I need some advice. We have paid all our debt except for our car. According to our statement we still have about 5 years left on the car. My husband got a job as a sales rep – the car will not last long. Can we trade the car and let the dealer settle the car and then apply for finance on a new car?
Thank you for the question.
Once the clearance certificate is issued, Credit Bureaus have 5 working days in which they must expunge from their records any information pertaining to the fact that you were subject to a debt review.
In theory, you should be able to apply for credit again within a week of receiving your clearance certificate. In my experience though, the latter is not true. Credit Bureaus take longer than that to get your record cleared. I always suggest waiting at least 3 months before applying for new credit.
Pull your credit report about one month after you have been issued with the clearance certificate. Check your credit score and payment history. If there are any discrepancies, take it up with the credit bureau. I would suggest that you make sure your credit profile and credit score is good before applying for new credit. Keep in mind that every time you apply for credit, and get declined, it affects your credit score negatively.
Be smart about applying for new credit and make sure that you are fully aware of how your credit rating works and how to apply for credit without doing damage to your credit profile.
Also keep in mind that even though your credit score might be good, credit providers might still have a flag indicating your history on their internal systems. They must also remove those records. It always remains the decision of the credit provider whether or not they want to extend credit to you. If they do decline your credit application, you have a right to know exactly why they declined it.
Once you have paid off all you debts under debt review you are free to borrow credit again and will be allowed to purchase a car if you can afford the credit each month.
So to answer your question, the dealer can settle your car, and we can then issue a clearance certificate. The challenge would be to convince them to grant you credit again while you are in fact still under debt review. If you sell the car out of hand and settle it, you will still need to give the credit bureaus about a month to update their records.
Hope the information was useful.