Loan question

[chestercheeto48]

a lookup has no effect on your score.

Not entirely true.

If you are looking it up yourself or a company looks you up to see if you qualify for whatever junk mail flier they are sending you does not hurt your score. If you are applying to places or reply to that junk mail it definitely hurts your score.

 

[Briansol]

What factors determine my credit score?
The exact formula of the FICO and other scoring models is a trade secret. However, Fair Isaac has identified five factors and the importance given to each factor. Other scoring models include most of the same factors. However, the weight given to individual factors may vary.
The five are (www.myfico.com/CreditEducation/WhatsInYourScore.aspx):

• Payment history - 35%
• Amounts owed - 30%
• Length of credit history - 15%
• New credit - 10%
• Types of credit used - 10%

Your Credit Score: How It All Adds Up | Privacy Rights Clearinghouse

5. Do Credit Report Inquiries Lower Your Score? Your credit report includes more than your record of paying bills. One section of the report lists inquiries. These are records showing who has accessed your credit report. There are various purposes allowed for companies to look at your credit report.

• Your credit card company may monitor your report to review your account with them. This type of inquiry appears on your credit report, but does not affect your credit score.
• Creditors and insurers review your report to see if you qualify for an offer. These "preapproved" or "prescreened" offer reviews do not affect your credit score. (For information on how to stop preapproved reviews, see www.privacyrights.org/fs/fs1a-basics.htm.)
• You apply for a job and the employer orders your report. This inquiry does not affect your credit score.
• You check your own credit report. This will not lower your credit score.

The only credit report inquires that can lower your credit score are applications for new credit.

 

[totalburnout]

The only credit report inquires that can lower your credit score are applications for new credit.

Which will be what happens if he solicits a second loan or a credit card.

If you can get the credit card, then do so. If not, a lot depends if the loan is on the bike or a personal loan.

Literally yesterday my girlfriend just secured 3.33% for a used car loan. I have to assume that the rate for a bike would be somewhat similar. However, you're normally negatively effected if you borrow less than $10,000.

 

[Kanned]

I heard from my bank the other day (BankAtlantic) and they approved me for 8.5%. Wtf? The local credit union has a flat rate of 6.99%, but I decided to wait to hear from my bank seeing as I have to open an account to even apply.

I have my report right in front of me from Experian... on 10/25/09 my score was a 757 and I still haven't been late or done anything to negatively effect my credit. I have to be 800 if not damn close to it.

All the good offers are for a minimum of $7,500. Hell, it's almost worth selling the bike and financing a brand new one for 8k, then dropping 4k on the loan to get it back down to the original amount.

 

[reckedracing]

are you just applying for a personal loan?
or a motorcycle loan

that seems like a high rate for such a good credit score
but what do i know

 

[Kanned]

I'm applying for just a motorcycle loan. I guess 22 year olds and sportbikes isn't the best combination in the credit world.

 

[reckedracing]

might help if you post a life insurance or disability policy as collateral

 

[Kanned]

I didn't even know that was an option. Does that replace the motorcycle as collateral or will I be putting them both up? Does it classify as a different type of loan then?

I'll have to do more research I guess.

 

[reckedracing]

i don't know that they can do that for a small loan
i know for million + mortgages you can put up a life insurance policy

 

[totalburnout]

I'm applying for just a motorcycle loan. I guess 22 year olds and sportbikes isn't the best combination in the credit world.

I would venture its a combination of the above plus the fact that the some of money is less than $10,000. Under $10,000. the bank practically loses money by the time they service the loan and submit the paperwork.

My girlfriend just received 3.33% for 36 months and 3.44% for 48 months on a $10,000 used car loan through a non-dealer affiliated car lot.

 

[Briansol]

save, pay cash.

 

[BigJ]

if its for a bike, its almost easier to just use a credit card or a credit line.


You can clear that easy with a 680+ credit score and a decent income.


I know I have a huge line of credit and I will barely clear 60k with 9 mos working.

 

[totalburnout]

if its for a bike, its almost easier to just use a credit card or a credit line.


You can clear that easy with a 680+ credit score and a decent income.


I know I have a huge line of credit and I will barely clear 60k with 9 mos working.

The problem may not necessarily be opening the line of credit but rather paying the line of credit down, if his finances aren't liquid - which is why I'm assuming he doesn't simply pay off the $4,000.

If you have an intro card and you don't need to pay 14-20%APR on the balance kept on the card for a month or two and you can come up with the cash in that time - great. If not, you're better off sticking with the loan. The interest rate is high but the amount outstanding isn't that great. We're talking the difference between probably $100-$500 in interest over the course of the loan.

 

[Kanned]

Again, this is the only debt I have, but I don't make anywhere near what I used to anymore. Current funds don't allow me to just pay it all off. Anyhow, I've gotten the loan figured out. Thanks again for everyone's advice.

I do have a CC question, though...

So, I pay all of my bills with a CC and pay off the balance at the end of each month, but I don't have a card with any kind of reward plan on it. I don't exactly fly a lot or do much of anything consistently that would help me decide what kind of reward plan to get, but I'll surely use whatever kind of points are racked up.

What's the best deal out there? Cash back, flyers miles, grocery credit? I'll surely do my research and check out all the deals online, but suggestions from experience are always nice.

 

[Briansol]

It all depends what you want.

I personally rock a BMW card for my day to day. It earns points towards service or a new car. I have something like $7500 worth of points at this point just from using it for normal stuff. Plus, it has one of the better non-promo rates around should the need arise to buy something large.

mybmwcard.com

There are tons of others, some offering 5% cash back on purchases. It's all about what YOU want back from a card.

 

[Kanned]

Well, I wont be getting a BMW anytime soon, so that wont pay off for me lol.

I guess I'll just check out all the offers tonight and make a decision. I almost want to get one that offers flyer miles just as an excuse to take random trips.