Bad Credit

[Sled]

My Sister has bad credit, she got into some trouble with credit cards after university and has paid them off (with my help of course). But the banks won't help her.

She is trying to get a car loan and I'm not in a position to co-sign for her right now. She's looked around and one place wanted to charge her 20% interest which I thought was insane.

Figured I'd try the resource with the most and see if anybody else has had this problem and what they did to get a loan with a decent interest rate.

[GrrlGoalie33]

Once you have a bad credit rating, and no current credit to rebuild that rating, you are kind of screwed. You cosigning with her won't help her out much either.

Unfortunately, it is something that she has to do on her own, and if that means paying 20% interest on a car loan, thats what she has to do.

If in a couple of years she has been paying things faithfully, she can look to a bank to help her out. Sorry I don't have better news for you, but this is what my brother went through.

The bank told him at the time that getting a cosignor wouldn't help him out at all, because the loan shows up in the name of the co-signor first and then the person who is "actually" taking out the loan. I know this is totally backwards, but it is the way things work.

[Rhettzky]

My credit still sucks from mistakes I made going to college. The only advice I can give from my experience is to get her to go into a bank and get them to look at her credit rating and make sure all of the hits are completely off of it. Then maybe get a pre-paid credit card to start building credit again.

As for a car her best bet is to save up a very generous size deposit to put down on something and then search around for a dealership that can make something happen. For instance, depending on how bad her credit is, if she were to put down $6,000 on a $12,000 car then I think she'd have an easier time finding a dealership that could make something happen.

[Agamemnon]

A lot of it has to do with debt load vs. assets/income. If she owes any money, anywhere, that counts against her. Does she have a student loan? Any type of debt at all?

Numerous credit checks can also hurt your credit rating by up to 10%. I was applying at a lot of insititutions for credit cards when I was younger and learned that all those applications labelled me a 'credit-seeker', which downgraded my likelihood of getting a card. Eventually I had to walk in to Scotia and 'force' them to give me a card.

Number of checks, debt vs. income, assets, and credit-payment history.

Get her to check her own credit and score, that should tell you what you need to know. If she doesn't know what to do with those, send her to her bank with that stuff and maybe they can put her on a 'plan to better credit' or something.

[Lanny_MacDonald]

Have her bite the bullet, get the car, make her payments religiously, and then try to refinance after 6 months. Normally a bank will cut you some slack after 6 months of payments and will re-do the loan.

[ken0042]

Yep, when my credit sucked I had to pay 18% on a car loan. Back then I had a choice of 2 car dealers. Now at least she should be able to get the car she wants.

There's a price to pay for having bad credit. Sometimes you have to pay for your mistakes.

[ken0042]

And sometimes you get free Flames PPV's because of Bell Expressvu's mistakes.

[nfotiu]

Originally Posted by Agamemnon

Numerous credit checks can also hurt your credit rating by up to 10%. I was applying at a lot of insititutions for credit cards when I was younger and learned that all those applications labelled me a 'credit-seeker', which downgraded my likelihood of getting a card. Eventually I had to walk in to Scotia and 'force' them to give me a card.

.

That is such a blatantly unfair rule. I don't think it should be legal. People should be allowed to shop around for the best rates, and shop around for better re-financing options without penalty. I guess the creditors don't want you to be shopping around for a better deal.

[@theCBE]

how much of an affect does paying bills late have on your credit?

edit .. to be more specific i mean like cell phone bills/cable bills

[Agamemnon]

Originally Posted by nfotiu

That is such a blatantly unfair rule. I don't think it should be legal. People should be allowed to shop around for the best rates, and shop around for better re-financing options without penalty. I guess the creditors don't want you to be shopping around for a better deal.

Well... I think when you're a 'credit seeker', they don't want you getting their credit card, 5 other credit cards at the same time, and then running them all up and being unable to pay them off in a timely manner... if ever.

But yeah... the real unfair part is no one tells you this until after you've screwed up. It should be taught in school...

[Agamemnon]

Originally Posted by fotze

I can't imagine any bank I have ever dealt with doing that. Have you under a severe rapage contract and just let you out after 6 months. If so kudos to that bank.

Yeah, you can do this, you just don't go to the same bank. Get the car for the 20% deal, pay off your payments on time, pay down/keep down existing debts, don't get any credit checks/hits.

After 6-12 months you've 'improved' your credit. Go to a different institution and ask for a loan to cover your existing loan (re-finance the car), they'll give you a better rate than your existing bank because your credit rating is now better. Chances are, to keep your business your existing bank would probably accomodate a lower rate in re-financing, otherwise they lose your business completely.

[Agamemnon]

Originally Posted by @theCBE

how much of an affect does paying bills late have on your credit?

edit .. to be more specific i mean like cell phone bills/cable bills

It doesn't affect your credit at all until the company forwards your debt to a collection agency (I believe).

Typically those 'basic bill' providers will let you ride for 3-4 months (or more) before 'getting serious' with you. I don't think they'll report you to the credit bureau until they've basically cut off service and you've refused to pay your 3-4 month (or whatever) outstanding balance.

They'll probably tell you whats going to happen before it does, in an effort to, you know, get you to pay what you owe them, as opposed to selling your debt to someone else for 30 cents on the dollar.

[V]

Tell your sister to buy a car for less than 5 thousand dollars. I just don't understand you folks buying all your pretty cars, especially those of you with bad credit or debt up to your eyeballs. I've never spent more than 4k on a car.

[Sample00]

Originally Posted by Agamemnon

Well... I think when you're a 'credit seeker', they don't want you getting their credit card, 5 other credit cards at the same time, and then running them all up and being unable to pay them off in a timely manner... if ever.

But yeah... the real unfair part is no one tells you this until after you've screwed up. It should be taught in school...

this is the reason why people should use loan and mortgage brokers to do their deals for them. With one application and one credit bureau hit, the brokers can shop yoru application to various financial institutions and negotiate the best deal for you.

in the case of this young lady, if she wants the car bad enough, she is gonna have to bite the bullet.

[Agamemnon]

Originally Posted by Sample00

in the case of this young lady, if she wants the car bad enough, she is gonna have to bite the bullet.

True, but potentially only temporarily. She can get, say, 4 year financing, and re-finance after the 1st year with (ideally) a better credit rating, allowing for a better financing rate. She could also re-finance at that point for 3 years, so the term would be the same as her original agreement, but the interest rate she'll pay will be reduced.

But yes, she'll have to bite the bullet and pay high interest for now.

[Agamemnon]

Originally Posted by Dominicwasalreadytaken

Tell your sister to buy a car for less than 5 thousand dollars. I just don't understand you folks buying all your pretty cars, especially those of you with bad credit or debt up to your eyeballs. I've never spent more than 4k on a car.

Sometimes people aren't part-time mechanics, and find value in a slightly more expensive car (and newer), as it may save them money/time/hassle when the 1992 Golf they bought for $2500 craps out on them.

More money doesn't always = more reliable... but less money doesn't always = smarter way to go.

[Sled]

Thanks for the info everyone, she had antother quote for 14% which although is the greatest is certainly better then 20%

[Hemi-Cuda]

Originally Posted by Agamemnon

Sometimes people aren't part-time mechanics, and find value in a slightly more expensive car (and newer), as it may save them money/time/hassle when the 1992 Golf they bought for $2500 craps out on them.

More money doesn't always = more reliable... but less money doesn't always = smarter way to go.

agreed. the car i had before my Mazda 3 was an absolute piece of crap. soon as i fixed something, another thing broke. had the same issue with the used car before it. so when it was time to change my BC license to an Alberta one (finished school), i had a choice of either spending over $2500 on my existing car so it would pass the out of province inspection, or using that money towards a downpayment for a new car. and seeing as how i've had my 3 for over a year now and not a single issue has caused me to take it to the dealership i think i made the right choice

but back on topic, i really don't have that much sympathy for those who ruin their credit with stupid decisions. i saw it happen to my brother when he was a teenager and at 28 he is still dealing with the consequences. when i was younger and just starting out on my own i had a simple plan, don't buy anything i didn't have the money in my bank account to cover. and whenver i do use my credit cards for something i always make sure that i'll have the cash in my account to pay them off within 20 days to avoid any interest accumulating

but as previously mentioned i do think basic finances should be taught in high school. kids need to learn that a credit card != free money

[V]

Originally Posted by Agamemnon

Sometimes people aren't part-time mechanics, and find value in a slightly more expensive car (and newer), as it may save them money/time/hassle when the 1992 Golf they bought for $2500 craps out on them.

More money doesn't always = more reliable... but less money doesn't always = smarter way to go.

I don't buy that at all.

I've had less than $1,000 of work done on my 87 Buick Century and I've owned that car for just under 5 years (bought it for $2200). If it ever craps out on me I'll just buy another one. It'll take a lot of cars before my spending comes anywhere near $12,000.

I owned a Neon for 5 years. I bought it for $3500 and paid approximately $500 per year in maintenance on it. Eventually it was so beat up to **** that I sold it to a wrecker for $200 and bought a mini-van for $4,000. That was just over a year ago, and I've paid nothing in maintenance.

So, over the last 5 years I've spent no more than $13k and I've owned 2 cars. 100 bucks says there aren't a whole lot of $12k cars that will cost you less than $1k in maintenance over 5 years. Not to mention the interest you're paying on your car loan. And the way cars are built these days you probably have to buy another car after 5 years to replace that $12k car you bought to save money.

Do your research, get the car inspected by someone you trust, and you will very rarely suffer for buying a cheap car. Unless you consider it suffering by looking as poor as you really are.

[GrrlGoalie33]

Originally Posted by fotze

WHat I have never understood is why can ANY business report ANYTHING to the credit bureaus and they accept it 100%. The individual does not have any recourse in the matter. I would not mind so much if this was not an essential service but this sounds like someone should file some sort of class action lawsuit or something.

Companies can pretty much hold you hostage with threats to your credit rating and some of them do it, the credit companies are complicit in this as well.

But if you actually did overspend then you deserve it of course.

You do have recourse with both Transunion and Equifax.
http://www.transunion.com/content/pa...TransUnionHome

http://www.equifax.com/EFX_Canada/co..._e.html#ques10

It's not an ideal situation, but at least you do have some options.