Mark and Shirley (from Bakersfield California) were in the market for an auto loan and they didn’t have bad credit. Mark and Shirley were lucky people because they had good credit. Their credit was good enough that it turned out their FICO score was around 700, in fact more accurately their FICO score was closer to 720 if you averaged out their FICOs.

This enabled them to look for a loan at the conventional banks as well as a private lenders with no worry of being declined.  However, they wanted to find the best interest rate possible – the lowest possible APR with the best possible terms from lender they could trust not too attach erroneous fees and balloon payments (although balloon payments are usually a problem with mortgages).

They thought about going to dealership for their financing right there in Bakersfield but opted out of that idea and started moving towards conventional banks.

They made an appointment with a loan officer at their local branch in Bakersfield, and the day they went in for their meeting with their loan officer they discovered that Shirley had damaged her credit rating.  This concerned them greatly because they knew the bank would give them a lower APR than the dealership but their bank would likely only lend to applicants that had an excellent credit history.

Ironically Shirley’s credit rating was damaged because she forgot to make a payment on her Target REDcard.  She found out that her Target card and not been paid for over three months and the amount she owed on this card was $78.39.  That $78.39 caused her enough of a problem on her credit score to make her a so-called undesirable by the banks.  (I know this sounds ludicrous, but believe me, it doesn’t take much to damage your credit rating – just miss a few payments on a credit card and you’ll find out what I mean).

So the day Mark and Shirley went to their meeting with a loan officer they were quite discouraged and disheartened because they thought they would not be able to afford the vehicle that they had both been dreaming about.

They were fortunate in that they both had the same idea about the vehicle they wanted to buy – a 2008 BMW SUV in bright red.  The price tag on the BMW SUV was a mere $80,000, and with both of their credit ratings in good standing, and both of their monthly incomes involved in the loan application, they would have been fine.

But unfortunately it was looking like Mark’s credit rating was the only one in good standing and therefore they may not be approved or the full $80,000 they needed for their vehicle.

The dealership said that they could get approved with dealer financing for 8% APR (annual percentage rate) but that was not good enough in their eyes and thought they could do better if they got their loan from a conventional bank.

Their bank in Bakersfield (which we have omitted for privacy reasons) is a major national Bank and they both have all of their accounts in that bank including their mortgage and their retirement savings.  They were comfortable about their meeting in that respect, in that they had a long-standing relationship with their local Bakersfield branch of a major national conglomerate, and hoped their past history of making payments and using frugal spending habits would endear them to the powers that be and surely help them get approved for their vehicle financing.

When Mark and Surely stepped into the loan officer’s office they made themselves comfortable on the two chairs that were available, and the loan officer introduced himself as Kevin.  Kevin asked them what they were there for and what he could do for them. Surely laid out all of the details in their hopes to buy their new BMW SUV.

They were both upfront and explained that Shirley had recently found out her credit rating had been damaged by neglecting to pay a credit card debt she uses from a local Bakersfield Target store on Wible Road.  Kevin (their loan officer) said he understood and told them that this may cause them some grief with their loan application, but he would do the best he could to get them approved for the amount of money they required on their vehicle purchase.

Kevin used the bank’s database to do a quick search on their past payment history and their past earnings history, and as well their monthly spending habits.  He said he was impressed with Marks and Shirley’s past credit history and that he would talk to his superiors to put a good word in for them on their application process.  This was music to Mark’s and Shirley’s ears as they were really hoping they could get approved for the funds they needed for their BMW.

End of part 1 – read on in part 2