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How much of a hit will my credit take (just took out a loan on a car)

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JNesbit89
Contributor

How much of a hit will my credit take (just took out a loan on a car)

I've had relatively good credit for quite some time now. I'm 33, work fulltime, and here are my stats:

Experian FICO (from my free account): 778 as of 8/21

Equifax (free from my credit card): 786 (as of 7/26)

Credit Karma (I know, not used by most): 768 TransUnion, 762 Equifax (as of today)

Total Debt (as of last report): $442 (and this was the end of my 3-year car lease)

Total New Debt: $16,000 5-year loan from Western Credit Union to buyout the car. I qualified for their best rates.

Total Credit Limit: $43,000 (a Best Buy CC, 2 Citibank CCs, 1 local bank CC, a PayPal Credit account)

School debt/other debt: 0

Hard Inquiries: (3): 2 credit cards over the last 12 months, and the hard inquiry to get the 15k loan

Living status: Moved back in with folks

Employment: New job with Ingram Micro, significantly better paying than my previous job

 

So I know I'm currently in good standing, but I'm unsure how hard of a hit my credit will take when it properly updates. Things that I think we negatively affect it:

- My 3-lease account had no missing payments, so that account was in great standing. Now it's closed because it ended and I bought-out the car. (Do closed auto-lease accounts stay on your file for more years??)

- I went from having $240 in debt for my last car payment to $16,000 in debt on a new account over a 5 year period. Granted, I qualified for the best rates..

 

Will the credit unions be like "**bleep** this dude just took out a huge loan..."?

Message 1 of 11
10 REPLIES 10
805orbust
Valued Contributor

Re: How much of a hit will my credit take (just took out a loan on a car)

Nope. Based on my experience, with your stats (although impossible to speak in absolutes here) you'll take a 10-15 point hit if that. When I bought my wife's car last fall my score was unchanged once the new loan hit, and the old one dropped off. (770's at the time)  I do have more accounts than you so maybe the overall effect is lessened, however I doubt that. You're good my friend. Certainly nowhere in the realm of any huge change.  I remember @SouthJamaica  messing around with auto loan utilization levels several years ago so perhaps we can get some feedback. 



Message 2 of 11
SouthJamaica
Mega Contributor

Re: How much of a hit will my credit take (just took out a loan on a car)


@JNesbit89 wrote:

I've had relatively good credit for quite some time now. I'm 33, work fulltime, and here are my stats:

Experian FICO (from my free account): 778 as of 8/21

Equifax (free from my credit card): 786 (as of 7/26)

Credit Karma (I know, not used by most): 768 TransUnion, 762 Equifax (as of today)

Total Debt (as of last report): $442 (and this was the end of my 3-year car lease)

Total New Debt: $16,000 5-year loan from Western Credit Union to buyout the car. I qualified for their best rates.

Total Credit Limit: $43,000 (a Best Buy CC, 2 Citibank CCs, 1 local bank CC, a PayPal Credit account)

School debt/other debt: 0

Hard Inquiries: (3): 2 credit cards over the last 12 months, and the hard inquiry to get the 15k loan

Living status: Moved back in with folks

Employment: New job with Ingram Micro, significantly better paying than my previous job

 

So I know I'm currently in good standing, but I'm unsure how hard of a hit my credit will take when it properly updates. Things that I think we negatively affect it:

- My 3-lease account had no missing payments, so that account was in great standing. Now it's closed because it ended and I bought-out the car. (Do closed auto-lease accounts stay on your file for more years??)

- I went from having $240 in debt for my last car payment to $16,000 in debt on a new account over a 5 year period. Granted, I qualified for the best rates..

 

Will the credit unions be like "**bleep** this dude just took out a huge loan..."?


Based on what you've said, you have no installment loans other than the closed auto lease and the newly opened auto lease. When the closure of the old account, and the opening of the new account, have reported, your aggregate installment utilization is going to go up from a very low percentage to 100%, so I would expect your FICO 8's and 9's to take a hit in the neighborhood of 30 points.


Total revolving limits 650200 (530700 reporting) FICO 8: EQ 708 TU 714 EX 715

Message 3 of 11
805orbust
Valued Contributor

Re: How much of a hit will my credit take (just took out a loan on a car)

Wow... @SouthJamaica  I was totally not correcting for the point gains you got as you brought the balance down. Good info. 



Message 4 of 11
SouthJamaica
Mega Contributor

Re: How much of a hit will my credit take (just took out a loan on a car)


@805orbust wrote:

Wow... @SouthJamaica  I was totally not correcting for the point gains you got as you brought the balance down. Good info. 


I have never experienced any noticeable gains from bringing aggregate loan utilization down, until it got down to 9% (i.e. below 10%), where I experienced a gain in the 26-32 point neighborhood.

 

Of course everyone's profile behaves differently, but I think it's fair to say that most single-open-loan people, when going from a loan in the "sweetspot" (9% or less) to a new 100% loan, experience a very sharp decrease in their FICO 8's and 9's. The mortgage scores don't respond as dramatically.


Total revolving limits 650200 (530700 reporting) FICO 8: EQ 708 TU 714 EX 715

Message 5 of 11
CrSter
Member

Re: How much of a hit will my credit take (just took out a loan on a car)

I haven't had a car loan in some time, but I had a few car leases back to back (all settled and closed for a while now).  When I first opened up a lease my credit score didn't change at all other than maybe a tiny bit over the inquiry, and when I paid that one off it didn't change much if at all, and then when I opened a new lease my score didn't change much if at all again.

 

If you don't ever use your credit for anything what's the point of having it.

Message 6 of 11
SouthJamaica
Mega Contributor

Re: How much of a hit will my credit take (just took out a loan on a car)


@CrSter wrote:

I haven't had a car loan in some time, but I had a few car leases back to back (all settled and closed for a while now).  When I first opened up a lease my credit score didn't change at all other than maybe a tiny bit over the inquiry, and when I paid that one off it didn't change much if at all, and then when I opened a new lease my score didn't change much if at all again.

 

If you don't ever use your credit for anything what's the point of having it.


Did you have any other loans?


Total revolving limits 650200 (530700 reporting) FICO 8: EQ 708 TU 714 EX 715

Message 7 of 11
805orbust
Valued Contributor

Re: How much of a hit will my credit take (just took out a loan on a car)

Ok that most likely explains it @SouthJamaica. Each instance I'm referring to in my personal experience I never had a single car loan open at the time.  I usually had (2) when I observed.  An open loan for myself, and one for DW's car as well.  This is going back 20 years. Very easy to see the kind of score changes you mentioned in a single open installment scenario

 

Of course, OP shouldn't let a score drop to 748 spoil their weekend 😆



Message 8 of 11
CrSter
Member

Re: How much of a hit will my credit take (just took out a loan on a car)


@SouthJamaica wrote:

@CrSter wrote:

I haven't had a car loan in some time, but I had a few car leases back to back (all settled and closed for a while now).  When I first opened up a lease my credit score didn't change at all other than maybe a tiny bit over the inquiry, and when I paid that one off it didn't change much if at all, and then when I opened a new lease my score didn't change much if at all again.

 

If you don't ever use your credit for anything what's the point of having it.


Did you have any other loans?


No car loans.  No credit card debt that wasn't paid off in full monthly.

Message 9 of 11
SouthJamaica
Mega Contributor

Re: How much of a hit will my credit take (just took out a loan on a car)


@805orbust wrote:

Ok that most likely explains it @SouthJamaica. Each instance I'm referring to in my personal experience I never had a single car loan open at the time.  I usually had (2) when I observed.  An open loan for myself, and one for DW's car as well.  This is going back 20 years. Very easy to see the kind of score changes you mentioned in a single open installment scenario

 

Of course, OP shouldn't let a score drop to 748 spoil their weekend 😆


Yes that would explain it. Unlike revolving utilization, FICO's treatment of installment utilization relates solely to aggregate utilization, not to single account utilization.


Total revolving limits 650200 (530700 reporting) FICO 8: EQ 708 TU 714 EX 715

Message 10 of 11
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