We're not even to the fuel dock before I've had the first lesson's harsh reality drilled into my brain -- don't expect the creative finance deals of the recent past. "If you're thinking zero down, or you have lousy credit, you're about three years too late," says Murray. "The banks went a little crazy. They forgot all about the processes that had been in place for decades, looking the other way instead of checking a guy's income, not considering whether he owned a home and not counting what kind of equity, if any, he had in it, and not even looking at whether the guy was employed. And don't get me started on what they considered a down payment. Things got out of hand, so now the pendulum's swinging the other way, and guys like you have to deal with the fallout."
I now expect that how much money I can borrow will be based almost solely on a harsh appraisal of my credit score. If it's good, I'm in business. If it's bad, I'll be lucky to have a kayak in my future. "Take note of how fast the info comes back to the finance guy," says my guru. "If it's right away, they'll be all over you. If it takes a while, you have problems."
Before I humiliate myself in front of the dealership's money guy, Murray suggests I contact the three major credit reporting agencies: Equifax (800/685-1111, www.equifax.com), Experian (888/397-3742, www.experian.com), and TransUnion (800/888-4213, www.transunion.com). Their reports are free, so contact all three -- they often have different scores. Each knows all about my accounts, bill-paying history, the unused portions of my lines of credit, whether I've had collection actions, and my outstanding debt. That info all adds up to a three-digit number -- my credit score -- between 300 and 850, which will decide my fate. If it's above 720, I'm golden, typically considered a safe risk and worthy of a low interest rate. Below 700? Better luck next time.
"Want to slowly trash your credit rating?" asks Murray, wagging a bony finger at me. "Each time you apply for a loan or credit -- make what we call a hard inquiry -- your rating drops by three to seven points. When that guy in the finance office says, 'Let's send in your application to see what comes back,' your credit rating goes south."
The same thing happens whether you go for an 18-months-same-as-cash deal at the furniture store, apply for a gas card, or get a new credit card. Each inquiry or application lowers your score. If your rating is on the cusp, a few points might kill the deal. Multiple boat loan inquiries, however, shouldn't take a toll. As Murray reassures me, credit applications for the same purpose within a short time span usually count as a single inquiry.
If you don't make the cut, give yourself time to improve your financial picture. Credit cards are the obvious. Make the required monthly minimum payment, and try to add something to eat away at the principal. Better yet, ask your bank's loan officer for an appraisal and what you need to do to improve your rating. He's a good source of honest information. Assuming your credit isn't completely in the toilet, you can make things look significantly better in as little as six months.
Six months is too long to wait? Murray disagrees. "I bet that boat or one like it will still be sitting in the showroom."