Does FICO Score matter more than Credit Problems?

Question

 As some of you may know I've been looking to trade-in my six month old Hyundai Accent. My pulled score (FICO Experian Auto 8) is now 649. It will go back up once new credit card balances are reported, right now it's 96%, it will be down to 8-9% by the middle of the month.  I still have one charge-off ($434), one open collection ($407) and a repo (that isn't true but whatever) from 2009. I also have some school loan lates from 2009; but nobody has mentioned that being a problem. One dealer in particular believed that the repo was serious despite it being almost seven years ago and had me write a note to the underwriter explaining what happen. I didn't even have to do this when I bought the Hyundai, I find this bizarre and possibly racial motivated.   I based that on some recent articles and also on Honda's recent fine of $25 Million for predatory lending practices on women and minorities.  Whenever I am face to face with a dealer negotiations start at MSRP. One dealer in-fact begged me to come to his store and he would sell to me way under invoice. When I got there, he claimed to have a problem with his system and could only pull TU which is my second highest score at 589. He demaned I pay MSRP for the car and to put $3,000 down as he couldn't push it through Ford he would have to use CPS or something.  This is on the back of when I bought the Hyundai I was initally told I would be approved by Hyundai but then was told I was approved only by Gateway One, when it turns out Hyundai would have accepted the deal if I could verify some information as I've had problems with my TU (listed as deceased).  I was hoping to take advantage of Hyundai's 90 days no payment (yes I know you still pay interest...) which would have allowed me to start my emergency fund for one thing.  I am almost out of this hole, my repo drops off in July 2016 and I will try to get it to come off sooner sometime after the first of the year. I could also offer First Premier PFD but I heard that it won't be accepted. Midland says it won't PFD when it has for some people.  So basically I am at where I am at. My score will continue to improve as I keep utilization down and keep paying on-time.   Will having a 670 Fico (660 Fico Auto 8) matter more in credit decisions than old negative information? Experian will get there first, I don't know whats holding back TU and EQ, there's less information on there, especially EQ but lower scores.     

Answer 1

hanales wrote:
What interest rate are you paying now? Have you just made the regular payments? If so, after 6 motnhs you're probably underwater on the loan. Auto loans are front loaded on interest, so you're not paying much to principal, especially at higher interest rates. In the meantime there is high depreciation in the first few months. That plus a repo doesn't make you very attractive to lenders.  Additionally, there are tiers for lending. I was just approved For a 26K loan sign and drive. At 29K Ford Motor Credit got nervous and wanted me to start putting money down. So I just stuck with 26K because I didn't want to (1.9 on 60 months). Also the car payment is documented less than 10% of my take home. I've never had a car loan where they didn't ask for some kind of proof of income by the way, the fact that Hyundai didn't is not the norm in the industry. Additionally, Ford Motor Credit pulled EX only for me so those are the scores you need to look at. Since the repo have you had a fully paid off auto loan? Not paid off from a trade-in. That matters more than the repo, because banks are only concerned with getting their money + the interest they loaned you at, or a significant portion.  Do you have a down payment? If they try to roll ANY of your Hyundai into a new loan your Loan To Value ratio will be shot, and don't forget on a more expensive car taxes are higher, and that is not part of your value either, just loan. Once you get to 100% and over LTV, they look for more solid credit profiles.  Point being, it's pretty complex, repos really mess that up (I know from experience). Just wait until it's gone, it will change the game,   Current interest rate is 18.65%  I've made all the payments on-time, of course I am under water. but.... Because my plates/fees and sales tax were not rolled into the loan like it typically is, I owe less than most people do in a similar situation. If I get fair market value for the car, it owe just over $3,000 of negative balance.  Nobody asked for income verification accept on the credit app I did online; I didn't submit pay stubs or anything else.  I know there are tiers to lending, reportedly I was Tier 4 asking for $30,000+. Whenever I asked what sort of downpayment they wanted, one dealer said about $6,000; DING, DING, DING, DING! Further investigation the same dealer said about $26,000 OTD.  So now we're in his life or death struggle -
 I want highest trade value and the lowest price. Most dealers just won't walk the plank for that; maybe if I catch a few at the end of the month as they aren't meeting sales targets, it's possible they'll take that lost but most of the time....  I got a letter from Ford Credit late last week, they denied me but didn't say why. This was interesting, so I called Ford Credit today and they are going to send me a letter stating why. The lady on the phone said usually these types of denials are conditional, IE the deal needs to be constructed a certain way, down or less money/less car, etc. This further cements that Ford feels most comfortable at $26,000.
 Any more than that I have to start putting down money. I am trying to avoid that for various reasons. I know Ford pulls EX which happens to me my highest score, it peaked at 657 (Auto 8 654) at the start of his mess which is a bit complicated. Above I mentioned I wasn't charged taxes or license fees up front. I paid those later, in fact I spent the last month paying those ($1878) including a smog test.  So while most of you pay over time. I paid mine up front....  The byproduct of that was constantly using my credit cards, they are all maxed out now. I will spend the rest of August paying those down to 8-9% not a big deal.  My current LTV is 89%.... I have checked LTV at various times, its under 100%. My payment is about 22% of income and I can easily afford it even with the elevated interest rate.  I don't mind rolling the negative I have other things I wanna do with my cash. I've done the math, I can get what I want and still have roughly the same payment.  WIth all the incentives I can get, even the optional ones, it's knocking another $2,500 off the price and that's if I don't take Ford financing. if I do, that's an additional $750 for $3250  When my credit cards update and depending on what that Ford Credit letter says will determine what and when I try this again. I can really use the 90 day payment delay they are offering right now. 
 My EX Score should hit 660-670 with ease with the balances below 9%   Waiting until it's gone (Repo) won't make much difference, no changes for the 2016 except Sync 3 and Google Auto. The updates come for the '15 model year (suspension tweaks, electric power steering tweaks and minor sheet metal changes with new tail lights). I also won't spend much more than what's being bandied about now.