Should I Refinance My Auto Loan

[Anonymous]

Hello everyone! New user here looking for a bit of advice.

Let me preface by saying that I have been lurking here for a while unregistered reading some of the excellent advice you users have to offer. I have a question for my personal situation now so it was time to set up a login.

Here we go... I have been working on rebuilding my credit for about a year now in order to get a home loan. I am finally starting to make some headway and want to make sure I don’t take a step in the wrong direction. I had an approval for a home loan from Arvest Bank up to 100k and was going to take advantage of the down payment assistance they offered in accordance with my state (Oklahoma). Here comes the kicker... At the time of the approval I was told my score was a 637 and that my state was changing the guidelines for the down payment assistance in 2 weeks and increasing the required credit score to 640! Well me and my wife didn’t find a home that we liked in that time frame and thus I lost the down payment assistance. I sought the help of a few other lenders who told me they could get down payment assistance for me which ended up not working out at all. In the process of trying to get another loan approval I ended up with 4-5 hard inquiries on my credit effectively tanking my score to a 596 (I had began checking my scores myself at this point)

In an effort to bounce back from this I came here and followed some great advice and got a secured Capital One Credit Card (my first real card). Outside of this, my only other lines of active credit that I have are my auto loan (11.9% APR/72mo. with a current balance of ~$20k) and a HSBC BestBuy card ($0 balance). The CapOne card just hit my credit reports and jumped me 32 points! So now I am back up to a 628 but I want to make sure I don’t do anything to risk taking another hit.

Now to my question: Should I/Can I refinance my auto loan for a better rate and or term without it hurting my actual credit score? Ideally it would make my life a lot easier if I could lower my payment some but I do not have to at this point. I am afraid to have another hard inquiry at this point. If this is NOT a good idea, what would be a good next step for my situation? Should I shoot for another CC or just sit tight and see if my score goes up some more?

Thanks in advance!

[Anonymous]

IMHO, I think you should try. I just lowered by Cap One rate of 8.15% to 5.25%. Your payment for a 60 month amortization at the same rate and loan amount would be $379.72. I don't know what your loan to value ratio is on the car and what you'd qualify for. Obviously, the more equity you have the less risk for the lender.  My credit score was 652 when I refi'd. You have a long term left on the car, that is why I'd do it.

[Shogun]

If you're looking to get the mortgage pretty quick, I wouldn't refinance the car just yet.  Get the mortgage done first and then refinance.  If you do it now,  you'll get hid with another HP and take a hit on AAoA.  Do you have any baddies on your CR that is holding down right now?  That's what I'd concentrate on.   YMMV as always.

[jandj80]

I agree with Shogun, the aged auto loan account is more favorable. You will likely take a hit from closing the aged Auto loan, and another hit for the hard inquiry for the refi. Get the house first, and then do a refi. The drop in interest might save you 20 bucks a month, but I'd take the 20 points on my FICO over that any day of the week. 

[Anonymous]

Here is my summary from where I check my credit score.

	Accounts Listed Negative	0
	Collections Account	2
	Real Estate Debt	$0.00
	Installment Debt	$22,725.00
	Revolving Debt	$36.00
	% Revolving Credit Available	97.88%

There are several items on my closed accounts that are bringing me down, a 30 day late pay here and there (3 to be exact), and the two collections account that are closed are listed as "key derogatory" and the site directs me to check these at my "Credit Report Guide" but I have no idea where or what this is?? What would you reccomend I do about these, or is there anything I can do? 

[Shogun]

Have you pulled your annual free reports from annualcreditreport.com ?   They would have your complete CR and you would find out exactly what is on them.  Plus the added point of those collections will most likely have to be paid before your mortgage.  Are they paid?  Who are they?  If they are paid, have you sent a GW to them?

[Anonymous]

Yes they are paid, no I have not sent a GW to them. I assume by you asking that I should.

I can see my complete CR I just dont have an effective way to post it here. I'll work on that.

Not sure when the last time I checked my scores at annualcreditreport.com was. I'll try that, if I can, and post those results also.

[Shogun]

GW those paid collections.  That will be the best chance for a quick rise in your score.  When you pull your reports, don't worry about the scores they offer, they're FAKOS and really don't matter.  Just concentrate on cleaning your report and your scores will respond accordingly.