I want to get a small auto loan (~$9,000 max) for a used car very, very soon since my current demon car will probably explode soon.
I checked my credit reports and my scores are:
727 (TU)
747 (EX)
698 (EF)
Obviously, we’re in a credit crunch right now but I still want a decent rate (and approval for that matter), so I’m going to apply for a loan from Northwest Federal Credit Union. When I opened my credit card account with them, I noticed that they pulled my credit report from Equifax and Experion, so are those the likely sources that they will pull my score from for an auto loan? Or will they likely have their own scoring concoction?
Also, I just paid off all of my credit cards this past month but the zero balances haven’t been reported yet. When they are reported, will it raise my credit score? Of course I still use my credit cards, but I plan on only carrying a very low balance on them from now on (maybe 10% max).
Timothy, I have heard that it’s actually bad for your credit score to pay off all credit card debt each month? I think the logic is that if you carry a low balance (<30%), then it shows that you are able to manage your debt well; however, if you have a zero month-to-month ending balance, then it just shows that you have no debt to manage…I’m sure it’s just a ploy by creditors to keep people in debt, but that’s just the way it is I guess.
You should pay your cards in full each month an not carry a balance at all. You may also need to consider that the balance that shows up on your bill is usually the balance listed on the credit report so even if you pay in full it may not show up with a zero balance. If the balances were a high percentage of the credit limits then you may want to wait until they report with the lower balance to apply for a loan. Even just a few points will push each of your scores into better categories.
Your best bet would be to talk to someone at the credit union. They can probably tell you what report they will pull. Your Experian score will probably qualify you for the best rate possible at most credit unions and banks. The Equifax score will likely still get you a decent rate though. Keep in mind that a lot of car finance companies use a slightly different model for you credit score that gives heavier weights to how you pay your auto loans so if you have a really strong payment history on cars this may be a good deal. The credit union will likely use your raw FICO score.
Be sure this is a true FICO score and not a FAKO.
Yes paying off your cards will raise your score. You should definitely wait until that gets updated as it could affect your rate significantly.
Starting at your credit union was a great idea. However, there is no way to know for sure if they will use the same reporting agencies that they did in the past; especially on a different loan product. Unfortunately, there no way to know which credit reports will be used in just about any situation.
Its just that auto loans have been difficult to get in hand recently. The web places are good and I have heard the are have easier approval sometimes.
My friend recently used http://auto.deal4-you.com
In the process to acquire a car, it is taken for granted that you have gotten requirements. There is a need for cash which would be needed to buy the car. On the other hand, if you do not have the ready cash, then you must have access to a loan facility. Okay, to get auto loans today, what would you be required to do? Having a good credit is the first factor. This is one thing can that can be very helpful despite the kind of loan you are interested in.
http://www.worldbestloans.com/autoloans.htm
Banks and other financial institutions feel a lot better doing business with people with a good credit score. Having a steady source of income or proof of employment is a major requirement for applying for auto loans. Without a proof of employment or a good source of income, a lender would not be confident to grant you a loan as they can not ascertain your ability to repay.
If the credit balances you were carrying amounted to less than 30-35% of your available credit then paying them down to zero will probably not affect your credit score very much.
As far as which score, very few auto dealers are likely to pull your FICO score. If the dealer uses Equifax, then they are likely to use Equifax’s Beacon Score. If they use Transunion, then they are likely to use Transunion’s TransRisk Score. Experian is not allowed to use the FICO score. Even though these and other scoring systems produce a different raw number with different score ranges, they are perfectly legitimate scores and are not “fako” scores (as one person here suggests) and they will all represent the same relative risk (high/medium/low). Don’t worry so much about your score “number” – worry about where your result falls within that scoring system’s “tiers”.
You are doing everything right.
BTW, Northwest FCU is one of our affiliated lenders.
Credit is built over time not in one month. Also, this is a very good time to buy a car. Go to Toyota. I’m sure they will be proud to see you. I got a new Corolla and I was in and out.
Financed cars is more expensive to insurance cause it requires full coverage. You can compare how much you would pay for full coverage of this car using this tool – carinsurance.yoll.net
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