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College student finances

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College student finances

Hello I’m a 23 year old college student after 5 years of good credit I received my first ever 30 day late from capital one. I woke up this morning with a 80 point decrease in my score. How long will it take me to get somewhat of an increase in my score because I’m looking to be financed for a car in the near future. My score is currently a 568. I do have about 6,000 in cc debt and I live on my own.
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3 REPLIES 3
Frequent Contributor

Re: College student finances

I'm so sorry that happened. It must have been sickening to see that decrease this morning, especially as you are hoping to finance a car soon.

 

I wish the news was better. It's probably at least year and more likely two years before that 30 day late stops weighing down your score. (It will have some effect, of course, for seven years, but it will decrease as time goes by without any other issues).

 

You didn't indicate what your credit limit and your credit card(s) are. But if $6000 is a significant portion of that limit, then that's also a drag on your score. By paying it down to less than 8.9% of your available revolving credit, you should see some increases. I realize that may be tough for a college student, though.

 

You also didn't incicate what your income is, although if you're like I was when I was in college, it's probably not very high. If that's the case, you probably also have a debt to income ratio (dti) problem. And debt in the equation also includes all of your other obligations -- including rent. That's not a part of your FICO score, but it does affect your credit worthiness in the eyes of lenders.

 

And your score before your 30 day late (~650) was only considered fair. That may be, at least in part, because you're carrying $6,000 in credit card debt. You would likely have been approved for a car loan, but you would probably not have gotten a great rate.

 

I wish I had something more encouraging. But perhaps all of these things together are telling you to take a longer-term view of things. Perhaps your credit planning should include a few years of focusing on building your credit by paying down your debt, keeping a perfect payment history (moving forward), and after that considering adding more debt. In the long term, you're going to be way ahead doing that. Even when you're 30 -- still really young -- you're going to be much happier if you don't dig yourself in deeper now.

Message 2 of 4
Community Leader
Senior Contributor

Re: College student finances

Even though nothing can be done if the 30-day late was accurately reported, I suggest putting your C1 payment on autopay. This is definitely something you don’t want happening again.
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Message 3 of 4
Established Contributor

Re: College student finances

I agree with the others Smiley Sad    But depending on who you are wanting to finance with and what type of car they may not care about your 30 day late more than they care about your DTI and other factors.     I would definitely pay down and keep down your CC's in order to get you a better deal and I recommend being 600 plus before applying if possible at least 650 but some dealerships are more lenient and work with customers even in the low 500's and lower depending on who finalizes your deal and how many they actually work with reach out to me or the Auto Forum whenever you get close so people in your state can help you figure out the best time to shoot for your loan to help get you the best deal some places even offer FTB (First time buyer) programs and Student discounts Smiley Very Happy

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