How much will this hurt my credit?

Question

My husband and I are in the process of purchasing a house. We have been pre-approved for a FHA loan. We have 4 bids in on houses, and one short sale contingency being reviewed by the bank.

On Thursday, I was involved in a car accident. My car is totaled. Insurance will pay for the current value of my car, which will leave me anywhere between 1,000-2,000 upside down. I have been told that this will roll over into whatever car loan I get next. I am intent on keeping my payment the same (if not lower) than it was before, to keep my debt-to-income ratio the same.

When I get a new car loan, it is going to pay off (and close) my current car loan account, plus I'll have to get my credit run to open a new loan account. My credit is good right now (Fico 2 is 711), and I don't want to do anything that will screw us out of getting a house. How much will this hurt my credit?

Thanks in advance for any help you can offer. If there is a better category for me to post this in, please advise!

Sgt Big Red · Accepted Answer

It should not affect your score all that much and if you do shop for a car, do it all within 15 days as all inquiries made within a short period of time for an auto loan or mortgage are considered as a single inquiry (hard hit).

When the damaged car is paid off, your debt utilization will drop first before the purchase of another car will show on your report, so it will simply balance out one another.

As far as the mortgage and FHA, as long as your monthly payments do no dramatically change, you should be alright.

You can read the source I have listed to prove my point.

dropkick232000 · Answer

This is hard to say, By running a credit check, does not all ways lower your score. It can lower the score if you do not get aproved for some reaosn. But with a score like 711 I dont see that being a problem., Now by haveing your car paid off, Can raise your score, because it show that you can pay your bills off on time, the reason it is paid off or how it gets paid off is not report just that it is paid off. But buying the new car now this could lower your score because now you have a new thing on your report that is not that old. The new a bill on your report is not that good. it takes time to show that you are paying on it. But I would not say that it would lower your score by that muchs. and Like some one else stated it will take sometime to post you your credit report if you do buy a new car. credit reports are update once a months.

Anonymous · Answer

Your total debt will increase 1k-2k, and that shouldn't affect your credit much (if at all).    It also takes awhile for stuff to show up on your credit.

T · Answer

I agree with twea.  However, make sure the dealership does not run your loan through several different banks.  That happened to my mom and her credit report reflected that she was at high risk for applying for so many loans at one time!

twea · Answer

it shouldn't hurt your score at all.. you will be "paying" off the old loan with the new one.
you can check with a credit reporting agency though if you are really worried

Sarah · Answer

alot

How much will this hurt my credit?

5 Answers