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Posted in Auto Loans
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Question By
Alitheal

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Should I get another credit card to spread out my existing debt in advance of a car purchase?
I plan on buying a 2014 Mustang in 2 months. I have a 704 credit score but my credit card utilization is at 96% since they all have high balances. Should I open another card and spread out the balances with balance tranfers to try and improve my score, or will this do more harm than good?

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Pay down balances first.

Helpful to 5 out of 5 people

You have a fair credit score at 704, but your credit card utilization is scary at 96%. I would not take on any additional debt, so I would not purchase the 2014 mustang. I would take the money that would be for the car payment, and put it towards your credit card debt. All it would take is one slip up on a payment to send any of your credit cards into default, and things can just go from bad to worse. Unless you have no choice to buy a new vehicle, then I advise you not to make this purchase. You don't mention how much debt that you are carrying, nor the number of cards.However, it really doesn't matter. Your debt to available credit ratio is way too dangerous. Pay them down, but don't close them out. And, do not take on more credit right now, as it may just allow you to take on more debt, if you are not disciplined enough to keep from using it. The only way that I would recommend taking on another card is if you can get a 0% balance transfer offer that would allow you to remove some of the interest from another card. You are simply playing with fire, imo, and I wish you luck.

Reply by
hparham

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Helpful to 6 out of 7 people

I would add to the above that if it IS a necessity that you purchase a car right now, I would look for a reliable, dependable, well cared for used car for A LOT less than a brand new Mustang. Sounds like you need to take a more practical route right now and save the Mustang as a goal to work towards after you pay off the credit card debt.

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Can you actually afford a new car?

Helpful to 5 out of 6 people

Since you have such a high balance on your credit cards, why are you considering keeping balances on them? You mention that you have a utilization of 96%, but didn't indicate what that equates to in actual balances and limits.  If you can't afford to pay these balances down, can you really afford a brand new sports car?  Remember, just because you think you can make payments doesn't necessarily mean you can afford it, you're taking on a considerably large amount of debt and still neglecting debt you already have and are seemingly not able or interested in paying that down.

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Helpful to 2 out of 2 people

You are using 96% of your available credit and you are buying a new Mustang? Now I understand why most people are slaves to the credit system in this country...Stupid move. Pay off your debt and drive a peice of - - - - that's paid for! Stop living above your means or you will always be poor... 

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2014 Mustang

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Would you consider paying down ALL  your cards as much as possible and buying a 14 Mustang at the END of 2014. That's when the big sales are.     I don't know you but it could be that  you are either trying to keep up with the Joneses or you ARE the Joneses.  Do you have any money in savings to cover you IF you lost your job, Heaven forbid?   Enough to pay your mortgage and all your other bills?    96 percent utilization is scary high.    DON"T  DO IT yet.  

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Helpful to 2 out of 2 people

It's surprising that your score is in the 700 range with a near maxed out credit utilization. Opening another card will lower your score in the short run by adding a hard hit on your credit profile and lower your average account age. Don' buy the car, you can't afford it. Pay down your debt, get them under 20% and maintain it at or below that level, if things are going well and you have the cash after that then by all means buy the car. 

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5.0

Helpful to 4 out of 8 people

YOLO!

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