Arm Yourself with your Credit Scores and understand APR
Tue, 07/15/2008 - 05:08 — the Goat
The Goat here to give you the quick and dirty on military loans again. Time is precious so let's help each other save it with some to-the-point nuggets of truth.
You want a FICO credit score above 720 or so. That usually qualifies you for the best loan rates. Lower is worse, and below 600 or so you should spend all of your effort cleaning and repairing your credit. A 680 FICO loan costs $1000 more than a 720 FICO loan on a $25,000 auto loan. Most loans go up about 1% (about $1000 on a 25k loan) per 40 FICO. If you did the math, the time you spend repairing your credit might be worth over $50 an hour. Think about it, but not too long. Better you take action and take control.
Beware the rate. Just because the finance officer tells you that you qualify for their best rate, don't assume you are getting the best loan possible. There are two ways you pay for a loan: initial payments and recurring payments.
Initial payments--no matter what they are called (for example, downpayments, fees, origination, documentation fee, I-just-got-some-coffee-so-pay-us-$45 fee, etc.)--they are all the same thing. It's an inital amount that you pay out of pocket to have access to someone else's money so you can use it on yourself.
Recurring payments are those monthly installments. The "rate" usually describes JUST that recurring monthly payment--not the initial payment. Unless that "rate" is the APR. The APR (annual percentage rate) is the only rate you should ever care about. If they tell you your rate is great(!), 'it's only 6.5%!', make sure you clarify they are describing your APR. If not, ask them for the APR. It includes both initial and recurring payments. Some lenders charge a higher rate but lower inital costs, others the opposite. Then some of those chumps charge high rates and high initial costs. Thats all for now, hope this helps you on your quest for military loans!
Comments
FICO Question!
So what are your thoughts on the idea that checking your credit too often can actually hurt your credit? There's been so many changes with the credit score industry over the last few years, I don't know what is currently the norm! Also, how do you fix bad credit? Maybe an idea for another article! Thanks for the tips, though, I'm new to military-loans-info, but I like it so far! Keep it up.
Dude, you are such a lame
Dude, you are such a lame new visitor. Who do you think you are fooling? But I totally respect the effort. I want to see this concept gain traction, too.
Hey, anyone reading this, which is probably a wife or something-> we're legit. The only way we could do this is if we actually believed it was doing good to others. That's our weakness, we are too committed to the goodness of man to stray from it in our actions.
To answer your question:
Any active credit search by a vendor (car seller, mortgage seller, credit card seller) will hurt your credit. The credit algorithm is set so that a request for credit is a sign of borrowing weakness. Delay your credit check until you have commited to a major purchase; know your credit scores beforehand through MyFICO.com or similar.
To fix bad credit you must first order free credit reports. Then determine what's hurting you the worst. If you have reports of bills that were 180 days overdue that you neglected, you need to resolve those. You didn't hear this from me, but maybe you were deployed, fighting for our country when those bills showed up.