Auto loan and CSR application strategy

Anonymous · ‎07-03-2018

I'm planning on applying for a $45-50k auto loan within the next few weeks (at least getting a pre-approval for that amount while looking for the perfect car). Putting down $25k, but not sure that will matter for scoring because it's still $50k balance on a $50k loan (correct me if I'm wrong).

I've been gardening for a little over a year now (AoYA is 15 months) after finally trying to fix my credit (BOA $800 SL student visa charged off back in 2015, paid off in full). Scores are sitting at 684/665/675 EQ/TU/EX as of today. I recently found a CSR pre-approval in my offers and have been dying to get that card.

If I'm not mistaken, once the auto loan hits my CR, I can expect a pretty big hit to my score for a while, probably lower than what I need to get approved for the CSR. Is there any particular timing I could try applying for both the auto loan and the CSR so that they both pull my score before it dips from new inquiries and accounts hitting my report?

Anonymous · ‎07-03-2018

Do you have any other open loans? If so, can you list each one as follows?

Loan 1. Current balance = ____ Original loan Amount = ____

Loan 2. Current balance = ____ Original loan Amount = ____

Loan 3. Current balance = ____ Original loan Amount = ____

Include in this list all installment accounts, including car leases, financing for a sofa at Rooms To Go, etc.

We can't guess how the loan will affect your score until we have all that info.

How many credit cards do you have now? Do all of them show a zero balance except one, with the remaining card reporting a small positive balance?

My own bias would be to focus first on the loan, since every point you lose from the new CSR could affect your interest rate on a 50k loan.

Anonymous · ‎07-03-2018

I have no open loans right now. The last loan was an auto loan closed back in 6/16.

3 open cards:

1) Chase FU - $0 balance reported, $17800 CL

2) Capital One QS - $1700 balance last reported (paid down to $50 as of today but won't be reported until statement close date of 7/18), $8000 CL

3) Jetblue Plus - $0 balance, $2500 CL

I was thinking of focusing on the auto loan too. I've lived this long without a CSR, I could probably do a while longer without it too.

Anonymous · ‎07-03-2018

@Anonymous wrote:

I was thinking of focusing on the auto loan too. I've lived this long without a CSR, I could probably do a while longer without it too.

Awesome attitude to have.

It's actually not entirely clear what will happen when your loan is added. You will be going from no open loans at all (FICO 8 does not like that) to an open loan at 100% utilization. FICO 8 will like it that you have an open loan and not like it that it you owe the full amount on it.

My guess is that you will take a hit, but this will result primarily from your AoYA going from > 12 months to 0 months.

Anonymous · ‎07-03-2018

Ahh I guess we'll see what happens! I forgot about the part where I'm taking a hit for not having an installment loan open

Anonymous · ‎07-03-2018

Do you have a car now? If you can wait, 2019 models will be coming in a few weeks so you'd have lots of deals available.

If I were in your position I would wait a few weeks for the paid off card(s) to report and your credit scores to update, then go for the CSR. You can use the CSR to make a down payment on the car and meet part of the spend for the sign up bonus (although dealers don't particularly like credit card payments because of the swipe fees).

A loan reporting at 100% will hurt your credit scores more than the inquiries for the CSR app so I'd go for the CSR first. Plus dealers like to shop your app around for financing so you might get multiple hits on your report if you aren't careful. Better to secure the auto financing before going to any dealer.

Anonymous · ‎07-03-2018

@Anonymous wrote:
Do you have a car now? If you can wait, 2019 models will be coming in a few weeks so you'd have lots of deals available.

If I were in your position I would wait a few weeks for the paid off card(s) to report and your credit scores to update, then go for the CSR. You can use the CSR to make a down payment on the car and meet part of the spend for the sign up bonus (although dealers don't particularly like credit card payments because of the swipe fees).

A loan reporting at 100% will hurt your credit scores more than the inquiries for the CSR app so I'd go for the CSR first. Plus dealers like to shop your app around for financing so you might get multiple hits on your report if you aren't careful. Better to secure the auto financing before going to any dealer.

@I actually decided to just apply for the car loan today. Alliant already approved me for $50k @ 3.74%, waiting to hear back from a few other credit unions. Multiple auto loan inquiries are only supposed to hit your score as one inquiry right?

I'm looking to buy a 2013-2015 GTR since I can't afford a new one