Real Estate/Banking Bees — Help?

posted 3 years ago in Home
Post # 3
Member
1021 posts
Bumble bee
  • Wedding: January 2010

@stuckinwonderland:  There is no true minimum score, but 640 is usually the cutoff for a USDA loan qualification, however, this will come with a higher interest rate. Ideally they should try to get their scores over 700 for a better rate.

In terms of improving their credit, the #1 thing they NEED to do is to put credit in their name!!! In a lot of respects, no credit is worse than bad credit, because the banks don’t even have a track record to go off of.

Have them open a credit card, charge no more than 50% of the total credit limit, and pay it off IN FULL every single month. That means do not run a balance, do not charge anything that they can’t pay for every month, and set up automatic payments to make sure they don’t miss them. Make sure that they pay all of their other bills on time and in full (cell phone, utilities…etc). 

Have them pull a free credit report and see if there are any delinquent accounts (medical bills…etc) and have them clean those up with the collections/credit reporting agencies.

Post # 4
Member
219 posts
Helper bee

Ideally, over 700.  

Post # 6
Member
1021 posts
Bumble bee
  • Wedding: January 2010

@stuckinwonderland:  She may have to get a secured credit card, where you send in the money to “sercure” the amount on the card. I had to do this when DH moved to the US from Canada and had zero US credit to his name. The company we got the card from was called Orchard Bank. We sent them $200 and they sent us a card with a $200 balance. I used it to sign up to automatically pay our cable bill every month, and then had the card balance automatically paid directly from my bank account every month. Then I just locked the card away and didn’t use it for anything else.

1 year later, DH now has wonderful credit and was able to qualify for a car loan in only his name.

Post # 8
Member
1021 posts
Bumble bee
  • Wedding: January 2010

@stuckinwonderland:  Not all prepaids report to a credit bureau. Make sure that she is specifically applying for a “secure credit card”.

Good luck to them. I would recommend that they find some sort of “money management” educational class in their are. It sounds like they might benefit greatly from some more education from a professional.

Post # 10
Member
2627 posts
Sugar bee
  • Wedding: November 1999

@stuckinwonderland:  Another idea (and a good idea to do along with the secured CC) is to get a CD or passbook loan from a bank. This works like the secured CX, but is an actual loan that is repayed. 

Here is a link to learn more and you can google for more. This helped a friend of mine tremendously.

http://www.foxbusiness.com/personal-finance/2012/05/21/passbook-savings-loans-are-secured-by-savings-cd-balances/

 

Post # 11
Member
1104 posts
Bumble bee
  • Wedding: June 2011

DH had no credit when we started looking at houses. We did the credit card thing through Capital One, they usually approve really low limit. He started with like $350 and we charged between 30% and 50% every month and paid it off. We did this for 4 months which got his credit score up quite a bit. The USDA requirementss jumped to a credit score of 640 last year. They will not qualify for USDA unless they have a 640.

The benefit of the USDA loan is that they don’t have to put 20% down, it’s 100% financing so they also will not have to pay PMI each month. Yes their monthly payments will be higher if they finance the 100% but as long as they can afford it it’s no big deal. Honestly, you don’t necessarily get a better interest rate just because you have a higher credit score if you’re using a government program like USDA. DH’s credit score was only 632 (I’m a veteran so we have a VA loan which requires a 620 credit score) and we still qualified for the lowest interest rate available at the time which was 3.75%. Unfortunately interest rates are already steadily climbing. They were 3.25% just 2 months ago and are already back up to 3.75%-4% now. The plus side is that is still a historically low rate and a great deal. 

Post # 13
Member
1104 posts
Bumble bee
  • Wedding: June 2011

@stuckinwonderland:  Yeah he just went to http://www.capitalone.com and applied. They have secured cards but I would apply for unsecured first. Or they can call Capital One. I did the same thing when rebuilding my credit. I think I was approved for $500 a few years ago and DH was approved for $350 a couple years later. They’re used to funding people with little to no credit, they’re always the company that stalks people on college campuses. Just make sure she understands that the credit rating is atrocious and we have an annual fee of $89 on it. They have to pay it off monthly to avoid making things worse. Really though, have her fill out an application online for an unsecured card and if it doesn’t work have her call and have them review her credit application for a secured card. 

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