Re: Does buying a car help build credit?

In article <[EMAIL PROTECTED]>, Things Planet Earth
<[EMAIL PROTECTED]> wrote:

> Both my wife and I bought (and leased) (1 each) vehicles last year to
> rebuild our credit which was bankrupt in the past with a repossesion as
> well. We are paying 25% interest to rebuild our credit. We have made ALL the
> payments right on time now for 17 months in a row. Now when I went to trade
> in for another car to get a lower interest rate....guess what...? Every last
> bank and lending institution turned me down except of course the 25 %
> lenders.
> I talked to a few people and they said that *INSTALLMENT* credit such as
> buying a car is no good for your credit report. Did the car salesman lie to
> me about rebuilding credit (I know they are liars sometimes)? If it is true
> that is does nothing positive for my credit report then why don't we just
> let the cars get repossesed and go from there because these car payments are
> killing us! And of course we owe more than they are worth!
> 
> BTW, we already have a mortgage (assumed) and credit cards with balances
> under $100 each

Normally a car loan that is paid consistently on time is a big
help to your credit history.  It isn't going to overcome a bankruptcy,
but it will help you recover over time.

I suspect that you are not dealing with a conventional auto lender,
and rather, are dealing with a consumer finance company.  Most of
these consumer finance companies have such shoddy business practices
that they either don't report, or their credit reports are filtered
out by the major credit agencies.  At 25%, you might just a soon borrow
from the mafia, and that is how they are treated by most credit
agencies.

One thing you can do is pull your credit reports from each of the
three majors, and check to see that your payment history is indeed
being reported.  You should be able to get free reports given all of
your turn-downs.

A second thing to try is to join a local credit union, and establish
a relationship.  After you get transferred over, check with one of
their loan officers about getting a better car loan.

Third, do you have any home equity?  A 125% H/E loan at 10% would
sure beat the 25% you are paying on the cars, and if you have
some equity to work with, you should be able to get the loan despite
your credit record since it is secured with real estate.  At least
you should have a shot at making something like this work.

Finally, sell one or both of the cars and get something that you
can afford without having loans.  Your history suggests that having
loans in the past have not always worked out for the best in your
case.

-john-

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John A. Weeks III            952-432-2708         [EMAIL PROTECTED]
Newave Communications                       http://www.johnweeks.com
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