Did you recently take on (or consider) a loan of 84 months or longer on a car purchase?
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I know this is the inverse of the initial question posted under this subject but I think it's relavant. I didn't have to finance, but I want to use this loan to improve my credit score because the credit on my plastics far exceeds my traditional loan experience - even though my plastic balance is next to nil.
I know that variety of loan types makes up 10% of a FICO score. So by taking a secured loan such as an auto loan, I gain in variety - not to say I pocket the cash incentive the dealer offers. But I also notice that credit bureaus track data about my recent balances. So if I pay off too quickly, there is a concern that my FICO score will not improve.
The finance guy at the dealership told me two things, I want to know if these are true or not.
1) If I pay off in less than six installments, FICO may question the necessity of the loan in the first place, thus my credit score is not going to change. He sait that 6 is the magic number.
2) If I take out too low a loan amount, it won't have much of an impact in FICO, either.
I think the second point is well echoed in other people's talks. But with the first point, even if 6 is a magic number, wouldn't FICO see through it if I pay down 90% of a loan in one installment and leave just a nominal amount to meet 6?
Do you know what your FICO score is? You can get it for free. If it's already above 750, then don't worry about any of this, just pay the cash like you were planning to.
The most important thing about your credit score is the ratio of your used credit to your income. As you note, variety only counts for 10% of your FICO. That is hardly worth paying all that extra money in interest if you don't have to.
It seems that the "magic number" for dealer is 4, as both sales and finance swore that I had to make 4 payments to qualify for the financing cash incentive - a claim that turns out to be nonsense.
That has no effect on you, of course..
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Go for such financing only when offered by the manufacturer.
Back your question - just have them run your credit and they'll tell you.
I had a good FICO score of about 720 when I financed my new car 3 years ago. Through my credit union I got a decent interest rate of 6.4.
As luck would have it, I was rear-ended last Friday and found out my car is a total loss. My credit score has plummetted to around 550-600. I'm afraid I'll be turned away when attempting to finance whatever car I end up getting.
Once my insurance pays off my car, will my FICO score go up since my debt-to-earning ration will have improved? If so, how long will that take to show up on my credit report?
The problem? Ooooh... I want to go car shopping and there's no logical reason to do it. It would be one thing if I were going after a nice BMW or some such but I'd only be replacing one minivan with another. Must resist. They sell me Uruguay if I wanted it....
Hey! There was an earlier post that the top credit score was 950. Experian says 730. Anybody know if the three different agencies have different top scores?
freecreditreport.com is a commercial website..
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freecreditreport.com will give you the number from Experian but it's only free for 30 days. That's fine. I only needed the number once.
I did get the free report and there's not a bad mark on it so that's very nice. I'll have to see if my wife wants me to run one on her. Since I'm paying all the bills and pay us both on time all the time (having learned much younger what happens to bad boys who don't mind their credit) I would expect hers to be close to the same. We both make about the same money.
2019 Kia Soul+, 2015 Mustang GT, 2013 Ford F-150, 2000 Chrysler Sebring convertible
Judging by what you posted, you probably will qualify for the lowest possible rate. Not unless they say, you don't have enough credit. Never understood that argument.
Good luck.
oldfarmer-- from my perspective you are an excellent risk, but your rather spartan credit history might work against you. The credit bureaus all use debt/income ratio, payment history and available line of credit among other factors to calculate everyone's score. It seems counter intuitive, but someone having more cards (more available credit) who consistently pays on time could trump someone like you who only has one card and no evidence of financing since 1986--a very long time in the credit world. If you carry a substantial balance on your one card that could work against you, too since your available line of credit would be much lower than if you had three or four other cards that you had held for some time, if those cards were at or near zero balance and you never missed a payment.
If you are planning to finance a big ticket item it's worth buying the scores simply to make sure there isn't any funny business in the loan office otherwise you can get a free credit report (minus scores) once a year just to make sure that no incorrect information has been recorded.
Gogiboy
You might as well keep driving it until it dies.
Besides, wouldn't you rather be there to comfort it when it rolls to a stop with the engine smoking and a rod sticking out of the crankcase. All of us want to be with loved ones when it comes time to meet our maker.
The Park Avenue is actually a very reliable car dispite what some people might say about anything made by GM. The 3800 Engine in there can go 200,000 miles or more without a lot of difficulty.
Unless yours has a close to 200,000 miles on it already it should be fine.
Did someone tell you that because your buick has XXX miles on it you have to get rid of it or something?
Its not real cheap but its not real expensive either. I would just get it fixed and keep driving the car.
Once that is fixed no reason you shouldn't get many more miles out of it with regular maintance.
I had a 1989 Pontiac Bonneville that had nearly 150,000 miles on it when I sold it. It is still going last time I talked to the guy.
2019 Kia Soul+, 2015 Mustang GT, 2013 Ford F-150, 2000 Chrysler Sebring convertible
By the way, I have been with the credit union since 2005 and my credit score is 685 (I know this can vary by agency).
As the other poster said, having a job is not always necessary. A few years ago I quit my job and took a few months off to kick around Asia. When I got back I bought a new truck. They asked where I worked but were not too concerned when I told them I was in the process of going back to work but had not decided where yet. I have pretty long credit history though and was putting 50% down. Not much risk for them really.
iwasaudrey - on the credit cards keeping on making payment religiously on time will do you pretty much all the good that paying them all off will. Long periods of on time payments do wonders for your score (which, BTW, isn't bad).
BEACON LOGIC:
Beacon is a generic risk score developed by Equifax and Fair, Isaac that predicts the likelihood that an account will become seriously “delinquent” in the next 24 months. “Delinquent” can mean:
• 60 days late
• 90 + days late
• Charge-off
• Repossession
• Bankrupt
Fair, Isaac also developed a generic risk score for Trans Union and Experian.
; Beacon scores range from 300-850. The higher the score, the lower the potential for serious delinquency (The higher the score, the lower the risk).
Beacon is a non-judgmental tool.
Beacon is a living, breathing score. As your credit changes so does your Beacon score. For example: As you open new accounts or start to slow pay a credit card – your Beacon score changes.
PREDICTIVE VARIABLES:
The most predictive variables that affect a Beacon score are:
1. Consumers Previous Credit Performance:
Since Beacon is predicting the future, the most predictive variable is your recent (12-24 months) credit behavior!
Beacon looks to see how long it has been since the most recent 60 day (or worse) delinquency.
Beacon looks to see what the highest level of delinquency reached in the last year.
Beacon looks to see the number of months since the most recent derogatory public record.
Charge-off: A new Charge-off bears more weight than an old charge-off.
Paid/Unpaid Collection Items: Beacon does not care if a Collection Item is paid or unpaid. As far as Beacon is concerned, an account that has gone to Collection status is considered to be as bad as an account can get. However, Beacon does care how long it has been since the last Collection Item.
2. Current Level of Indebtedness:
Beacon does not have the luxury of knowing what a consumer’s debt to income ratio is. Therefore, Beacon concentrates on the level of debt (especially Credit Card debt) that a consumer has.
Beacon weighs heavily against credit card debt due to the fact that credit card debt is unsecured.
To help increase your Beacon score: Make sure that you are never over 50% maxed out on any one credit card.
3. Amount of time credit has been in use (Credit Stability):
Has the consumer had existing accounts open for 10 years or 6 months? Chances are, the more time Beacon has been able to track a consumer’s credit behavior, the better the Beacon score will be.
4. Pursuit of New Credit:
Has a consumer been shopping for credit recently? If a consumer has been shopping for a car or mortgage – all inquiries that occur within a 30 day period will be considered as only one inquiry to Beacon. Beacon realizes the difference between a habitual shopper and a consumer shopping for the best interest rate.
MINIMUM SCORING CRITERIA – Beacon will not score a Credit Report with the following:
A deceased indicator on file
Safescan Warning
“File under Review”
A file with no tradelines
No updated tradelines in the last 6 months. (Beacon is unable to predict the future if it can’t see how a consumer has paid their bills in the last year).
Beacon will ignore the following tradelines:
Child support tradeline
Family Support tradeline
Returned check items
Rental Agreement
INVISIBLE INQUIRIES – Inquiries that do not affect the Beacon score:
Consumers requesting a copy of their credit report from Equifax
; PRM (Promotional) Inquiries – Consumers receiving promotional credit card offers in the mail.
AR (Account Review) Inquiries – Credit grantors reviewing their customer’s credit file. Companies review their “loan portfolio” in order to determine if they should close the account (if Beacon has decreased) or increase the Credit Limit (if Beacon has increased).
EMP (Employment) Inquiries – Credit report pulled for Employment purposes.
Note: Inquiry de-duping – For a 45 day period multiple auto inquiries are treated as one and multiple mortgage inquiries are treated as one.
TO IMPROVE A BEACON SCORE:
Obtain a copy of your Credit Report. Address any discrepancies with all 3 Credit Bureaus.
Pay your bills on time. Delinquent payments on mortgages, automobiles, and national credit cards can have a major negative impact on a Beacon Score.
Pay down high outstanding balances. Keep balances low on unsecured revolving debts like credit cards. High outstanding balances can affect a score negatively.
Do not take on new debt. Apply for and open new credit accounts only as needed.
I would definitely call the credit union.
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I ask these questions because it is possible, if let's say this is for a used car for 48 months, the 6.74% is for top tier credit. 680 isn't top tier. So they have realized this and denied it. They may approve at a higher rate.
But, as others said, it could just be a clerical error, too.
'11 GMC Sierra 1500; '98 Alfa 156 2.0TS; '08 Maser QP; '67 Coronet R/T; '13 Fiat 500c; '20 S90 T6; '22 MB Sprinter 2500 4x4 diesel; '97 Suzuki R Wagon; '96 Opel Astra; '11 Mini Cooper S