Need to raise FICO by 40 points for a car loan

[Kory]

Hi. I intend to look for a new car next month. From what I the dealership told me, I’ll need to raise my FICO by 40 points or so if I want to get a car loan at a decent rate.

What would be the best approach to this?

Tnx

[Michael C]

How high is your util?

There is no quick way to raise your FICO except lowering your utilization ratio. This is the ONLY approach that can work in short time (even one month), assuming that your current util is above 30%.

Any CC util above 30% adversely affect your FICO, up to 60 points (YMMV), depending on your credit profile. Once you bring down your util below 30% (preferably 10%), your FICO will go up immediately!

To do that, you will need to pay off your CC balance before the statement date, i.e. before the CC Company sends the statement to you. That way the balance on the statement will be zero or near zero. This balance is also what the CC company reports to the CRAs, so it will report zero balance, which will lower your util and raise your FICO.

Another good side effect of this approach is that it also lowers your total debt-to-income ratio. While DTI has no effect on FICO, car dealers like to see low DTI because it means that they can offer you better terms.

While zero CC balance is not good for your credit on the long run, it’s an excellent practice before asking for new lines of credit. Any credit.

There are many threads in this site about this approach. Here are a few:

Pay credit card before statement date to improve your…
How much will my FICO score go up after i…
When is the best time of month to pay off…

Good luck

[Author]

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