Auto Loan or 2nd CC first

[Anonymous]

Hello all.  First time posting.  I'm 37 years old, and due to having a terrible financial time over the course of about two or three years about 8-10 years ago, I could not get credit for some time.  Back in 2006, I bought a truck (and had good enough credit at the time to finance it).  Shortly after is when the bad financial times hit.  I usually managed to make the payments, but it was repossessed twice.  Now, I don't know if it was "officially" repossessed, because on both occassions, the finance company allowed me to pay money to get it back both times.  Ultimately, I paid the truck off in full.  None of this is on my credit report.  No late payments.  No repossessions.  In fact, it's as if it never happened.  The account is obviously closed, but it shows nowhere on my credit report from any of the three bureaus.   At this point, the most recent negative on my credit report is almost 8 years old (and is also the only negative on the report - and unrelated to the truck).  I recently (about 5 months ago) got a Capital One secured Mastercard.  It's the one where you deposit either $49, $99 or $200 for a line of $200 of credit.  I qualified with just a $49 deposit, which I was pleasantly surprised at.  I got the card back in September and have charged up an average of about $185 a month on it while making frequent payments.  The balance at closing (and reporting a couple to three days later) has never been more than $2 (1% utilization).

I'm sorry for that long-winded background, but I think some of you might find it helpful.  I have an Identity Guard account to track my credit, and as of now, they can't generate a credit score since my one account is not yet 6 months old.  I don't have a "bad" credit score, but it's as if it has been so long it is as if I am new to credit, and starting over (which I think is better than rebuilding bad credit - correct me if I am wrong).  Anyway, I still own that same truck I paid off (and had repossessed twice, but not really!).  I need a new vehicle.  I also hope to get an automatic CLI from Capital One sometime within the next month or so.  My problem I think with getting a car loan is my limited history - coupled with a very low total credit line.  According to Mastercard's "Creditwise", my score is 675.  On Credit Karma, they have 673 and 679 depending on the bureau, but these aren't "official" since I don't have six months of history yet, but a good indication of where it will be?  I'm not sure.  The only active accounts on my credit report are the Mastercard and child support.  I don't think child support helps anything, but it is over 7 years old and 100% on-time payments.  Now, to my ultimate question - assuming my credit line remains at $200 or even increased to just $500, will this hurt my chances of getting a car loan?  In other words, would it be better to apply for a second card (I was looking at Discover It) so that my total credit limit is higher - or just go ahead and apply for an auto loan (once I actually have a reliable score)?

I make about $4,800 a month before taxes.  Child support is about $650, I split a mortgage payment (though I'm not named) of about $1,150 (so $575 of "rent").  What do you guys think?   

[SouthJamaica]

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@Anonymous wrote:

Hello all.  First time posting.  I'm 37 years old, and due to having a terrible financial time over the course of about two or three years about 8-10 years ago, I could not get credit for some time.  Back in 2006, I bought a truck (and had good enough credit at the time to finance it).  Shortly after is when the bad financial times hit.  I usually managed to make the payments, but it was repossessed twice.  Now, I don't know if it was "officially" repossessed, because on both occassions, the finance company allowed me to pay money to get it back both times.  Ultimately, I paid the truck off in full.  None of this is on my credit report.  No late payments.  No repossessions.  In fact, it's as if it never happened.  The account is obviously closed, but it shows nowhere on my credit report from any of the three bureaus.   At this point, the most recent negative on my credit report is almost 8 years old (and is also the only negative on the report - and unrelated to the truck).  I recently (about 5 months ago) got a Capital One secured Mastercard.  It's the one where you deposit either $49, $99 or $200 for a line of $200 of credit.  I qualified with just a $49 deposit, which I was pleasantly surprised at.  I got the card back in September and have charged up an average of about $185 a month on it while making frequent payments.  The balance at closing (and reporting a couple to three days later) has never been more than $2 (1% utilization).

I'm sorry for that long-winded background, but I think some of you might find it helpful.  I have an Identity Guard account to track my credit, and as of now, they can't generate a credit score since my one account is not yet 6 months old.  I don't have a "bad" credit score, but it's as if it has been so long it is as if I am new to credit, and starting over (which I think is better than rebuilding bad credit - correct me if I am wrong).  Anyway, I still own that same truck I paid off (and had repossessed twice, but not really!).  I need a new vehicle.  I also hope to get an automatic CLI from Capital One sometime within the next month or so.  My problem I think with getting a car loan is my limited history - coupled with a very low total credit line.  According to Mastercard's "Creditwise", my score is 675.  On Credit Karma, they have 673 and 679 depending on the bureau, but these aren't "official" since I don't have six months of history yet, but a good indication of where it will be?  I'm not sure.  The only active accounts on my credit report are the Mastercard and child support.  I don't think child support helps anything, but it is over 7 years old and 100% on-time payments.  Now, to my ultimate question - assuming my credit line remains at $200 or even increased to just $500, will this hurt my chances of getting a car loan?  In other words, would it be better to apply for a second card (I was looking at Discover It) so that my total credit limit is higher - or just go ahead and apply for an auto loan (once I actually have a reliable score)?

I make about $4,800 a month before taxes.  Child support is about $650, I split a mortgage payment (though I'm not named) of about $1,150 (so $575 of "rent").  What do you guys think?   

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1. Your score information from CreditWise and Credit Karma is useless, because they use Vantage 3.0 rather than FICO.

2. I don't know anything about Identity Guard, but I seriously doubt, with your credit history, that you have no FICO score.

3. I would suggest you spring for a few bucks and check to see what your FICO scores are on MyFICO.

4. I would definitely not apply for anything now until you know what your FICO scores are. When you find out, update us, especially on your FICO 8 scores and your FICO Auto scores, and we can advise you whether you're good to go on the truck loan.

5. If it turns out that you really don't have a FICO score, then you should wait until you do.

[Anonymous]

I do not have a FICO score.  I tried to get one before I posted, and I should have said so.  When I try and order my scores (I just signed up for the $29.95/mo plan), my order could not be completed because there was not enough information in my credit file to generate a score.  I need at least one account that is six months old and activity within the last six months.  Like I said, it is as if I am starting all over and have no credit yet.  The worst thing on my report WOULD be the repossessions, but I guess they aren't ACTUALLY repossessions since the account was never charged off.  Both times, I was able to bring the balance current and get it back - and then paid the account off in full, so as far as they are concerned, it is an account in good standing on the day I paid it off (at least my assumption based on the fact that it is not on any credit reports).  While I do not have a score, I DO have a report, and none of the truck mess is on it.  I just checked, and Identity Guard does not specify what scoring method they use - which probably means it is not FICO.  I was never planning on applying for any loan before I knew what my actual FICO score was.  My question was mainly whether or not it would be a good idea to open a second credit card to increase my total credit limit before doing so - considering that my history will be limited regardless of my score.  I appreciate your response.  I will update this thread when I get a FICO score.

[Anonymous]

Helpful reponse by SouthJ as always.

The answer to your question is that size of credit limit is not a scoring factor.  Credit utilization (the percent number) is a BIG scoring factor.  But the raw dollar value of one's credit limit is not.  Thus, if you were to stay with a $200 total credit limit and keep your utilization at 1-5%, you'd have the exact same score as if your card had a $20,000 credit limit.

As a quick side note, making a card report at an ULTRA tiny dollar value ($1 - $3) makes me nervous.  That can be treated as $0 by some issuers -- many people have reported that happening to them.  There's no scoring advantage to a util 1% over 3-4%, so personally (if I were you) I'd aim to keep my dollar value at $4 or more.  That's just my opinion.

My advice is to keep on doing what you are doing, and then when you are eligible for a true FICO score, get yours via the $1 free trial at Credit Check Total.  Assuming your scores are not horrible, I would then execute the Share Secure Loan technique using Alliant.  You can find out all about that here (you only need to read the first 2-3 posts):

http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Adding-an-installment-loan-the-Share-Secu...

This will get you another 20-35 points (assuming you have no open loans).

Then you can thinking about getting a car.

The plan I have described means you wouldn't buy a car for the next three months.  Is that realistic?

[Anonymous]

UPDATE :  So, I generated FICO scores today.  Here they are :

FICO 8 :

Experian : 648

Equifax : 648

Transunion : 750

FICO 8 AUTO :

Experian : 648

Equifax : 639

Transunion : 749

FICO 8 CC :

Experian : 657

Equifax : 637

Transunion : 747

FICO 9 :

Experian : 662

Equifax : 648

Transunion : 740

FICO 9 AUTO :

Experian : 672

Equifax : 655

Transunion : 743

FICO 9 CC :

Experian : 674

Equifax : 656

Transunion : 751

I have a tax lien on my Experian & Equifax reports from May of 2009.  This does not appear on the Transunion report (this explains the huge discrepancy).  I am still paying on the balance I owe the IRS (although not under any payment plan).  The taxes were owed on 3 years in which I was self-employed and did not have withholding (plus self employment tax).  Starting in 2007 (and every year since), the IRS has simply kept my overpayment and applied to the tax owed.  I met with them years back (sometime after May of 2009) and at the time, they decided I was unable to pay and put me on some kind of "uncollectable" list - where they would not come after me (I believe I was to be on this list for 3 years, and they would contact me after that time).  They haven't contacted me other than sending me a letter every year where they have applied my overpayment to the balance owed.  Obviously, I need to find out the status of this lien.