In three months, I will have three major accounts paid off equaling around $8,000. What type of
scores do lending services look for when making loans for vehicles? How much will paying these accounts off affect
my credit score?
-- Travis
Dear Travis,
Paying down debt, but not necessarily closing all accounts, will definitely help raise your credit score. But depending
on what your past credit problems were -- a repossession, debts sent to collection agencies, etc. -- that will only go
so far.
Because of the subprime mortgage problem, auto loan lenders have tightened their standards for making
loans at prime rates. To get some of the best deals, you'll need a credit score in the 700 range, if not higher. With a
credit score in the mid-600s, you'll almost certainly find a willing lender, but the interest rate could be 10 percent
or higher.
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