21 replies to this topic

[lashgo]

Hi there, and thank you in advance to anyone who reads this and has any input.

My situation is this:

I make 36k/year
I have 50k in student loans
I have 15k in credit card debt
my credit score is 695-705 currently.

my fiance needs to buy a car and he has poor credit (550...working on settling old debt collections) I have been approved for a 20k auto loan with him as a co-applicant and am considering going forward with it.

my main concern is how much this would effect my debt-income ratio and my subsequent credit score. I don't want to compromise my chances of getting approved for my own auto loan in the future. We also are definitely thinking about a home loan in the near future. With us not knowing exactly how long it will take for his score to come up and be useful (both with his actions and score reporting), I just don't know if it's worth it to possibly risk my score at this point.

Does anyone have input on this issue? We want to have some kind of asset (a nicer, resalable vehicle) but should we just pay cash for a much "worse" vehicle?

Thank you again!

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[crtt]

Hi there, and thank you in advance to anyone who reads this and has any input.

My situation is this:

I make 36k/year
I have 50k in student loans
I have 15k in credit card debt
my credit score is 695-705 currently.

my fiance needs to buy a car and he has poor credit (550...working on settling old debt collections) I have been approved for a 20k auto loan with him as a co-applicant and am considering going forward with it.

my main concern is how much this would effect my debt-income ratio and my subsequent credit score. I don't want to compromise my chances of getting approved for my own auto loan in the future. We also are definitely thinking about a home loan in the near future. With us not knowing exactly how long it will take for his score to come up and be useful (both with his actions and score reporting), I just don't know if it's worth it to possibly risk my score at this point.

Does anyone have input on this issue? We want to have some kind of asset (a nicer, resalable vehicle) but should we just pay cash for a much "worse" vehicle?

Thank you again!

sorry but....
dont sign unless your willing to buy it yourself

[Duck Bills]

And this is a sticky beacuse............?

[kayvebear]

Why did this thread get sticky'd?

[lashgo]

I don't understand what "sticky" or "sticky'd" means?

[kayvebear]

Sorry, your thread got overshadowed by a MOD accidentally making it a sticky...

I am honestly surprised based on your fiancee's credit scores, and your current DTI that the two of you were able to get joint approved for an auto loan.

How much is his income?

I do think that this might affect your ability to get your own auto loan in the future, unless your income dramatically goes up. Just my two cents. In my mind you are already at the debt limit, so I don't see creditors wanting to give you more installment debt based on your income, especially when you have your fiancee's auto loan reporting.

YMMV (your miles may vary)

Welcome to CB

[hegemony]

NEVER co-sign unless you plan to make ALL the parents yourself.

[donkeyshark]

I still have a repo on my CRs from my ex-wife's car. It will haunt you if things ever go wrong. As far as it effecting your ability to qualify for another car in the future, YES, IT MOST CERTAINLY WILL. It will likely make it so that you don't qualify for a car. They will look at it as you buying a 2nd car.

[kayvebear]

NEVER co-sign unless you plan to make ALL the parents yourself.

he meant payments

[hegemony]

NEVER co-sign unless you plan to make ALL the parents yourself.

he meant payments

yes

damn auto correct!!!!!

[hdporter]

As has been made clear, co-sign for your fiance with the understanding that it has lasting impact if, for any reason, you go separate ways. Make sure vehicle is titled in both names.

FWIW, I had a fiancee do the same for me when I was in my early 20's. We did end up splitting after 10 months. Ultimately, I obtained my own financing and paid off the original loan.

So long as the two of you have sufficient income to comfortably meet your obligations, I don't see any problem with your co-signing for him.

The loan will not significantly impact your credit score, and the only barrier when you go to purchase a car yourself will be the debt issue (burdened with one car loan, for which you share responsibility, it may be necessary for your fiance to co-sign on the 2nd car as well).

Because of the possibility that your fiance may later need to co-sign for your car purchase, you want to be sure that you're comfortable that he won't load himself up with inappropriate debt, such that the bank might feel he doesn't have any additional debt capacity.

[hegemony]

best sticky ever...

[melikey]

I'd never suggest anyone co-signing a loan. It also appears as if OP doesn't need more debt.

[LizaW]

Well since this thread is a glorious sticky, we might as well make use of it.

How does the OP get $15k in credit on an income of $26k, and then get half of a $20k auto loan?

I'm not asking how they did it so much as how the underwriting works.

Wouldn't a request for a credit card or CLI result in a hard pull which results in the bank noticing the total CL is more than %20 of their income? (In fact, its almost %50.)

How do people get such high credit limits? (Or am I wrong that banks will turn you down if your total CL exceeds %20 (%40 when including a mortgage.)

I'm curious because my total CL is actually less than %10 of my income.

[Repairerer]

Well since this thread is a glorious sticky, we might as well make use of it.

How does the OP get $15k in credit on an income of $26k, and then get half of a $20k auto loan?

I'm not asking how they did it so much as how the underwriting works.

Wouldn't a request for a credit card or CLI result in a hard pull which results in the bank noticing the total CL is more than %20 of their income? (In fact, its almost %50.)

How do people get such high credit limits? (Or am I wrong that banks will turn you down if your total CL exceeds %20 (%40 when including a mortgage.)

I'm curious because my total CL is actually less than %10 of my income.

Confusing DTI with credit limits to annual income ratio?

My unsecured available credit is higher than my annual income. I also have a secured loan. But my DTI is fairly low.

[hegemony]

Confusing DTI with credit limits to annual income ratio?

My unsecured available credit is higher than my annual income. I also have a secured loan. But my DTI is fairly low.

+1,000

"available" is not debt.

my individual income is a lot lower than my available credit; my household DTI is under 10%.

[LizaW]

Wouldn't a request for a credit card or CLI result in a hard pull which results in the bank noticing the total CL is more than %20 of their income? (In fact, its almost %50.)

How do people get such high credit limits? (Or am I wrong that banks will turn you down if your total CL exceeds %20 (%40 when including a mortgage.)

I'm curious because my total CL is actually less than %10 of my income.

Confusing DTI with credit limits to annual income ratio?

My unsecured available credit is higher than my annual income. I also have a secured loan. But my DTI is fairly low.

I'm not talking about DTI at all. I'm asking about how underwriting works. I was under the impression that they cared about your total credit line as a ratio of your total income. I was under this impression because this is what my bank told me. I know they care about UTI, at least when generating scores, and probably in underwriting as well, but assume your UTI is very low, do they not look at total credit vs total income?

Do they only care about your total monthly payments as a ratio of your monthly income? (or annual)?

Eg: You may make $50,000 a year and have $100,000 in debt, but because your payments on this debt (plus rent and other expenses) are well below your income, you can afford to service even more debt and thus get another revolving line when you apply?

IF they only care about your ability to service the debt, then someone making $100,000 a year, and a perfect credit record, should be able to get $200,000 in credit. ($100k income, minimum revolving payments of %4 for each month or 0.48 over a year, means $100k/0.48=$208,333.) Of course this would be adjusted by taking out housing expenses, etc.

Edited by LizaW, 01 June 2012 - 01:06 PM.

[hegemony]

Wouldn't a request for a credit card or CLI result in a hard pull which results in the bank noticing the total CL is more than %20 of their income? (In fact, its almost %50.)

How do people get such high credit limits? (Or am I wrong that banks will turn you down if your total CL exceeds %20 (%40 when including a mortgage.)

I'm curious because my total CL is actually less than %10 of my income.

Confusing DTI with credit limits to annual income ratio?

My unsecured available credit is higher than my annual income. I also have a secured loan. But my DTI is fairly low.

I'm not talking about DTI at all. I'm asking about how underwriting works. I was under the impression that they cared about your total credit line as a ratio of your total income. I was under this impression because this is what my bank told me. I know they care about UTI, at least when generating scores, and probably in underwriting as well, but assume your UTI is very low, do they not look at total credit vs total income?

Do they only care about your total monthly payments as a ratio of your monthly income? (or annual)?

Eg: You may make $50,000 a year and have $100,000 in debt, but because your payments on this debt (plus rent and other expenses) are well below your income, you can afford to service even more debt and thus get another revolving line when you apply?

IF they only care about your ability to service the debt, then someone making $100,000 a year, and a perfect credit record, should be able to get $200,000 in credit. ($100k income, minimum revolving payments of %4 for each month or 0.48 over a year, means $100k/0.48=$208,333.) Of course this would be adjusted by taking out housing expenses, etc.

every creditor is different. my base pay is about your 100K example but I have >700K in credit limits reporting. + mortgages and auto. You seem to be thinking available credit limits is debt?

Edited by hegemony, 01 June 2012 - 06:15 PM.

[norhan2012]

My opinion is not to co-sign on any loan espacially of you are thinking about getting a home loan soon.
what may happened when you apply to home loan, is they going to ask you to pay off some debts.
the car loan may be one of them, it will depend on your credit score, your income and the amount of the loan.
I think you should use a mortgage calculater to have an idea of what you will expect when you apply for a home loan.

[RebuildCredit]

Don't cosign, just buy the car yourself. Or have him save money to buy his own car. You can get great deals on 3-7k dollar cars. I understand you are married but as one guy said. It will haunt you hard. My advice is just get some money saved then go and buy it outright.

[asapcc]

Just to echo what everyone else said, you need to think about the long-term effect this may have on your credit if you ever have a falling out with your fiance. Ultimately, you'll be responsible for the car loan if anything goes wrong. But even if you're confident with the long-term outlook of your relationship, signing on this car loan will definitely affect your ability to get another car for yourself later on. As a married couple, you should be able to use your future husbands income to help increase your debt to income ratio. But since he's had problems with debt in the past, I'm not sure how beneficial having him included will be...