Lenders care more about car repossessions than bankruptcy andforeclosures, as they indicate a history on your part that you may repeat (^)
with the new vehicle. It will usually be four to five years or longer beforemost will extend your car credit, except some of the true, sub-subprime
lenders. Don’t expect even them to offer you a loan if you’re less than ayear out from repossession. Pay cash for a cheap car (using the tips in
CHAPTER 10 - BUYING A USED CAR
PERCENTAGE OF CREDIT AVAILABLE
This is a funny one: Lenders don’t want you to have a bunch of credit cardsand lines of credit that have no loan balances on them and are completely
available for you to use. They worry that you’ll suddenly max them out dueto a job loss or something similar, and become unable to make your
payments. At the same time, they want you to have used some—but nottoo much—of any available credit. The rule of thumb is that they want the (^)
balances on your credit cards (and perhaps home equity loans) to be below40 percent of the maximum.
Perhaps the strangest thing I’ve seen is that if someone pays cash for mosteverything, their scores will actually be lower than those who have some
loans. In my opinion, the whole credit thing is a bit of a racket, designed toget people to borrow money—but not too much money—and make the
lenders lots of profit off of interest.
DEBT-TO-INCOME
Debt-to-income is moderately important if you have credit scores over 700,and very important if you’re below that. Lenders assume that those with
prime credit can be trusted not to get in over their heads on car payments;