[A30]A Fair Credit Score

I hear this all the time. It's almost as if husbands are competing against their wives to see who has the better FICO scores. I must admit, I felt the same way when my wife's FICO credit scores were higher than mine.

About two years ago I was shopping for a new car. After I decided on the make and model, I submitted a credit application to the lender.

I Thought I Was Prepared...

I had checked all three of my FICO credit scores about three months prior to car shopping. At the time, all three were over 700. I also knew the auto lender's tier schedule gave the best interest rate to people with scores over 700. Needless to say, I was confident I would be approved for the lowest interest rate and best terms.

My assumptions were wrong.

I was approved...but, to my surprise, not at the best interest rate they offered.

They approved me in their third tier. Which means I was not offered the best...or the next best...but the third best interest rate. (Yuck!)

This was painful for me. I'm always in the top tier. What gives?

As it turns out, my scores were lower than I thought. The balances on my credit cards that month were higher than normal (I should have checked my scores a few days or a few weeks before I filled out the application...not three months before). In addition, the lender recently changed their tier schedule. To get their best interest rate I now needed a 740+ score. (Yikes!) My scores were around 680 at the time.

Guess I shouldn't have assumed.

I did catch one lucky break, though. Fortunately, I had financed two cars with the same lender in the past, and each had a perfect payment history. So, as a courtesy, the car dealer convinced the lender to bump me into the second tier. But it was still only second best. The difference in the interest rate between the two tiers was less than 2%...but I just couldn't bear to be "second best."

So I said, "No."

Sometimes You Need to Walk Away from a Deal

I really wanted this car. It was a convertible. I already envisioned myself in it, flying down the road, my gray locks flowing in the wind. Saying, "No," really hurt. However, one of the most important things I learned when we were recovering from bankruptcy was the ability to not compromise and the willingness to say, "No"...even when it hurts.

It's better to walk away than get saddled with a bad deal that will last years. Our attitude has always been that if the deal doesn't make sense�"there will be a better one waiting for us down the road.

So I went to plan B.

How a Husband and Wife can Work Together to Get a Lower Car Payment

I talked with Michele, my wife of 14 years, and asked when she last checked her credit scores. She hadn't checked them for several months.

So we went quickly purchased her three FICO credit scores from myFICO.com/12.

All three of her scores were MUCH HIGHER than mine.

How embarrassing is that? Now ladies, don't take that the wrong way. It's fine that her credit scores were higher than mine. But, I'm the credit scoring expert!

So, instead of sulking over it (O.K., I sulked a little), I asked myself a question, "How can we use this to our advantage?"

I am Woman, Hear Me Roar...

We took action. Michele was elected to become the borrower for my new car. We quickly filled out a credit application in her name and I faxed it to the lender. As expected, they approved it right away...at the lowest interest rate and best terms they offered.

Imagine that. My new car, but financed in my wife's name. I can see it now. I'm getting a speeding ticket and have to explain to the police officer it's my wife's car...embarrassing.

At first, it was a little tough to let my wife finance MY car, but as I say at the Credit After Bankruptcy seminar, I had to, "Build a bridge and get over it."

You can't let pride get in the way of your goals. You have to take every advantage you get if you want to accomplish what you want. This is a strategy we've used for years. We use whoever has the highest FICO credit score(s) at the time. We saved several hundred dollars a month by putting the car in Michele's name. This works for us because we've both rebuilt our credit since our bankruptcy.

When NOT to Use this Strategy

If you've just been discharged, or are still trying to build your credit, this may not be the best strategy for you to use.

Why not?

Because, for those of us who've filed bankruptcy, we need as much good credit on our reports as we can get. That's how we rebuild our credit. It's fine that we got the loan in Michele's name, but the problem is that this loan never showed up on MY credit reports. So, I never got any benefit for paying it on time.

Fortunately, I had already built up my credit, so it was no big deal that the loan wasn't showing on my credit reports. However, your situation may be different. If your scores are really low, and you need to build credit, you're probably better off waiting until you can apply for the loan in your name.

When My Credit Scores Went Up�"I Put the Loan in My Name

So, now that a few years have passed, I decided to convert the auto loan into a lease and keep the car for another three years. This time I had current information before I filled out the application. And my scores were back to normal.

In fact, my scores were higher than Michele's scores (this makes me a happy credit scoring expert). So the car is back in my name�"I guess now I can start speeding again!