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Will Trading My Car Tank My Scores ?


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I'm considering trading my car in for a new one. However, being that I also want to do a mortgage, will this drop my credit score ?

Now as far as cost, the dealer says they can get the new one financed for the EXACT same payment as my current one or lower. So, I was thinking my debt to income ratio would not change BUT, will the new loan appearing on my credit file drop my score ?

I figured it may change my history or something.

By the way, the dealership DEFINITELY didn't pull my credit report yet at my request.

They know I'm concerned about inquiries. They are trustworthy. I have bought like my last 6 cars from them over the years.

Please tell me your opinions on should i do this or not.


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Neither. We just have a problem with Cleveland.


It's going to take about 30-60 days for the new tradeline to appear on your credit report. It also takes about that long to finalize a mortgage.

While new tradelines tend to lower your score (balance to credit limit and inquiries), the old car loan will show paid, a definate bonus, and something that will increase your score.

Since the amount of the car loan is the same, it's not so much that it will effect your DTI so much as they may see the risk of a "new" loan is greater than that of one that's almost paid off.

I'd work on the mortgage first. Cars are disposable, and should be addressed as such.

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Well, as far as my revolving credit card utilization, i'm just waiting for it to update. i have 2 credit cards-1 of which I paid in full so the balance is ZERO. the other one-I paid all of it but $75 off. But the limit on that one is $800.

I'm authorized user on 2 other cards. Those 2 have a combined limit of $5,000 , but they have a combined balance of about $160.

So, my utilization should be showing extra low as soon as those first 2 update on the reports to show the payments. The authorized user ones are already showing correctly. No chance of any of them going up. I intentionally paid them off in preparation for mortgage shopping.

So my utilization is what now ? about 8% ? I'm guessing. Does that help too?

The car still a bad idea ? If so, I don't HAVE to have the new car but I sure do WANT it. But not if it'll screw up a mortgage.

More comments please.

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I am going to back Doc on this one. The DW and I are looking at the new Chrysler 300 w/Hemi. Since we are doing a refi on our home, we had thought to pay off our 2002 and use it's value to place the down on the new one. Even with our saving $800+ a month after refi, then add a new $300 a month for Auto, we do realize a net savings of $500 + a month, but, the fact of "new" action on our CR's may cause a loss to our scores that may take too long to recover to affect our main goal. Our goal with the proceeds of this loan is to do the upgrades our home needs, pay off Auto, pay off 3 CC's (High Interest), pay some misc debt, and place a cushion in our savings. Then, once the CC's are Zero and have a couple of months to aid the scores, we will apply for the lower rate CC's as our scores will be at least in the 730-750 range. But, when we sat down and really looked at it, we decided to just do as planned except we are now going to wait for the refi to show, let the current Auto and CC's show a Zero for a few months, then we will go ahead and buy the new Auto and obtain at least one new low rate CC. We are not going anywhere until the end of March, so we have plenty of time. The current 3 will then only be used once a month until such time as the new one has overcome it's "new" status. Then, we will close two of the current ones and keep the oldest one for a while longer, then close it out. Also, unless we win the Lottery, we will never be able to enjoy a Reverse Mortgage, so the best way to do it is to either refi or obtain a HELOC, or both, if possible. It is now our game to play and win.

According to our lender, he claims a Mortgage pull costs about 5 points. Then, since it usually takes at least 60 days for a new TL to show, we can assume our scores will be somewhat lower for a couple of months. Also, I found from the Dealers we have visited in shopping for the Auto, that to qualify for the lowest rates, you must come in at the least, a 730. To include, we will refi our home again in one year as our scores should be up to where we can get the lowest rates available. Remember, we are "Senior Citizens" so it is slim we will ever sell and move again, plus, why should we save anything for our children, all they will do is spend it. Therefore, as long as we can keep the payments where they are or lower, then there is no reason why we should not enjoy the time we have left. When my checkout comes, all that has to be done is call Arlington National in DC, the VA, and then say Goodbye. It's all free for me. The DW is handled as she will be placed with me. All that will be left is for the children to fight over who gets what. In short, their problem, not ours.

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