car vs. credit score

[vin]

Hello to all! From N.Y. and I have a car 2004 honda civic on which i am paying 365/month and 300/month for insurance. Bought the car last year, currently 74,000 miles for $9,500.I want to be debt-free so should i sell the car and get an older one? If so, how would this effect my credit score. I just finished paying my student loan(glad to have that contact removed from my phone book!), and ready to take on my horrible credit score of 560(yea, i made that face too).
Thanks and the advice, suggestions and personal experience everyone gives is excellent.

[bjl584]

I'm not sure about the credit score part, but your car payment and your insurance payment both seems really high. Do you have a bad driving record? I pay less than $100 a month for my policy, and that is for two fully insured vehicles. What is the term on your auto loan? A standard 60 month loan on $9500 should be around $200 - $240 depending on the interst rate. I would shop around for insurance, and you will have to give more info on the auto loan.

[disneysteve]

In many places, credit score affects insurance rates. I suspect that is the case here.

As for the car, making regular, on-time payments on the loan should help your score. Why is it so low in the first place?

[Joebanker]

Hi VIN - Is the term of your loan 24-months? I would guess it is if your payment is that high on $9,500.

The first thing I would do is start shopping for cheaper insurance. The total premium on my house and two vehicles if calculated monthly is roughly $180. $3,600 per month seems really steep. Your driving record will have the greatest impact on your premium. Your credit score may cause you to pay a slightly higher premium because you can't take advantage of the "good payer" discounts that some insurance companys offer.

If you feel you can't afford to make your car and insurance payments then maybe you should sale your car and buy something a little cheaper. If you're over 30-days late on your car payment, it gets reported, and that 560 will drop even more. On the other hand, if you can make your payments on time, I would recommend keeping the loan you have through the maturity date. This will help you build a longer credit history, which will improve your score over time.

[maat55]

Without knowing your income and debts, generally, if you can be debtfree within two years, keeping the car, that would be ok. If you have a terrible driving record, you should sell the car and get a cheap one you can carry liability on.

Sit down and write up a tight budget. You can get a temporary part-time job and sell anything you don't need. Your insurance is way to high, so shop that around. Getting on a good budget will be your best first step, then you can deside if selling the car will speed things up for you.

[vin]

My credit score is low by bad decision. I had a cc and put college expenses on it, books and part of my tuition all in all maxing it out to $5,000(now at $6,000) and I've also co-signed for a "friend"($3000). My driving record is not a good one also. This is the main thing that effects my car expenses-and budget.
Thx for the advice so far. I'm looking for lower insurance and i am considered a "high risk" for most insurance companies and they are quoting me as such. $330/month is the lowest I've gotten so far, out of 4 companies. They also suggested defensive driving courses. I live in Queens,NY and use the car for work mainly. 35 minute ride vs. a 2hr public transportation one-way commute(a bus and 3 trains)from queens to brooklyn.

[bjl584]

I would defenitely look into a driving course and any other program that may drop your rates. Ask your insurance provider to recommend different programs that you may be eligible for to help lower your insurance costs.

[lehresman]

The best thing you can do is make lifestyle changes and stick with them for the long term. There is no quick fix to bringing up your credit score, as a large portion of it is based on your long-term history. So your poor choices will stick with you for probably about 7 years. However, now is the perfect time to start building a perfect credit record. Make your payments on time and pay down those loans.

Also, don't be so concerned about your credit score. If you can't afford your car payment, or if you just want to get out from under that debt, go ahead and sell it. I highly doubt it would negatively affect your score enough to be noticable. If anything, the benefit of using that money to pay off your other loans will increase your score to offset it.

In short, don't be so concerned about your credit score that it dictates your decisions. It's good to be on top of your score and be working toward a better one, but it's not a good reason to keep a car if that's the only reason.