High credit utilization affect on credit score?
Dae Asked: High credit utilization affect on credit score?
Hi, I was just wondering how my credit score will be affected by my high debt to credit ratio. Last time I checked my FICO I had a 725 (May 2011). I am trying to get a loan for a used car but am afraid of being denied.
It would probably help if I told you a little about my credit history. I had a one year installment loan from first quarter 2010 to 2011. I paid that off a month earlier than due.
In March of 2011 I got a credit card with a $4000 limit, and in May I got a Macys credit card with a $300 limit. These are all the loans/credit I have ever had, my average account history is 8 months. I maxxed the Macy’s card out because I only got it for the 30% savings (bad habit I know). The credit card I have never had a balance of over 10%.
For both cards I pay over triple+ of the minimum payment, so that I can get it over with sooner. I have never been late for any loan/credit payment.
Just recently I had to use up alot on my credit card. It now has a balance of $2900, and $75 for the Macy’s card.
I plan on paying $600 on the credit cards next due date, and paying off the Macy’s on its next due date as well.
After that, I will make a payment plan to where I can get the credit card balance and interest paid off in 10 months.
How badly will this affect my score and how long will it take to repair it. Will it ever get above the original score of 725?
The balance also shows up on my authorized card holders credit report, will this mess up her chances of getting a loan? She has no credit history at all.
And lastly, should I even bother with applying for a car loan?
Thanks in advance.
Answers:
Guess Who Answered:
Your credit scores are only part of the criteria lenders use to determine your credit worthiness.
Your income and other debts also play a part in the decision.
Paying a debt before it is due doesn’t help your credit scores. Your debt to available credit ratio might, however.
Opening too many new accounts or having too many inquiries hurt your scores.
Only time can increase your credit scores. Your credit scores are not based on how much you owe, but on how well you handle your finances.
When someone co-signs for credit for someone else, the co-signer guarantees that the bill will be paid of the borrower defaults. If this is a joint account, the both account holders are both responsible for 100% of the debt. The creditor can choose which one he wants to pursue if you default. So yes, your debt may prevent your co-signer/joint account holder from obtaining credit.
Hold off on the car loan for now.
Good luck.
BungalowMo Answered:
Closing your cards when you only have an 8 month credit history is a very very bad idea.
To learn more about how credit scoring works, this thread from the myFICO forums is the most informative & accurate information you’ll find in one place.
Not all links within will pertain to your situation, but many will.
Those folks got me from mid 500 FICO’s to mid 700’s today..They ROCK!!!
EL Answered:
Close any credit cards you do not use and never use more than 1/3 of the available balance AND pay more than the minimum payment. Before applying for a car loan, find out what you can afford to spend on a monthly payment including insurance and maintenance. Going in knowing what you can realistically afford will keep you from tanking your credit score because you got a loan you really can not afford to pay.
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Categories: Loan Questions Tags: get a loan, loan, loans
5 Simple Ways To Improve Credit Score – Mortgage Brokers Edmonton
Often times people think that their credit score is perfect, untarnished and in good standing. Well creditors can be unforgiving sometimes and for whatever reason you may have missed a payment which can in turn bruise your credit. Here are some ways that help you keep on top of your credit.
- Check your credit on regular basis. Your inquiry should not affect your credit score. By doing this you will be able keep a tab of your credit score and monitor any fraudulent activity such as identity theft.
- Get a credit card to establish or re-establish your credit. If you are applying for new credit card get one that will have a minimum limit of $2,000. If you are re-establishing credit then get a pre-paid credit card. This will show as revolving credit and allow you to improve your credit rating.
- Get a loan to improve your credit. For example a car loan which is considered as revolving credit shows to the lenders that you are capable of managing debt. These are considered to be installment loans.
- Pay Down credit cards as fast as you can. this will drastically improve your credit score in a shorter period of time.
- Credit correction. If you have had a collection, late payment or even bankruptcy; based on the infraction, they should fall off after a certain period of time.
At Western Direct Financial Mortgages we help you back to the road of recovery. Contact us for a free no obligation consultation.
Categories: Loan Videos Tags: loan, loans, Pay Down
When should I refinance my auto loan?
Mitch Asked: When should I refinance my auto loan?
I purchased a vehicle in December 2010 with very little credit history.Total purchase price was $14,900 with $1,900 down. I’m not sure what my actual FICO score was at the time but I had 0 installment credit history and only 2 credit cards that had been opened for about 2 years each. Plus, another 3 small student loans totaling $12k. Only one late payment on my credit history due to Microsoft renewing my Xbox live account without any notice. Needless to say, I didn’t get a very good interest rate (just under 12%) at the time of purchase. After 6 months of payments, the balance of the loan is about 11,500 now since I’ve been paying nearly double the minimum monthly payment of $297. I checked my credit score for the first time in over a year and according to Experian, it currently sits at 707.FYI – I have 6 hard inquiries on my credit over the last 2 years because I had my credit run 4 different times during the vehicle purchasing process which I know was a mistake. The Finance director at the dealership I purchased this vehicle through mentioned it’d be best to wait a year or a year in a half before I refinance. However, I think there’s obviously a conflict of interest there.
When is it best for me to refinance since I only have about 6 months of installment credit?
Answers:
Common Sense Answered:
Ummm, 12% isn’t that bad for “very little” credit. If you’re paying double your effective interest rate is much lower anyway. I wouldn’t bother with a refi.
Huntsman Answered:
With the way that auto loans have been a challenge to get in hand these days. The online places are fast and I have heard the are less paperwork.
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Categories: Loan Questions Tags: Huntsman Answered, loan, loans, Mitch Asked
Experts Discuss the Role of APR with Dr. Charles Richards
NILA (National Installment Lending Association) is a new association for an old industry. Installment Lenders were the original core of what became the American Financial Services Association (AFSA), which was formed in order to work with Arthur Ham and the Russell Sage Foundation on consumer credit reform a hundred years ago. Ham credited these lenders with playing a crucial part in getting the universal consumer credit law written in 1914 and passed in so many states. After AFSA expanded to include providers of other types of consumer credit, such as mortgages, vehicle finance and credit cards, installment lenders felt the need for a new association which would retain a more singular focus on traditional installment lending.
See another video and read more here: value and significance of the consumer installment loan industry.
Categories: Loan Videos Tags: APR, Installment Lenders, loan, loans
The Value and Significance of the Consumer Installment Loan Industry
NILA (National Installment Lending Association) is a new association for an old industry. Installment Lenders were the original core of what became the American Financial Services Association (AFSA), which was formed in order to work with Arthur Ham and the Russell Sage Foundation on consumer credit reform a hundred years ago. Ham credited these lenders with playing a crucial part in getting the universal consumer credit law written in 1914 and passed in so many states. After AFSA expanded to include providers of other types of consumer credit, such as mortgages, vehicle finance and credit cards, installment lenders felt the need for a new association which would retain a more singular focus on traditional installment lending.
INSTALLMENT LOANS THE SAFEST PRODUCT
There is general agreement that installment loans are the safest loan product for the consumer. Lenders test the ability to repay and loans are paid off in equal monthly installments of principal and interest. Borrowers therefore have a “roadmap out of debt.”
Equally important, loans are made from local bricks and mortar community offices, which are individually licensed and examined by state authorities. Loans are not sold off but are held and serviced in the local branches, giving both borrowers and regulators real people to talk to when they need to.
Rates are fixed and are the same for all borrowers; there are no prepayment penalties either and the product is as understandable and transparent as we can make it. Installment lenders do not require post-dated checks or access to a borrower’s bank accounts, unlike other kinds of lenders.
When installment loans were the only product available there was no problem with overlending and no problem with chronic indebtedness.
FINANCIAL CAPABILITY
Installment lenders report good and bad credit to the credit bureaus, thus enabling responsible borrowers to build up credit scores which can help them access other services.
Categories: Loan Videos Tags: Installment Lenders, loan, loans
Refinanced auto loan, old account closed new one opened with same debt but credit score dropped 60+
AJ J Asked: Refinanced auto loan, old account closed new one opened with same debt but credit score dropped 60+
I refinanced my 60 month auto loan which was at 6% to 3% at the 20 month mark to save myself some money. I refinanced with a new bank and the terms are now 40 months (but since I paid 20 months into the 60 month term the balance and payment is pretty close to the old account). I subscribe to transunion and can see my accounts/credit scores. I noticed when the old account was “removed” and new account “added” my credit score dropped about 60 points instantly!! The debt did not increase, it actually is getting lower every month as I pay my auto debt. Why did the act of refinancing drop my score so dramatically? This is from the official transunion site using vantage score (dropping form 820 to 760 approx). Is “opening” the new refinanced account making it look bad? Shouldn’t the “closed” account be seen as a transfer and not like I am losing and adding accounts in just a few days?
I though refinancing was actually good not just to save money but for your credit score too since it adds a mix of installment credit?
I was just wondering as I was not expecting a 60 point drop in 1 day due to refinancing and having the same number of debt.
Answers:
A Hunch Answered:
Based on your description, it’s because you lost payment history.
When you say “removed” the old loan, no longer shows on your credit report?
– it’s not listed as “paid in full” or “closed by XYZ”?
What i would have expected:
OLD loan – classified as “paid per agreement”, “paid in full, “closed by customer or lending institution”
New loan would appear as a new loan with one month of payment history.
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Categories: Loan Questions Tags: Andrian Ramirez, John Herod Answered, loan, loans
Can I payoff my car loan at once and get good credit score?
V Asked: Can I payoff my car loan at once and get good credit score?
I bought/financed my car about 2.5 years back and since then I am paying car’s payment on a monthly basis (regularly). The car loan is for 5 years.
Now I want to pay off the car loan as soon as possible but at the same time I want to get a good credit score increment because I was regular at all my payments.
The question is:
1) Shall I pay all the remaining amount at once (which is equal to 2.5 years of payments) or shall I pay it in 3-4 equal installments?
2) What happens when you payoff the car loan? I mean when you can get the car’s registration certificate?
Please advice. Have a good day!
Answers:
John Jones Answered:
NO, they like to see history, so keep paying.
Huntsman Answered:
Installment loans build credit by making payments over time. You have to pay on car loans for at least 12 to 18 months to do much for your credit/score. Paying off the loan early will do nothing to improve your credit/score. It will save you a lot of interest though. Sometimes you should think with your pocketbook and not worry about a few points to your score.
Your payoff on that car loan is a lot less than 2.5 years of payments. You don’t have to pay the interest on those 2.5 years. Call your lender and ask for the payoff balance. Pay that and save all that interest.
When you pay off the car, the lender will release their lein and you get clear title to the vehicle.
Ronald S Answered:
If you can afford to get it over with now, do it. You will see a bigger effect on your credit score from the fact you paid off the loan and now owe less money, than from the extra payments. All you’ll get out of four more payments is the privilege of paying more interest.
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Categories: Loan Questions Tags: Huntsman Answered Installment, loan, loans
I am looking for a lender who loans funds to those with bad credit and not a payday loan
Michael Asked: I am looking for a lender who loans funds to those with bad credit and not a payday loan.
My credit is bad and have only been on my job for 3 months. I am trying to borrow $2000.00 to be re-payed in monthly installments. I am not interested in payday loans. If I can get a loan in this amount, it will financially put me back on track. I will be able to afford notes between $150.00 and $200.00 per month.
Answers:
Huntsman Answered:
You are about to get about 50 responses (answers) of online loans.
Careful.The online loan scam is very, very simple to operate.
If you fall for it, it will make you cry for days.
Stop by your local small banks and credit unions.
If they turn you down, everyone else will.
You are about to get about 50 responses (answers) of online loans.
Careful.The online loan scam is very, very simple to operate.
If you fall for it, it will make you cry for days.
Stop by your local small banks and credit unions.
If they turn you down, everyone else will.
Note:For any personal loan you will need employment for at least 1 full year
MVD34 Answered:
To put it bluntly:that just isn’t the way the world of banking and credit works.
To put it bluntly:that just isn’t the way the world of banking and credit works.
Payday lenders and the like exist for people with bad credit because everyone else (“the banking industry”) refuses to lend to subprime borrowers in all cases.
The only reasonable exception to the rule is a credit union.However, if your FICO score is below 620, you won’t be able to get an unsecured loan from them either.
Ed Fox Answered:
No chance.
Would you really loan money to someone with a poor record of paying back?
No chance.
Would you really loan money to someone with a poor record of paying back?
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Incoming search terms:
- installment loans for bad credit over $2000
Categories: Loan Questions Tags: get a loan, loan, loans, Michael Asked
Universal Cash Express Inc.
Are you experiencing unexpected financial needs? Do you know what to do? Are you provided with enough solution in this kind of situation? Have you considered loans?
The video involves Universal Cash express Inc. and they will be helping you when crisis like this happens.
In this video, you will know how they can assist you with title loans and installment loans. Also, they will guide you with the steps on how you can have these loans whenever you need them.
Everyone experiences financial crisis, that is why this is helpful to almost anyone.
Categories: Loan Videos Tags: loans, Universal Cash Express
Lending Companies That Offer Loans With No Credit Check Are Embraced By Borrowers With A Poor Credit History
Amongst the numerous payday lenders that now exist, not all of them carry out credit checks when assessing your potential as a borrower. That being said, there are a number of payday lenders that do carry out credit checks.
Having access to payday lenders that will provide loans but do not carry out a credit check is going to be especially useful for people that have had a few problems in the past and have tarnished their credit record. Having a blemish on your credit record would normally make it difficult to obtain a loan. Banks have really clamped down on their lending these days and even though the problem may have been in the past the lender may well still reject the application.
With all the lenders offer no credit check loans that are in the market place, how do you find the ones that do not do credit checks? The easiest way to do this is by reviewing a few companies online to see which ones you want to look at applying to. The information is quite often posted on the lenders website as they see it as a marketing benefit.
Another alternative would be to use a payday loan broker as they will have access to all the main players including those that do not do any credit checks. Lenders that do not use a credit check base their application process and decisions upon the applicants current income levels and their assessed ability to repay the loan.
So if you have a bad credit history and need to get some cash quickly, no credit check loans could be the answer. They are a useful tool to help you get back on your feet following a financial emergency or cash flow problem. Most of the time, having a bad credit record will hamper your attempts at getting credit but not so this way allowing you to obtain credit without further penalty.
Categories: Loan Articles Tags: bad credit loans, get a loan, loans, no credit check loans