Applying for car loan and credit card in a short time period

[Anonymous]

I'm looking to apply for a car loan in the coming months with PenFed, however, I would also like to apply for the Chase Sapphire Preferred card (very good approval odds according to Credit Karma) and take advantage of the sign up bonus as I will be using it to pay for an upcoming vacation later in the year, then I'll just immediately pay off the card. My only concern is doing these two things in a rather short time period (both within 1-3 months of each other) and how it will (negatively) impact my score. Right now my TU is 730 and EQ 710, I have two Cap One cards at the moment (5% utilization currently) and no car loans. Should I forgo applying for the credit card and only get the auto loan? If doing both, does it matter which one I apply for first (auto loan vs CC)?

Thanks

[pipeguy]

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@Anonymous wrote:

I'm looking to apply for a car loan in the coming months with PenFed, however, I would also like to apply for the Chase Sapphire Preferred card (very good approval odds according to Credit Karma) and take advantage of the sign up bonus as I will be using it to pay for an upcoming vacation later in the year, then I'll just immediately pay off the card. My only concern is doing these two things in a rather short time period (both within 1-3 months of each other) and how it will (negatively) impact my score. Right now my TU is 730 and EQ 710, I have two Cap One cards at the moment (5% utilization currently) and no car loans. Should I forgo applying for the credit card and only get the auto loan? If doing both, does it matter which one I apply for first (auto loan vs CC)?

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I would do the car loan first since the addition of an "installment" type loan (account) should increase your scores due to the increased mix of credit types. As far as the credit card, a "very good approval odds according to Credit Karma" means next to nothing, not only is CK based on Vantage Scores not FICO scores, but CK makes money off their referrals. Another note, if the scores you listed are Vantage Scores (Credit Karma) you need to see your actual Fico scores (Cap-1 Credit Wise is also Vantage Scores) depending on your credit mix and other factors Vantage scores can vary greatly from your actual Fico Scores.

To give you an example, my CK scores are 75 to 100 points lower than my actual Fico scores and I have $400k in available revolving credit lines (aka credit cards), plus a mortgage and 2 car loans, with zero lates or derogatories. When I was rebuilding I had much lower Fico scores and much higher Vantage scores. 

The reason you need to know your true FICO scores is because PenFed and Chase use Fico scores, as do almost every other lender. If you are in good standing with PenFed the auto loan should be fairly easy, but Chase can be a bit more difficult, especially for one of their higher level cards. Keep in mind that you can always secure the auto loan and then wait 6 months to try for the Chase card. The addition of a car loan payment history will help your overall profile and scores too.

Note too that you need to spend $4000 on the Chase card to score the sign up bonus, you have to weigh if that is possible and you can pay in full since you don't want to pay interest on excessive spending just to score a sign up bonus. 

[Anonymous]

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@pipeguy wrote:

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I would do the car loan first since the addition of an "installment" type loan (account) should increase your scores due to the increased mix of credit types. As far as the credit card, a "very good approval odds according to Credit Karma" means next to nothing, not only is CK based on Vantage Scores not FICO scores, but CK makes money off their referrals. Another note, if the scores you listed are Vantage Scores (Credit Karma) you need to see your actual Fico scores (Cap-1 Credit Wise is also Vantage Scores) depending on your credit mix and other factors Vantage scores can vary greatly from your actual Fico Scores.

To give you an example, my CK scores are 75 to 100 points lower than my actual Fico scores and I have $400k in available revolving credit lines (aka credit cards), plus a mortgage and 2 car loans, with zero lates or derogatories. When I was rebuilding I had much lower Fico scores and much higher Vantage scores. 

The reason you need to know your true FICO scores is because PenFed and Chase use Fico scores, as do almost every other lender. If you are in good standing with PenFed the auto loan should be fairly easy, but Chase can be a bit more difficult, especially for one of their higher level cards. Keep in mind that you can always secure the auto loan and then wait 6 months to try for the Chase card. The addition of a car loan payment history will help your overall profile and scores too.

Note too that you need to spend $4000 on the Chase card to score the sign up bonus, you have to weigh if that is possible and you can pay in full since you don't want to pay interest on excessive spending just to score a sign up bonus. 

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Thanks for the info! I will check my Fico scores. Every year my wife and I set aside around $4,000 for a yearly vacation, so I would be able to meet the Chase sign up bonus. Only problem is we book in March to ensure the resort we stay at isn’t booked, so if I got a PenFed loan in the next few weeks I wouldn’t have much time in between that and the Chase app. Alternatively I could always apply for the Chase card next year, I guess I’ll have a better idea after checking my Fico scores.

[CreditInspired]

Welcome OP

What are the CLs on your 2 CO cards and your AAOA? Appears you may have a thin profile.

Those things, along with FICO scores, will also be determinants on being approved for a CSR with a decent SL.

[pinkandgrey]

Short answer: I would get the car loan first. Not only will the loan help your credit, but also having fewer inquiries will help you get a better loan/rate. 

Good luck and enjoy that new car! (And card!)

[Anonymous]

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@CreditInspired wrote:
Welcome OP

What are the CLs on your 2 CO cards and your AAOA? Appears you may have a thin profile.

Those things, along with FICO scores, will also be determinants on being approved for a CSR with a decent SL.

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My credit profile is a little thin, hence why I’m looking to add a CC and car loan. My Cap One limit is $2,000, the other is an old secured card so pretty useless. I also have a Zales Charge Card with a $1k limit and school loans. AAoA is just under 3 years with the newest being 2 years ago and oldest being 4 years.

[Anonymous]

On Monday, I apped for a car loan through Navy Fed, the following day I apped for an AMEX based on pre-approval.

One hp for Navy, sp for AMEX. No score impact yet.

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@Anonymous wrote:

I'm looking to apply for a car loan in the coming months with PenFed, however, I would also like to apply for the Chase Sapphire Preferred card (very good approval odds according to Credit Karma) and take advantage of the sign up bonus as I will be using it to pay for an upcoming vacation later in the year, then I'll just immediately pay off the card. My only concern is doing these two things in a rather short time period (both within 1-3 months of each other) and how it will (negatively) impact my score. Right now my TU is 730 and EQ 710, I have two Cap One cards at the moment (5% utilization currently) and no car loans. Should I forgo applying for the credit card and only get the auto loan? If doing both, does it matter which one I apply for first (auto loan vs CC)?

Thanks

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[Anonymous]

I know most people say the auto loan and I don’t know that it’s wrong. But here was my profile and what I did.

I had a paid off auto, an auto just over a year, and a 4 month secured cu cc when I started. My FICO 8 at the time was 720. I got Amex gold and discover. 3 weeks later nfcu, penfed, and Uber cc’s. A month and a half later I got penfed auto loan. My scores were pretty close to even from when I started applying.

Even though my AAoA went from over 3 years to about 20 months, I only added 2 inq to each bureau. So once my first 2 cards hit 3 months I applied for the auto loan.

I have gotten 4 more cards since and my scores overall are only down 10 points, even with my auto loan reporting almost 100%.

Obviously everyone’s experience is different and I’m not suggesting you go the same route. But I didn’t have any huge negative effects like I was worried about and they can all age together to really help my scores over the long run.

I would suggest to get prequalified and take that to the dealership and tell them you don’t want them to pull your credit. I have heard people have bad experiences telling the dealers not to pull their credit. I was lucky and they didn’t pull my credit. The only downside is they wouldn’t let me leave with the car until they received the check which only took 2 business days. I was fine waiting 2 days to get it. But you avoid potential or if inq on all of your reports.