Refinancing at a higher rate to build credit?

[Logan]

Unfortunately, it is not as easy as that and msm859's comment that he has to make an analytic business decision is spot on. I'm not a huge fan of our credit-system either but in this case, building credit might actually get him out of debt on future loans faster. The only alternative to get out of this system is to avoid any form of credit - but as soon as you take part in the borrowing-system, you either adapt to the rules or pay a penalty for not doing so.

I'm just over 4 years out of BK and as of August I had a 716 mid FICO and have never paid a dime of interest to a credit card company and I bought a Subuaru Outback and was able to get a loan through Subaru (chase) at their special pricing at the time.
Back to my original post--it's a waste of money to pay interest to credit cards and personal loans or refinancing to a higher rate to get better credit. If I did it anyone can do it.
Logan

[IBroke]

I'm just over 4 years out of BK and as of August I had a 716 mid FICO and have never paid a dime of interest to a credit card company and I bought a Subuaru Outback and was able to get a loan through Subaru (chase) at their special pricing at the time.

Paying CC-interest is something I wouldn't consider necessary, either. What would be interesting to know is if you had a car-loan reporting after your BK-discharge - before you bought the Subaru. Did you discharge an auto-loan? Did you have any previous repos or missed auto-loan payments on your report? Don't get me wrong, I'm not asking you to answer these questions - I just want to point out how many factors came into play when you got that special car-loan.

Back to my original post--it's a waste of money to pay interest to credit cards and personal loans or refinancing to a higher rate to get better credit. If I did it anyone can do it.

Again, everybody's circumstances are different. Maybe you already had several auto-loans on file and therefore, didn't need an additional auto-loan to get that special deal. Now, do we know if that applies to the OP as well? Making the claim that circumstances that applied to you apply to anyone might be a bit too optimistic. What score you can reach also depends on what you did right after discharge and how your credit-picture was when you filed. According to the score-simulator on myfico, I'm going to exceed 720 already in September - only 2 years after filing. And I've been very active in rebuilding credit since the day I got my discharge.

[Logan]

Paying CC-interest is something I wouldn't consider necessary, either. What would be interesting to know is if you had a car-loan reporting after your BK-discharge - before you bought the Subaru. Did you discharge an auto-loan? Did you have any previous repos or missed auto-loan payments on your report? Don't get me wrong, I'm not asking you to answer these questions - I just want to point out how many factors came into play when you got that special car-loan.



Again, everybody's circumstances are different. Maybe you already had several auto-loans on file and therefore, didn't need an additional auto-loan to get that special deal. Now, do we know if that applies to the OP as well? Making the claim that circumstances that applied to you apply to anyone might be a bit too optimistic. What score you can reach also depends on what you did right after discharge and how your credit-picture was when you filed. According to the score-simulator on myfico, I'm going to exceed 720 already in September - only 2 years after filing. And I've been very active in rebuilding credit since the day I got my discharge.

I had a car loan included in BK and my Subaru loan I had for about 8 months before I was able to pay it off--2 years out of BK my score was 690ish and it's slowly working its way up--fast enough for me since my FICO is not the limiting factor in obtaining credit--my BK is.
Logan

[crazytown]

You have all given me a lot to think about. My original idea was very similar to what msm859 posted. I figured the extra interest was "worth it" to build future credit.

I am less than one year from my discharge but trying to get things as fixed up as quickly as possible. I always had excellent credit until the events that led up to the bk happened so I am impatient and depressed about all of this. After discharge I immediately obtained a secured credit card and a small regular credit card. I only charge little things each month and try to carry a tiny balance just so it looks good on reporting. My FAKO score is 690, I don't know what my "real score" is at this point. I still have a mortgage reporting on my credit too. I thought an auto loan would round things out nicely. Plus, I hate paying on something that is not showing my payment history anywhere.

I only owe $8000 on my car. It is a 2010 and worth $20000. I always paid (and still pay) extra each month and I also put a bunch of $ down so there is equity in it. I usually trade my cars in every few years anyway because I figure I will always have a car payment so why not have a newer, good running car...right?
Anyway, I hope that better explains why I thought of doing the refinance. I think my next step is to run the actual numbers and see what the extra 4% would actually amount to...

[crazytown]

Ok guys I just shopped around a bit. I went on Capital One auto after reading some of the stories here and was instantly approved for 5.39% for my refi. I'm totally doing it. I'm going to keep the same months of repayment too. This way I will build a legit auto loan history and the interest rate is only less than one percent higher. I can't believe it!

[IBroke]

Ok guys I just shopped around a bit. I went on Capital One auto after reading some of the stories here and was instantly approved for 5.39% for my refi. I'm totally doing it. I'm going to keep the same months of repayment too. This way I will build a legit auto loan history and the interest rate is only less than one percent higher. I can't believe it!

Considering your current rate, what you owe and the value of the car, I'm totally convinced that this is the right move!

[justbroke]

I'm perfectly okay with that rate. So long as you kept the same term.

[crazytown]

Yes I kept the same term. It was approved (at least that's what it said on my computer screen). Now, they denied it because the car was not reaffirmed! I complained about that on another thread though. lol.