How fast will getting an auto loan raise my credit score?
My credit score generaly hoovers between 620 and 630ish. I have 2 credit cards. 1 is years old and the 2nd is since July. I previously had bad credit but paid off all balances over 1 year ago and all were medical. Years ago I had a few charged off credit cards and those were paid shortly after closing them. I am getting married in May of '08 and hy future husband's score hoovers between 680 and 700ish and we are looking to refinance our home in our names after getting married. It is currently in his and his fathers name as we both had sad credit to begin with. His was a bancruptcy in '02. I am hoping te auto loan will raise my score to 680ish by April to July. that would be appx 60 points. Is this realistic?
Public Comments
- I would think it would be as long as you didnt go past due on your credit cards or other loans. My advice is to check on if your other debts got their payments early for the month. Try not to pay things so close to the due date because if for some reason a payment didnt go through you will need the extra time to get the issue resolved. I too am learning from bad Postal Service experences and internet goofs. Those are not company errors and they will keep that bad mark on your credit for 7 yrs. I let one go for 3 months because i didnt get a bill. That is not bank error and now I pay for it. I am giving you extra advice because I dont want you to have to deal with the mistakes and unfortuntate cicumstances I went through. Congradulations on the future marriage. It will be a fantasic one.
- Installment loans have very little affect on your FICO score. Revolving accounts such as credit cards comprise the largest portion of your FICO score. Account age is another key indicator. So although installment loans look good on a manual review of your credit, it has little impact on your FICO. I doubt the auto loan will raise your score. Its best to get a credit card or two, use it once for gas every 6 months. Depending on your file, but if its thin, you'll get a better score lift. Also paying down all credit cards below 30% utilization will cause a fast increase as well. Go to www.creditboards.com/forums I was once in your shoes about 2 years ago. Took a year to clean the credit up/build it up and closed on my first home a little over a year ago.
- Dont obsess with your credit score. Banks spend millions brainwashing people into thinking you need a High fico (I Love Debt ) score to make it in todays world. That's bull. Pay as you go and you'll win with money. You can get a home loan with manual underwritting (with the best interest rates). The way it was done before this stupid FICO.
- It's not unrealistic, but it's unlikely. Reason being that the 2 credit cards you have especially the one that was opened back in July are too recent to report on your credit. It would take at least a year of payment history for a car loan to start reflecting on your report, but it's not worth adding more debt to try to raise your score. I know that hindsight's 20/20, but when you paid the medical collections off, it would've helped your score to negotiate getting them removed in exchange for paying it. Same goes for those other credit cards you had. Paying off the delinquencies, don't help your credit anywhere near as much as negotiating a "pay to delete" from your credit report. My suggestion is this, keep the balances you owe on your credit cards no more than 25-30% of the avaialbe credit. For example, if the combined limit on both of the cards is $1500 ($1000 on one and $500 on the other), the balance should be no more than $450 between the two cards ($300 on the $1000 limit card and $150 on the $500 card). Make sure to pay everything on time, and don't apply for any additional credit right now. Applying creates "hard inquiries" that lower your score whether you're approved or not. And trying to get a car loan will make you lose more points right now than it would help you later. Be patient, time is on your side Thanks for reading and I wish you good luck
- With a new card and a new loan, your scores may take a little dip at first then increase as you make payments on time each and every month. A mix of credit - the cards and the car is better than all cards. You might want to only use one of the cards and tuck the other away because owing on cards doesn't look all that good. Use them for convenience, not for going into debt. And the scores represent a history so you'll need to establish that history on your car - 6 months to a year before seeing any dramatic change and higher scores get you a lower rate on the refinance. I think by the time you two get married, you can be seeing the better market rates apply to you.
