Working on my Refi-Loan

[IBroke]

Well, almost 7 months have past since I purchased my CPOed Lincoln and at 18% interest, I think it's time for a better rate.

This thread has the purpose of keeping you informed about my (hopefully successful) auto-loan refi-project.

Right now, I have two old car-repos (both more than 5 years ago). After the repo, I obtained a car-loan from a buy here/pay here lot that fortunately reported to 2 of the 3 bureaus. I paid off that loan over 36 months - never late. Unfortunately (the month after it was paid off), the car died and last August, I had to get a new (and current) car. My current loan-balance is at $21K. Since I wasn't prepared for that loan, my CCs were all maxed out when I applied - so I got stuck with an 18% interest-rate. I paid every installment on time (and a few bucks extra) and on February 1st, I started my credit-preparations to get the best refi-loan possible.

My current Equifax FICO-score is at 614 at a UTIL of 68%, spread over 5 of my 6 CCs. The 6th CC is a retail-account of a local auto-dealer with a $1,000 CL and already paid off. Altogether, the CCs have the following CLs:

$1,000
$700
$700
$300
$300
$300

Once I'm done, every CC is going to report a $0 balance - except one of the $700 CCs which is going to report a balance of $60. I'll keep that balance below 9% of its CL. All updated balances should be reported by the end of the month. I'll apply for the refi-loan the first week of March (after a couple of inquiries will drop out of the 12 month window).

I'll keep you updated on my score-progress (I'll pull an updated FICO-report for TU and EQ the day before I apply). My goal is to at least cut my current interest-rate in half (9% or better). When I apply, there will be 59 payments left on my loan but I want to refi the balance over 36 months instead.

[IBroke]

Update:

After the first two $300-CCs reported the $0-balance, I received a FICO Equifax score-alert today. Score went up from 614 to 626. Current total utilization at about 50%. As of today, three cards at $0-balance, three to go (two have to be paid off to $0, the third left with small balance).

[IBroke]

Update:

The first $700-account reported a $0-Balance EQ-score went up 626 to 643. Two to go (one has to be paid off to $0, the second left with a small balance).

[basketsbears]

Keep going! You are doing great!

[justbroke]

Isn't it amazing how much utilization affects the score?

[IBroke]

Isn't it amazing how much utilization affects the score?

Indeed. Hopefully, it will also help my auto-enhanced score. My goal is to reach 660 which should get me the 9% interest.

The TU-score should be higher by now as well and I'm going to get an update on that the first week of March. Right now, there is just no sense in spending money to monitor the progress on that one.

[IBroke]

Update:

The final $300 CC reported the $0 Balance. Only the update from the remaining $700 CC is missing. That card closed yesterday with a statement-balance of $57 which should be just perfect. They already reported to Experian but not to the other two. The update on the $300 CC only brought up my score from 643 to 649 which is a bit less than I thought. Hopefully, the final, bigger CC gets me the missing 11 points.

[justbroke]

This is a good experiment.

[IBroke]

This is a good experiment.

It certainly is. I just received a monitoring-alert on myfico.com from TransUnion. That report still shows the final two CCs with the high balances. Considering that, however, the current score of 649 isn't that bad at all. After BK, TU has always been my lower score.

[tobee43]

IBroke, which is the BEST site, in your opinion, to obtain one's current scores??? we see so many of these sites and apparently, which ever you are using sounds excellent. can you share than information, if you don't mind?

[IBroke]

IBroke, which is the BEST site, in your opinion, to obtain one's current scores??? we see so many of these sites and apparently, which ever you are using sounds excellent. can you share than information, if you don't mind?

Sure!

The source of my EX-score is USAA. They are only providing a FAKO-score but I'm using their service for about $12/month which allows to pull all three reports on a daily basis. So basically, I'm using them to check the CONTENT of my reports. If you are looking for your SCORES, you have to go to myfico.com.

I'm not purchasing credit-reports and scores from them on a regular basis - that would be much too expensive. However, I'm using their scorewatch service for Equifax which is $14.95/month which gives you regular updates and their TU-monitoring for 4.95/month which includes a FICO-score every 3 months. Once you are signed up with scorewatch, you can pull two additional credit-reports with score for free and receive a discount on further reports. You also get a discount on TU-accounts when you are signed up for their TU-monitoring.

So $30/month for credit-monitoring is everything but cheap but I've yet to find a better package that delivers more for less.

[IBroke]

Ok, I've completed my journey! after all CCs have updated, my current scores are:

EX (FAKO): 659
EQ (FICO): 663
TU (FICO): 672

I'm quite satisfied with that. today, I went to lendingtree and applied for the Refi-loan. Capital One approved me at 12.09% interest. Not quite as good as I wanted (they used Experian and stated that my credit-score was 643), but MUCH better than the 18.24% I'm currently paying. I was aiming for 9% but I found out that the difference in interest between 9% and 12% are only $30/month at the beginning, getting less every month. I chose a 57 months term because the interest-rate was the same as it would have been for 36 months. However, I'm still going to pay off the loan over 24 months. I just picked this option as a safety-net.

Right now, I don't want to celebrate too early because they needed a paystub as proof of income which I already faxed in. In addition, I find it hard to believe that Capital One approved me although my last auto-loan with them ended as a repo where they lost more than $10K. So I guess I will know for sure in a couple of days if I'm REALLY approved. It was an interesting project and shows what you can accomplish with the right utilization. take my TU-score, for example: the only thing that changed since November 30th of last year was my CC utilization. The score went up from 575 to 672. I wouldn't be surprised to reach 700 in September - once my BK-filing has its second birthday. Amazing...

EDIT: After closer examination (because the TU-score went up almost 100 - a bit too much for even for utilization), I found out that the only two collection-accounts on file were removed as well. They were still reporting in November and were scheduled to dropp off much later so I missed that. So the score-increase was the result of two deleted collections AND the utilization. My bad..

[ValleYum]

Congrats on the new rate!!! I like how you have the built-in safety net, too. Just in case because at least once all of us have one of those times.

I have enjoyed reading your experiment and seeing what changes in scores occurred with your utilization % decreases.

These hamsters are having a party for you!

[IBroke]

These hamsters are having a party for you!

Thanks!

But as I said, I'm not going to celebrate until it's a done deal. A 100% done deal..

[ValleYum]

You are welcome! How about we just consider these the "warm up" act?!?!

I will find something else to have a party for you when it is a 100% done deal!