Credit Score Thread

Solariss_sl said:

I recently posted that I was looking to buy a new car, but now I have a question as I've been doing a bit of research.

I will be getting a decent sum of money when I am able to cash in my company stock option in March. I was going to wait until then to buy the car and put a decent down payment on it. This month there is a 500$ rebate on the car if I finance with the dealership. So if I bought the car now, then refinanced in March with a credit union with a big down payment would this have a big negative impact on my credit score? Should I wait or is this a fairly safe thing to do?

My credit score is in the 700-720 range

Click to expand...

My understanding is that "dealership" promotions are pretty much round year; they just change the "season" so "omg winter season sale 1.9%APR" is just a rehash of "omg summer sale 1.9% apr!" I would, however, get a car at the end of quarter, working closely with Sales (not in sales though) they all want to hit a number at the end of a quarter.

I'd also suspect that you can negotiate a better deal if you bring in more cash. Or is that only if you don't take advantage of the dealership's financing? Because "free" financing just means you pay for it in the price of the car. Nothing is free...

Solariss_sl said:

Well, the 500$ rebate is only if you finance through the dealership. But that is also a good point about negotiating more with more cash down. I'll likely wait till March

Click to expand...

This is coming from someone who was a District Manager at an automaker, and has seen the dealership financials. Get your own financing through a bank or credit union beforehand. Dealers mark up your rate for a profit, as well as tack on a bunch of stuff (extended warranties, credit life) that you don't need. Pretty much the goal of any dealer is to make $1-2k profit on your car. They are even willing to let the car go at invoice, because they know they'll make it up in F&I.

Get your own financing and cut out the middle man, saving yourself 2k.

Solariss_sl said:

Well, the 500$ rebate is only if you finance through the dealership. But that is also a good point about negotiating more with more cash down. I'll likely wait till March

Click to expand...

Good idea to come with more cash down; even thought he refinancing wouldn't kill your score. Just remember to never do anything stupid just to increase your credit score. After all, it is a score that tells the banks how good you are at stuffing their pockets. And because car buying is such a large purchase that goesdownin value, you need to think backwards in your purchase. Would you buy that $25k new car if you had $25k in the bank? Probably not, but we sure will finance the thing out for the next five years.

Lyrical_sl said:

This is coming from someone who was a District Manager at an automaker, and has seen the dealership financials. Get your own financing through a bank or credit union beforehand. Dealers mark up your rate for a profit, as well as tack on a bunch of stuff (extended warranties, credit life) that you don't need. Pretty much the goal of any dealer is to make $1-2k profit on your car. They are even willing to let the car go at invoice, because they know they'll make it up in F&I.

Get your own financing and cut out the middle man, saving yourself 2k.

Click to expand...

This is anecdotal and I am obviously an exception, I know you're generally correct, but I thought I'd share an experience I had when I bought my last car. I went through Costco's auto-program, which gives you discounts with dealers who have deals with Costco. I had to drive an hour or so to get to the dealer even though there was a local one. It was a slightly smaller dealer then the one local to me but they'd just hired the best salesman from the dealer nearer and, essentially, they were trying to draw off all the business. So they gave me the car at invoice for 1.9% interest, tacked on nothing (they asked, I declined), and all they asked that I do was refer anyone to them instead of the local dealer. I'm sure part of that was I was buying it in late 2010 and they needed to clear inventory for the 2011, but overall I actually paid less for a new 2010 then I would have paid for a used 2008 (after interest, no way am I getting a 1.9% rate on a used car, even with a 790-810 credit score). Part of that is just used Honda retraining their value really well.

Are you financing through the dealership or the manufacturer/manufacturers finance division?

HUGE difference. Manufacturer will subsidize the fuck out of your note to move the metal, and will provide a FAR better rate than any bank will offer.

If you're buying a well-used car, nm. If you're buying a lightly used car, well, you're getting fucked - a new car will end up costing you less due to the manufacturer incentives.

fuck new cars, buy used outright. put the payment you would be making monthly for the next 3-5 years towards savings / investments. cars are nothing but losers, especially new ones.

So I really fucked up my credit when I was younger. I ended up getting a Dell computer on one of their cards ($1500), spending $1500 on my Capital One card to buy a guitar, $500 on an amazon credit card, $500 on a paypal card. I basically said "fuck paying this" and eventually they came after me for huge amounts of money. I paid them off at that point, but the damage was already done. My credit score sat roughly at 600 even.

I go to school so I have a large amount of debt there, and that's it. I paid off all of the collectors that I owed and I also ended up paying off my car loan pretty early.

What is the best way for me to rebuild my credit? It is already slightly better than it was before (around 620), but I'd like to keep improving it. I have a really good income now, so I'm not worried about falling into the same trap again.

I need a new car, so will getting a new car loan and paying it off monthly/early help build my credit? Should I get another credit card and use it for small purchases and then pay it off? Looking for a little advice.

Major loans, paid on time, will increase your credit the fastest (car loan, mortgage)

You can also build it back up using credit cards, but you'll have to pay on them longer compared to a car/house loan to see the same improvement.

Generally speaking, get 1 or 2 credit cards(secured if you must, if you can't get a normal card because of your credit), charge maybe 1/3 - 1/4 of the limit per month and pay it off each month. Never max the card, in fact, don't even go over 50% of the way to the limit. To improve your credit, credit companies want to see that you can acquire credit, and use it responsibly, which means not maxing your card out every month even if you do pay it off.

This doesn't mean that you have to go out and buy stuff to improve your credit. Put gas on it, or groceries, or something you would be buying regardless.

I did the same thing as you Noodleface, (posted about it a bunch back on FoH), basically racked up 10K in credit card debt my last years of college and the couple years afterwards. Took me forever to get out of that hole but I eventually did. It honestly took a good 5-6 years of really working at it to get back to a 750 credit score. I think I was around 570 at my worst.

If you still have some of your credit cards(probably not if you didnt pay them) use 1 or 2 of those to work your credit back up, credit is also determined by the longevity of your accounts. It looks better to have a couple cards that have been open for years than it does to have a couple brand new cards.

Noodleface_sl said:

So I really fucked up my credit when I was younger. I ended up getting a Dell computer on one of their cards ($1500), spending $1500 on my Capital One card to buy a guitar, $500 on an amazon credit card, $500 on a paypal card. I basically said "fuck paying this" and eventually they came after me for huge amounts of money. I paid them off at that point, but the damage was already done. My credit score sat roughly at 600 even.

I go to school so I have a large amount of debt there, and that's it. I paid off all of the collectors that I owed and I also ended up paying off my car loan pretty early.

What is the best way for me to rebuild my credit? It is already slightly better than it was before (around 620), but I'd like to keep improving it. I have a really good income now, so I'm not worried about falling into the same trap again.

I need a new car, so will getting a new car loan and paying it off monthly/early help build my credit? Should I get another credit card and use it for small purchases and then pay it off? Looking for a little advice.

Click to expand...

If your debt from those cards where sent to collectors or if you declared bankruptcy AFAIK they'll still be in your report for 7 years. And that's since the "last activity" so if you had 6 years and 11 months of it being in collections and you made a payment now they'll be for another 7 years (paid, but still).

/Can't remember if it's 7 or 6.

Lyrical_sl said:

This is coming from someone who was a District Manager at an automaker, and has seen the dealership financials. Get your own financing through a bank or credit union beforehand. Dealers mark up your rate for a profit, as well as tack on a bunch of stuff (extended warranties, credit life) that you don't need. Pretty much the goal of any dealer is to make $1-2k profit on your car. They are even willing to let the car go at invoice, because they know they'll make it up in F&I.

Get your own financing and cut out the middle man, saving yourself 2k.

Click to expand...

Hmm... So you're saying basically get the final price beforehand and have a check from your bank waiting? I'm looking to trade my truck in and get something else now. Markups seem crazy so just trying to cut a reasonable deal at this point is a lot of work..

Convo_sl said:

Hmm... So you're saying basically get the final price beforehand and have a check from your bank waiting? I'm looking to trade my truck in and get something else now. Markups seem crazy so just trying to cut a reasonable deal at this point is a lot of work..

Click to expand...

That's exactly what I said. It's getting to be par for the course that they sell the car at invoice, but rape you in F&I. People usually only argue the price of the new vehicle and what they are being allowed for their trade-in. They never argue with F&I.

Dealers absolutely lose their shit when you negotiate price and then when you get to F&I, write them a check.

Hah ill have to keep that in mind. Just asking for a final price seems to be an adventure from these dealerships.. I'm guessing most cars have a 1-3k wiggle room on them? Sometimes more?

Convo_sl said:

Hah ill have to keep that in mind. Just asking for a final price seems to be an adventure from these dealerships.. I'm guessing most cars have a 1-3k wiggle room on them? Sometimes more?

Click to expand...

That depends on the make. There is only like 1k in a Toyota, but I know a Porsche dealer that said it was 15k from invoice to MSRP. You can go online and find out beforehand, just keep in mind that the prices aren't always 100% accurate. They could be off $500. The last car I bought, I allowed the dealer to make 1k profit, give or take.

I always try to negotiate every step seperately. If you are trading in a vehicle + purchasing a new vehicle + financing the vehicle, be really wary about the dealer just talking in final overall numbers. They can make the new vehicle price look great by screwing you on the trade-in, or vice versa, or make both vehicle prices look great by gouging you on the loan.

I always negotiate on the vehicle I want and get a final price before I even mention my trade in or agree to talk about financing. I generally don't finance through the dealership/auto manufacturer unless they are offering a 0% promotion at that time.

Yea.. I need to get them to raise the price of my trade in at this point. They offered me 15,500 but I'm wanting more like 16,500-17k for it. They will prob try and sell or for over 20k so..