I was told that since I made a big purchase..ie..my car and also co-signing for my daughter, my credit scores will go down..is this true??
2007-02-13 08:34:39 · 13 answers · asked by ktopping23 2 in Business & Finance ➔ Credit
Actually making a large purchase can make your credit score go up! This depends on several factors: how much debt you currently have; past significant purchases (have you bought cars in the past and had no issues with the financing); length of time between major purchases; etc.
Co-signing on a something like a car is always hard to call -- it can vary state-to-state. My understanding is that there is some federal legislation in the works that would make co-signing having nothing to do with your existing credit score. Only an issue if the loan is defaulted on.
Hope this helps. --Andy
2007-02-13 08:41:22 · answer #1 · answered by Andy 5 · 3⤊ 0⤋
I am continually amazed by how many people on here answer questions with false information!!
Your credit score is made up of four parts: Average Account lengths, Payment history, inquiries, and utilization ratio (balance vs. limit on your credit cards.)
2 new car loans means that you have 2 new inquiries (might have dinged you 2-3 points each but they each probably only checked one credit bureau so its not that bad!) and also that you lowered the average account age because 2 accounts are new.
Overall, it isn't going to hurt you very badly, and in fact could very well help-- installment accounts (loans) are a big part of a healthy credit picture. If you dont ahve a bunch of other loans, 2 car loans can really help your portfolio of accounts. Make sure both you and your daughter maintain on time payments are you are fine.
As far as the bad information in other answers: Credit scores DO NOT take into account the overall $$ amount of debt NOR do they look at your income or debt vs income ratio. A bank who is considering lending you money may ask for your income and compare it to the debt on your report, but your CREDIT SCORE DOES NOT INCLUDE THIS INFORMATION. Just pull your reports and you'll see that there is NO WHERE On the report for income.
You'll be fine!!
2007-02-13 16:55:05 · answer #2 · answered by Anonymous · 0⤊ 0⤋
No making a large purchase can make your credit score go up. Both cars that I have bought have raised my credit score. And once they see your making your payments on time it keeps going up. Just make sure your daughter makes her payments on tim. If you have credit cards always pay more than the minimum payment it will help you in the long run! Good luck!
2007-02-13 16:46:03 · answer #3 · answered by Momof2 3 · 1⤊ 0⤋
Debt is bad and good at the same time. When you first buy a car and still owe a huge chunk of change on it, it will reflect negatively on your credit. Not terribly negatively, however, because financing a car is a pretty normal every day thing to see on a credit report. However, after you have the car for over a year it looks good on your credit. That is if you've made your payments on time. Finally, when you have a car totally paid off, it looks great on your credit. Hope that helps.
2007-02-13 16:38:52 · answer #4 · answered by ppc422 2 · 0⤊ 1⤋
It might take a small hit because you have more debt. Also, whenever you apply for credit you might lose a point or two because of the inquiry. None of the above should truly effect your score though...especially if you consider the fact you will be making timely payments on an account for the next few years.
2007-02-13 16:38:47 · answer #5 · answered by sbeezy 2 · 0⤊ 2⤋
Shop all you want, but know this. Not only must you pay that note every month but also pay it on time. Late payments affect your credit score. Purchases do not.
2007-02-13 16:38:42 · answer #6 · answered by Anonymous · 1⤊ 0⤋
Yes, assuming you took a loan out for your car. Credit scores are comprised of a number of factors such as earnings, reserves, credit history and outstanding debt. Since you took out a loan for your car you are committed financially to paying this loan which leaves you with less capacity to pay any future loans/ bills. Due to this your credit score is lowered until you reduce your outstanding debt.
2007-02-13 16:40:38 · answer #7 · answered by Anonymous · 0⤊ 2⤋
It won't go down because you bought a car. If it does go down it's because on your credit report it will look like you have two cars and two car notes. It goes back up as they are paid off.
2007-02-13 16:42:14 · answer #8 · answered by Anonymous · 0⤊ 1⤋
Yep. Lending institutions will see that as a high debt to income ratio. You need to pay something off before you apply for more credit unless you don't mind the high interest rate. Like pay off a credit card or a car.
2007-02-13 16:38:44 · answer #9 · answered by Brandon T 2 · 0⤊ 3⤋
no your credit score will only be affected if you miss payments or overdue.
2007-02-13 16:37:04 · answer #10 · answered by GoodWillHunt 3 · 1⤊ 0⤋