to do with my current auto loan? I have about $1500 remaining on a $15,000 loan. I planned to pay it off with a lump sum this month and get the title free and clear before applying for the new loan.

But is there a benefit to having this auto loan open at the time I apply for the new one?

I have high utilization on my credit cards (55%, trying to get under 50% before applying) but I already learned from reading this forum the last two days that utilization % on installment loans does not factor into the utilization considered for my revolving debt?

2) Credit Line Increase

Any benefit to asking my credit card companies for a credit line increase to reduce my utilization %, or will that have a short-term negative effect on my score?

Thanks for any advice!

Anonymous · ‎08-16-2007

Oooh, great questions! I want to know this too.

Tuscani, FICO_Focused, fused111, NewWorldMan.......... chop chop. LOL

Anonymous · ‎08-16-2007

It all depends. Will a credit line increase result in new hard inq on your credit report? If so it can damage your score more than improve it as it looks as if you are making requests for new credit. Especially if you are not approved for the increase but you have a hard hit on your bureau. Have these creditors voluntarily increased your limits in the past, if so how long ago. Most like for you to wait 6 mos between increases at a min.

At 55% utilization there is another negative factor. You have 1500.00 to pay off your current car, how much of your utilization can that take care of? Enough to get you to 30-35%? Enough to raise your score enough to put you in the new tier for a better interest rate?