I have always thought my scores were low. I have been working on my reports for about a year now and have made some progress. I had to buy a used car through Credit Acceptance Corporation for a 96 taurus in 01. The ford dealer didn't really want to finance that. I went back to that dealer and showed the salesman a copy of my TU report (608) and asked what I need to do to come back a year from now, when my taurus is paid ($4800), and purchase a new Mustang with a decent rate. He and his manager tried their darnest to sell me a mustang for about 3 hours. I had to get a secured CC, but I can buy a car from Ford motor credit. $3000 rebate, ate up by the remaining balance on my taurus. No cash to pay down. I did not buy the car. Payments would have been $450 a month; 16.99% APR. I have a few questions. 1. Should I have taken the deal so that I will have a positive account with a major car company? 2. Can I get my score over 700 in 1 year w/o the major company loan, or can CAC give me the same boost? I could make the payments, but I made an agreement w/ NCO about Fingerhut account. I have been paying 150 and plan to pay 480 for 3 months to pay the debt. It is charged off and I ask can NCO get a judgement if I refuse to pay any more? Thanks. I guess things are getting better.
I have a viable question. Do I need to have a major auto loan company (like ford motor credit) to raise my score, or can a more sub prime auto lender like CAC do the job? Can a company or a collection agency get take you to court and get a judgement if the OC charged off the account? Thanks again
I am no auto loan expert. What is CAC? If they are a lender what kind of rate are they offering? I would think that you would get a score boost from making timely payments to ANY lender after awhile. As far as your score... what is it now? What other factors on your reports are effecting it?
CAC = I believe the poster is referring to Credit Acceptance Corp. where he had the used car loan? I could be wrong. But I agree ... even if a lender is "subprime" I don't think the CRAs see it that way. They just see "AUTO LOAN" or "INSTALLMENT LOAN." Just like the CRA doesn't know if a credit card is prime or subprime ... it just seeing "CREDIT CARD" and "REVOLVING ACCOUNT." I'm pretty sure though, that while an auto loan will help your mix and reflect favorably in your score in the long run, remember that your score might take a hit for the first 3 to 6 months until the TL's "newness" wears off. peace, delilah
I just re-read your post ... If you are 608 now, I don't think adding one auto loan to the mix is going to raise your score to above 700. I could be wrong though ... who knows about FICO. But if you have a NCO (collection) account on there, that's probably hurting your score more than the lack of an auto loan. peace, delilah
Not all installment loans are good for your credit/ FICO scores! I believe FICO scores will actually DECREASE if a car loan is from a FINANCE company (and I do believe all auto dealerships fall under this category unless they distribute your report to other lenders and you happen to receive better terms from a BANK as happened to my dw). I was pre-approved for a car loan up to $30 K from Cap One Auto Finance (aka Summit Acceptance Corporation). At the time, I thought, great! I can use this loan to get a new car and build a positive trade line at the same time... WRONG! Well, I was able to purchase a new 03 Toyota ECHO hassle-free for about $12.7 Gs at 8.25% (tried to keep the principal amount as low as possible just to build the TL and get a fuel-efficient car). But when the trade-line showed up on my CRs, my FICO score dropped about 5-10 pts, and on TU (on its own scoring model), my score dropped 36 pts!!! That was very disappointing because I had just cracked 700 FICO! I was at 712 and was hoping to go 720+ but instead I went down to 702 or something!!! (I believe that if my FICO had been lower than 700, my score would have dropped even more!) The logic behind this IMHO is that FICO doesn't like to see loans from FINANCE companies because this is unsecured debt (although the car actually secures the debt, FICO doesn't see it this way). FICO believes that you are having credit, money, or debt problems, if you have to go to a finance company for a loan. To achieve higher score, it is better to obtain a loan from a BANK or CREDIT UNION. If you can't qualify for a large loan, you might think about opening up a CD (certificate of deposit) at a bank or CU and taking out a secured loan using the CD as collateral. More info about this here: http://consumers.creditnet.com/stra...php?s=&threadid=45583&highlight=secured+loans and http://consumers.creditnet.com/stra...php?s=&threadid=42534&highlight=secured+loans From what I read, even a 6-month $1,000 secured loan from an established bank that will report the TL to the 3 CRAs will boost your FICO scores. I opened up a $1.2 K CD at WAMU (Washington Mutual) and took out a $1K secured loan about a month ago as a way of hopefully balancing out the negative damage done to my FICO score done by the loan from Cap One Auto Finance. The TL has not been reported yet (should take another month or so), but as soon as it does, I'll post an update. Anyhow, I would try to stay away from finance companies if at all possible. However, I realize that sometimes this is the only option available. In this case, I've heard that your score takes an initial hit but then stabilizes over the years of making payments. But don't expect a big increase even when you finally pay off the installment loan 3 to 5 years down the road. I heard your score may go up 5 to 10 pts or may even drop a couple of pts. I could be wrong. You can never tell by FICO. This is all from what I've read, and like I said, I'll be able to post my personal experience as soon as my secured loan posts to my CRs. At any rate, I plan to open up another secured CD at USAA bank for the balance of my Cap One Auto Finance loan (about $12,000) and take out a secured loan to pay off Cap 1. Then, I'll just make my loan payments to USAA. I've also just moved, so next year, I plan to dispute Cap One with CRAs and try to get this finance company loan deleted from my files. That's my story...Sorry if any of this is a bummer. MisterX
So my best bet is to wait until I can finance a new vehice through my bank. I guess any good positive account over time is good enough. I did not even think about taking out a small loan at my bank for a positive account. Thanks for the idea. I went to the dealer to find out where I stand and almost got suckered into another financial mistake. I am learning and CN is helping a great deal. About fingerhut/NCO I have been paying 150 for about 3 months now to NCO for a fingerhut charge off. I had made an agreement to pay 486 for 3 months to pay the balance. The NCO rep said they are retained monthly by fingerhut and did not pay for the account as other CAs do. He said if I did not make the agreement when I did, he would get a judgement on my account. What is the criteria for a judgement and can the CA get one when the OC charges off the account balance. I really do not want to pay, knowing it makes no difference paid charge off or unpaid. I want to make good on my debts, but I could really use the money somewhere else. Thanks again.
I disagree. If the finance company beats a bank's interest rate by two or more percentage points with identical terms, go with the finance company and save money. You'll need all the EQUITY you can get with a depreciating asset. Yes, finance trades hurt, but they don't destroy you. And a "paid as agreed" finance trade looks good eventually, and will cease to hurt you. Don't let fear of FICO rob you of cash.
One important comment, that is more about personal finance then credit. If you get a 16.99% interest loan i would suggest you make sure your loan has two things: 1. No Prepayment Penalty 2. A car that you will have no buyers remorse for. Make sure that if you pay your loan off early, there is no penalty--you are in a sucker position because you have bad credit, so they can charge you 16.9 when people w/good credit can get zero to five percent. You need this also if you want to refinance. You will be negative in your loan (owe more than the car is worth) instantly, especially if this is a 60 mo loan. Make sure it is a car you want and a payment you can afford. I've been stuck with a negative car loan and its no fun when your situation changes. Good luck.
