Financing/credit score. - Polaris ATV Forum
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post #1 of 12 (permalink) Old 02-16-2017, 06:05 PM Thread Starter
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Financing/credit score.

You all may already know this but I hadn't thought about it at all. Anyone who might be financing part of an ATV might learn something.

Long story short I bought a new 570 last summer, I had cash for half and financed the rest through Polaris/Sheffield.

Fast forward this week I was borrowing some money for some home improvements. The banker noticed my credit score had dropped about 40 points since my score was last checked. The report showed right on it that my score dropped because the "loan" with Sheffield, was maxed out. She said any time you have a line of credit and the balance is close to being "maxed out" it really hurts your score. Even though the bike is valued at say $6,000.00 and I only owe $3,000, Sheffield opens the credit for the exact amount I financed. I basically have a $3K loan with Sheffield and owe $2400 on it. She said in the future I should always finance the entire amount, then use the cash as a payment toward the first loan payment. I never thought about that and just handed my dealer the cash for a down payment and "financed" the rest. I figured "borrowing" 6K would be worse then borrowing $3K.

She said it would be better to have a loan for $15K and only owe $8K then to have a loan for $3K and to owe $3K. I will have it paid off this year and she said by next year it will recycle and my score will go back up to where it was.
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post #2 of 12 (permalink) Old 02-16-2017, 07:20 PM
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Good info..... I had heard that before, but sometimes still find it funny how our financial system sometimes works!!

Matthew "MustBeNice"

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post #3 of 12 (permalink) Old 02-17-2017, 12:46 AM
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The more you borrow , the better the rates also.

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post #4 of 12 (permalink) Old 02-17-2017, 04:33 AM Thread Starter
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Sometimes it does seem backwards. I have a project at my house and have a set amount I need to pay it off. I am doing a HELOC (which I have never done before). They first asked how much I needed and I told them. They said I should open the line of credit for double that amount and then borrow the amount I need. She said if I open the line of credit for exactly what I need it will again hit my score hard. Seems crazy to me that it is better to open a line of credit for $20K and only use $10 of it. She said if I open the HELOC for $20K and only borrow $10K it will not impact my credit score at all. Yet the $3K from Sheffield dropped me 40 points.
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post #5 of 12 (permalink) Old 02-17-2017, 09:24 AM
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I don't doubt it's a marketing scam to , the majority of people probably spend the other 10k anyways....

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post #6 of 12 (permalink) Old 02-17-2017, 11:08 AM
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lol, open the HELOC for $30k, pay off the ATV & do your project and fix your credit score sooner.

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post #7 of 12 (permalink) Old 02-17-2017, 11:36 AM Thread Starter
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The interest rate on my ATV is slightly lower then the HELOC. My credit score is still above average and is high enough it didn't have a negative impact on my HELOC interest rate. Ill have the ATV paid off this year and will then start trying to put a dent in the HELOC. I am sure by then I will need a new roof, new car, and braces for my kid.
I've got a plan in place, I just posted this mainly for people who might be financing anything and considering putting money down on it first.
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post #8 of 12 (permalink) Old 02-17-2017, 11:50 AM
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Quote:
Originally Posted by midwest View Post
Sometimes it does seem backwards. I have a project at my house and have a set amount I need to pay it off. I am doing a HELOC (which I have never done before). They first asked how much I needed and I told them. They said I should open the line of credit for double that amount and then borrow the amount I need. She said if I open the line of credit for exactly what I need it will again hit my score hard. Seems crazy to me that it is better to open a line of credit for $20K and only use $10 of it. She said if I open the HELOC for $20K and only borrow $10K it will not impact my credit score at all. Yet the $3K from Sheffield dropped me 40 points.


Your credit score is affected by the percentage of credit that you are using as opposed to how much you have. I assume lenders look at other things besides the score when deciding to give you a large lone such as your income and outstanding debt. On small loans they may not care.
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post #9 of 12 (permalink) Old 02-17-2017, 02:24 PM
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Lenders look at your debt to income ratio, your credit, and what the intent of the loan is for. For example, a loan on a car or a house is relatively good for lenders, because if you fail to pay they get the item. But if it's a personal loan for decorating, or a vacation, or something like that - then the loan is harder to get and typically the interest is higher to boot.

In addition the type of credit effects how it effects your credit. A revolving line (Credit cards, HELOCs that are open, etc.) is dependent on how much of the line of credit your using. It's best to keep credit cards below 25% of the available balance. I think that is what The Sheffield line of credit is showing as. While a Mortgage or car payment is a stationary line of credit, meaning the loan doesn't go up after you've paid on it. It's steadily going down.

"There are no problems. There are only Solutions. It's your job to find the right one.

2007 Hawkeye 300 17HP of gutless glory
25" STI Black Diamond ATRs
Pure Polaris Deluxe front Brush guard
Pure Polaris hand guards
4" LED on the pod
8" LED light bar on the front bumper.
Tamarack Titan Luxury Lounger
Cabela's Chainsaw mount
Badlands 2500 lbs. winch w/remote and Kong winch saver.
Full Aluminum Skid plate and A-arm guards(custom built)
Pure Polaris Front rack extension
Quadworks Stage 1 power kit
  • K&N Highflow reusable filter
  • Quadworks highflow prefilter
  • Dynojet kit
2" rear spring spacers

Towable/equipment
Custom built road drag grader

Future mods
Rear bumper/brush guard
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post #10 of 12 (permalink) Old 02-17-2017, 04:46 PM Thread Starter
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Quote:
Originally Posted by lpendlet View Post
Quote:
Originally Posted by midwest View Post
Sometimes it does seem backwards. I have a project at my house and have a set amount I need to pay it off. I am doing a HELOC (which I have never done before). They first asked how much I needed and I told them. They said I should open the line of credit for double that amount and then borrow the amount I need. She said if I open the line of credit for exactly what I need it will again hit my score hard. Seems crazy to me that it is better to open a line of credit for $20K and only use $10 of it. She said if I open the HELOC for $20K and only borrow $10K it will not impact my credit score at all. Yet the $3K from Sheffield dropped me 40 points.


Your credit score is affected by the percentage of credit that you are using as opposed to how much you have. I assume lenders look at other things besides the score when deciding to give you a large lone such as your income and outstanding debt. On small loans they may not care.
I kind of new that is how it worked. I always thought it was more of the total amount of credit you have available compared to the total you owe. Never really thought that the one purchase from Sheffield would have had that kind of impact. Two years ago I built a pole barn and financed a large portion of the materials. I put the materials on a Lowes card at 0% interest for 12 months. I paid it completely off and once it was paid off I bought the Sportsman. Seems weird that I could pay off $9k to Lowes and the purchase with Sheffield would have that bad of an impact. It specifically said on the credit report that the Sheffield account was the cause of the drop, I was concerned there might have been something else going on at first.
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