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Best course of action for upcoming auto loan

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hippychic823
Regular Contributor

Best course of action for upcoming auto loan

Looking at getting an auto loan later this year/early next year. Most likely will be looking into a CPO sedan or small SUV. Budget is around 25k.
Now the fun stuff:
I currently have an Open auto loan with Chase with a bal of 3.5k. This will be paid off before I app for a new vehicle and I will not use it as a trade in, I will be keeping it for my teen to drive. This is my only installment loan. Would I be better off to app for a new vehicle when the loan is down to the last payment, to avoid taking a score hit for my only installment loan being paid?
Also, have 2 small credit cards, both with 300CL that I always use and PIF and a tuition loan through Comenity that reports as revolving. It is at high util (2233 owed/3k CL). What would be the best balance/util to have this card at to maximize scoring at the time of app?
Lastly, I have a dirty file. 2 CO from March 2015 (DoFD Oct 2014) that were PIF in Feb 2017; 1 paid collection from Nov 2016 (paid Feb 2017); 2 unpaid collections from 2015. With these items, if my cards were reporting at optimal util, what is the highest I can expect my scores to go? Obviously I know I won't get over 700 with all my baddies, but I would like to get my scores as high as I can get them since I know I'll likely have a high interest rate because of my baddies.
Current FAKO scores are 666 (TU); 683 (EQ) and my EX FICO 613 (per Discover Scorecard). I know the FAKO scores don't count but I included them to give y'all an estimate of where I stand. I will check actual FICO scores a little closer to apping for the auto loan to see where I stand. For now, I'm just needing a good plan of action to optimize scores with a dirty profile.
6 REPLIES 6
SouthJamaica
Mega Contributor

Re: Best course of action for upcoming auto loan


@hippychic823 wrote:
Looking at getting an auto loan later this year/early next year. Most likely will be looking into a CPO sedan or small SUV. Budget is around 25k.
Now the fun stuff:
I currently have an Open auto loan with Chase with a bal of 3.5k. This will be paid off before I app for a new vehicle and I will not use it as a trade in, I will be keeping it for my teen to drive. This is my only installment loan. Would I be better off to app for a new vehicle when the loan is down to the last payment, to avoid taking a score hit for my only installment loan being paid?

Yes


Also, have 2 small credit cards, both with 300CL that I always use and PIF and a tuition loan through Comenity that reports as revolving. It is at high util (2233 owed/3k CL). What would be the best balance/util to have this card at to maximize scoring at the time of app?


Best to have one revolving account reporting a balance of 10% or less, with the other two reporting zeros.


Lastly, I have a dirty file. 2 CO from March 2015 (DoFD Oct 2014) that were PIF in Feb 2017; 1 paid collection from Nov 2016 (paid Feb 2017); 2 unpaid collections from 2015. With these items, if my cards were reporting at optimal util, what is the highest I can expect my scores to go? Obviously I know I won't get over 700 with all my baddies, but I would like to get my scores as high as I can get them since I know I'll likely have a high interest rate because of my baddies.

I don't know the answer to your question but I'm not so sure they will preclude you from getting over 700.  In any event you should be sending verification letters to see if you can get one or more of them dropped.


Current FAKO scores are 666 (TU); 683 (EQ) and my EX FICO 613 (per Discover Scorecard). I know the FAKO scores don't count but I included them to give y'all an estimate of where I stand. I will check actual FICO scores a little closer to apping for the auto loan to see where I stand. For now, I'm just needing a good plan of action to optimize scores with a dirty profile.

 


Total revolving limits 741200 (620700 reporting) FICO 8: EQ 701 TU 704 EX 685

Message 2 of 7
hippychic823
Regular Contributor

Re: Best course of action for upcoming auto loan

I've tried GW, PFD and DV for all the baddies. No luck. Looking like they are all there for the duration. All my attempts to have them removed just resulting in them updating which caused them to look "new" and dropped my scores a bit
Message 3 of 7
Anonymous
Not applicable

Re: Best course of action for upcoming auto loan

It is true that you will experience a substantial score drop when your auto loan goes from (a) a very low but positive balance to (b) a zero balance.

 

If you implement the Share Secure Loan technique before that happens, however, then you will experience no score drop.  Let us know if you need further explanation of what that is.

 

So if you discover that from a financial perspective (irrespective of score) it makes sense to buy three months after it gets paid off, there is still a way to have the great credit score and buy the car at the best point in time.  You aren't locked into a need to buy before the final payoff.

Message 4 of 7
hippychic823
Regular Contributor

Re: Best course of action for upcoming auto loan

I would like more info on the Share Secure Loan. Would opening one lower my score though? I have 3 inqs currently and an AAoA of less than 2 yrs right now from opening new cards this year (March, June and July of this year).
Message 5 of 7
SouthJamaica
Mega Contributor

Re: Best course of action for upcoming auto loan


@hippychic823 wrote:
I would like more info on the Share Secure Loan. Would opening one lower my score though? I have 3 inqs currently and an AAoA of less than 2 yrs right now from opening new cards this year (March, June and July of this year).

There's no inquiry, but there is a new account.

 

But the point or two lost from that is eclipsed by the points you would lose with no open installment loan.


Total revolving limits 741200 (620700 reporting) FICO 8: EQ 701 TU 704 EX 685

Message 6 of 7
Anonymous
Not applicable

Re: Best course of action for upcoming auto loan

Good reply by SouthJ.

 

Note to our OP:

 

You mentioned wanting to hear more about the SSL technique.  Read the first 2-3 posts in this thread.  It will also give the an overview of how loans are scored by FICO 8.

 

http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Adding-an-installment-loan-the-Share-Secu...

Message 7 of 7
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