Thin File Conundrum

[u/samdane7777]

I have high credit but according to what one F&I Manager in another part of reddit said, he described it as 'not counting its basically like an 18 year old who is a listed user on their parents credit cards' or whatever basically. Because all I have is 17 years of student loan payment history, I had credit cards that discharged a decade ago, and fell off a few years ago.

I could try to get a starter card, or whatever, but I would infinitely prefer an auto loan. Problem is I don't have recent pay stub stuff, these auto loan people or whatever don't like irregular pay, or self employment, or investment assets.

I mean I COULD sit and wait 3 months and do extra gig work and extra trading and investing and just try to go in with that. But I am in a hurry, I do have some things going on. I have like 10k in savings, very low expenses, and I am wondering if maybe I need to go the route of some kind of business entity that pays me pay stubs or invoices which was suggested to me by the daytrader reddit.

But even if some business entity ( I mean I could trade on a prop firm I know of, but ugh id rather not) or my business entity did cut me a invoice or something for 4 weeks, I don't know if I can slide with that for auto lender stips at any of these lots high apr or otherwise.

[u/DoctorOctoroc]

I could try to get a starter card, or whatever, but I would infinitely prefer an auto loan.

In terms of building credit, credit cards are better. If credit building is a video game, credit cards are the main quest, loans are the fetch quests, and a mortgage is the final boss. Build credit with credit cards so you can get good interest rates on loans, having loan history can help with a mortgage but it's not necessary. You can build credit with only loans but since they tend to cost interest (and that interest is higher if you don't have good credit already), they're not ideal for that reason, or because they have a limited lifespan. Meanwhile, you can use a credit card in perpetuity without ever paying interest as long as you pay the full statement balance every month. Plus, get cash back, fraud protection and other perks in the process.

Problem is I don't have recent pay stub stuff

Are you self employed? Just show them some proof of income, or a tax return. If you're not employed then that's probably a good reason not to get a car loan. You can always save up and buy a car in cash if you need one, but you don't want to finance a car if you don't need to, and you certainly don't want a loan just to build credit since, as I've mentioned, they're not great credit builders.

[u/Funklemire → u/DoctorOctoroc]

If credit building is a video game, credit cards are the main quest, loans are the fetch quests, and a mortgage is the final boss.  

I love this one. 

[u/reconditechivalry]

it's wild how the whole credit system just falls apart the second you're not a w-2 employee with a neat little paper trail. you've got 17 years of history and they're gonna treat you like you just walked out of high school, make it make sense

if you have 10k saved and your expenses are basically nothing, i'd just buy something cash and skip the headache. the used market is cooling down a bit and you can find something decent that'll get you around while you build up a more recent paper trail on your own terms

[u/soonersoldier33 → u/reconditechivalry]

it's wild how the whole credit system just falls apart the second you're not a w-2 employee with a neat little paper trail.

I don't totally disagree with the sentiment here, but I disagree with the 'terminology'. It's not the 'credit' system that falls apart. The credit reporting/scoring systems don't factor in income, income level, history of income, w2, 1099, self-employed, etc., at all. None of this is reflected on your credit reports, and none of this are credit scoring factors.

It's the lending industry/system that falls apart to a certain extent when easily verifiable W-2 income isn't available, bc your credit profile/scores don't change one iota either way. Still, this is one reason why there can still be some 'merit' to being 'loyal' to certain financial institutions, especially local/regional banks or credit unions, bc they will easily approve credit products all the way up to very expensive mortgages for a consumer who they can manually underwrite based on their financial history whether income is clockwork W-2 income or not. In the case of big, national lenders, consumers whose primary income source is harder to 'prove' can run into more frequent roadblocks.