In most cases you can apply for both at the same time through credit unions or banks. IME an auto loan will have zero bearing on your CCs approval, unless the loan or CCs show late payments.
The auto loan is a secured loan. While credit cards are unsecured loans.
It's possible to be denied a CC from the same bank or CU, that will approve you with no problem for an auto loan.
The auto loan is a secured loan. While credit cards are unsecured loans.
It's possible to be denied a CC from the same bank or CU, that will approve you with no problem for an auto loan.
@Anonymous wrote:
Hi everyone, this is my first post here, but by browsing I can tell that this place is crawling with good info! I'm new to this credit thing, but am ready to learn and begin taking control of my future. A little about my situation:
I have 620 FICOs across the board. Several medical collections that are due to fall off later this year, no other derogs. I'm an authorized user on a $3400 Chase card and have a secured $500 card, and that's the full extent of my file. Average age of accounts is 4 years. My income is $40k.
Once my collections are removed and my util is down to 0, I would like to begin apping for some decent cards. However, I'd also like to get a small-ish loan for a used car through my CU. Neither of these things are particularly time sensitive. Which should I do first? Will having more revolving accounts increase/decrease my chance for the loan? Will having some loan payments reporting increase/decrease my chance for good cards?
Thanks!
1. On any FICO scoring model, recent credit cards will make the car loan tougher, so get the car loan first.
2. Prior to the car loan, if you can control the balance on the AU card, try to get it to report only a small balance while your own card reports a zero balance; that will optimize your revolving utilization, at least to the extent that it will help your FICO 8 and FICO 9 scores, and will either help or not harm your other scores.
3. After the car loan, see how your scores react. You will get a bump up, in at least some scoring models, for adding an open installment loan to your "credit mix", but will get some demerits in some scoring models for having a high percentage installment utilization. You will add points in some scoring models as you pay the loan down. 9% or less, but above zero, is the sweet spot.
4. Once your scores are >700 you can go ahead and apply for a card you will enjoy having. At that point it's good enough to know your FICO 8 score, and/or your FICO 9 score, but some credit unions use weird older scores like FICO 2.
@Anonymous wrote:Great advice from SouthJ.
Only thing I'd ask is if SouthJ wouldn't want to switch the zero balances. An AU card can sometimes be excluded by FICO 8 for utilization. Thus, a small positive balance on the AU card and a $0 balance on his own card could be construed by the scoring algorithm as $0 on all cards, resulting in the 15-20 point penalty for all cards at $0.
In contrast, with the AU card at $0 and the card in his name reporting the small positive balance, there would be no chance of that penalty occuring.
I didn't know that AU cards can be excluded by FICO 8.
So perhaps it would be better to use that as the zero balance card, but query whether OP can control the balance on that card, being only an AU.