(Closed) HELP–Bees who know about credit stuff!

posted 6 years ago in The Lounge
Post # 3
Member
410 posts
Helper bee
  • Wedding: September 2014

Do you know what your credit score currently is? Do you think you can pay off ALL your debt with your tax refund, or just a portion of it? Are you badly in debt (10k+) or just a few thousand?

Post # 5
Member
2831 posts
Sugar bee
  • Wedding: May 2014

If you opt to pay off your debt and then try to get approved for a car loan you might have to wait a few months. The credit report may not be “up to date” Usually takes about 2 to 3 months for the report to catch up with any pay offs or changes.

I would pay cash and work on paying off the debt. Could be risky paying off your debt and trying to get approved.

Post # 7
Member
1226 posts
Bumble bee
  • Wedding: June 2013

Accidentally double posted ^_^

Post # 8
Member
1226 posts
Bumble bee
  • Wedding: June 2013

Car need aside, the debt should be paid first. *You have no money to spend if you owe*

That’s my opinion though, trust your guts 😉

Post # 10
Member
998 posts
Busy bee
  • Wedding: November 1999

While paying off debt is always a good thing….that does not mean your credit score is going to magically raise. You said you have student loans, and that is not considered “bad debt” on your credit report. It is installment debt and actually helps your score if you can show that you make timely payments. However, with a credit score in the 500s you are not going to qualify for a car loan without a co-signer. Maybe you can use your refund to repair your car so it is more reliable?

Post # 11
Member
2419 posts
Buzzing bee
  • Wedding: August 2015

Could you put half to debt reduction and half towards buying a new car? That way you have some cash to put down.

Post # 13
Member
3885 posts
Honey bee
  • Wedding: September 2011

If you only have a credit score in the low 500’s, then even paying off the full debt won’t bring your score up enough to where you can get a decent car loan; you’d probably get approved for a loan, but at a ridiculous interest rate, probably well over 20%. 

I would shop for a car and pay for it outright rather than paying off debt, but budget a bit lower than you’d had in mind, and pick mechanically sound rather than stylish, as you don’t want to be making expensive repairs a few months from now.  If you can come in at 20% less than your tax refund, then put the rest to the debt, that’s a good balance.

FWIW if you are getting a large tax refund, then you are overpaying your taxes, and should adjust your withholdings. It’s nice to get a fat pile of money in April but in reality, the government has been holding your money for a year and not paying you interest.  If you have a little self-control and change your withholdings, you can take the difference in your check and pay it towards your debt, starting right away, without really changing your standard of living.

Post # 14
Member
14656 posts
Honey Beekeeper
  • Wedding: June 2011

If your credit is that bad that you worry about a loan and your car is really on its last leg, I would just spend all of the return on a car.  It’s the safer route.  You’d be screwed if you paid the loan, then your credit didnt update fast enough, your car died, and you had no way to buy another and get to work.

Post # 15
Member
3041 posts
Sugar bee
  • Wedding: May 2010

@busybride215:  If you pay off your credit card debit, it usually takes at least a month for it to affect your score at all. I think it takes a few months usually, but I’m not quite sure.

Do you have a lot of credit cards? Or like one with a high amount? Are they maxed out? Have you missed a payment?

Post # 16
Member
808 posts
Busy bee
  • Wedding: April 2011

I would keep looking around for car loans.  You should be able to find someone to do it and not with a 20% interest rate.  Pay off the debt and then loan shop for the best rate you can get.  You may get declined, but someone out there will approve you.

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