....how will it look on my credit report?

Question

I have good established credit. I have two paid autos, a motorcycle that I financed paid full,and a few credit cards always paid on time. I've been told I have a good credit score for my age(23). On the last vehicle i bought the salesman said it may get me a lower intrest rate if i got my father-in-law to co-sign, even though I have plenty of credit to purchase the vehicle on my own. Is this a step backwards? I tried getting a loan before in the past and they said i had "too much co-credit"even though i had never had any before.So will getting that co-signer actualy make my credit go down?Also I've heard that it is better to leave credit card accounts open when you're done with them rather than closing them, that creditors like to see available credit. Is this true?

Answer 1

A co-signed account by itself does not lower your credit score. But, your score does consider how much total debt you have. So, indirectly, your score could go down slightly with a new car loan, but it would only be short term, until you've established an on-time payment history. However good your credit is, a co-signer with a higher credit rating will result in a better interest rate.

Regarding your credit cards, it is true. One measure of your score is the balance-to-limit ratio. For example, if you owe $8,000 total on credit cards who's limits total $10,000, your usage ratio is 80% (8000/10000). So, if you have $10,000 in credit card limits and $1,000 balance, suddenly your usage ratio is very low (10% in that example). The lower the better. And lastly, your credit score measures how long you've had credit. If you don't use an open credit card, it will eventually fall off your credit (and therefore you score) and you won't receive credit for this positive tradeline. What you want is a credit card you've had the longest. Use is only periodically so that it constantly updates in your credit and does not fall off the report. For example, a credit card you have open from 1990 is better for your score than a credit card you have open from 2004. This is called credit depth.

Hope this helps.

Answer 2

Regarding the credit cards, the previous answer is correct. Don't cancel them or close them.

But I'm real confused about your situation and your question. did you have other loans that were co-signed? How many and are they still open?

Your discription of your finances implies that you should have super-good credit and I don't understand how having a co-signer will improve your interest.

But getting this car with a co-signer will not hurt your score. It could have an effect on your co-signer because it will increase his credit liabilities.

Just for fun, check out another source for a car loan and see what they say. You sound like you have your finances under control.