(Closed) Credit and buying a house

posted 5 years ago in Home
Post # 4
Member
4311 posts
Honey bee
  • Wedding: November 1999

Probably.  A nice down payment will help, but your mortgage APR will probably be high.  I have seen people take the high APR, make payments for a year & then refinance.

Post # 5
Member
10366 posts
Sugar Beekeeper
  • Wedding: September 2010

The minimum credit score is typically 530. Different banks have their own limits, though. You likely won’t get a very good rate with a score of 600, but you will probably be able to get a loan. Some banks may require a larger down payment, and larger reserves (ie the money you have left over after you pay for the down payment, closing costs, insurance, taxes etc etc).

Post # 7
Member
753 posts
Busy bee
  • Wedding: October 2011

I think that 750 might be hard to do, depending on what all of the factors are impacting your score (i.e. length of time since your oldest account, time since last late payment, etc).  You can definitely improve it that time though.  A credit card might help as long as you pay it off regularly and don’t get anywhere near your credit limit on that card. 

Post # 9
Member
8446 posts
Bumble Beekeeper
  • Wedding: April 2013

@figgnewton:  I would definitely pull your credit and make sure that everything is accurate on your report.  When my Fiance were about to purchase our home last year we realized that he had inaccuracies caused by fraud on his report.  We got a much better rate after we were able to get that removed.

Post # 10
Member
10366 posts
Sugar Beekeeper
  • Wedding: September 2010

I think it isn’t a long enough period of time to have a credit card to build up your score that much. What’s realllly hurting you is those missed utility bills and your medical debt. Not having a credit card is probably hurting you in that you likely are utilizing close to 100% of your available credit (since you don’t have any cards with zero balance and a larger credit line) and you don’t have a car loan (car credit is a different type of credit that looks really good, especially once you’ve paid it off and shown you can complete a loan in full). If wouldn’t hurt to have a credit card regardless, as long as it is one without fees. It would help you build credit over time, would be useful in an emergency, etc. Just don’t open one and then go house shopping within the next 3-6 months. That will be a negative ding.

Post # 11
Member
4311 posts
Honey bee
  • Wedding: November 1999

@figgnewton:  I would.  With your credit score you could probably get an Orchard Bank credit card.  But what I would do is charge a bill that you normally pay every month (phone bill) to it and pay it off at the end of the month.  No more or no less.  750 would be hard to achieve I think even in 2 years. 

If you can go 12 months without being late on anything, however, I think your score would greatly improve.

Post # 12
Member
750 posts
Busy bee
  • Wedding: December 2014

Things may have changed since the financial crisis, or maybe it’s the area that I’m in, but the minimum credit score required for a loan had to be at least 640, when we asked in December. They go by the median scores of whoever is buying the house- say my scores are 560, 620, and 660, they’d use 620 and I would not qualify. 

If you want to buy a house in the next couple of years, take some steps to get your credit back up. Utilities and rent do not report on your credit, unless you make late payments. Pay them every month in full on time? Great, but it doesn’t help your credit. Make a late payment? BAM! On your credit report. It sounds like you have hospital bills negatively reporting and utilities negatively reporting- in order to combat these, you need to get something positively reporting on there. 

Your credit may or may not be good enough to qualify for a credit card, if it’s not, get a secured card. Charge on it every month (less than 20% of the credit limit) and pay it off in full, every month. If you’re planning on going to school, take advantage of federal student loans- not in excess, but get a couple. If you have someone (a parent, SO, etc) that has good credit and pays their bills on time reliably, ask to be put on a card of theirs as an authorized user (even if you’re not using it.)

What they’re looking for is a few sources of credit that positively report for you. If you have a million credit cards and they’re all paid off in full and you don’t use them anymore, it looks bad because they’re not positively reporting for you AND you have the ability to charge a gazillion dollars and owe a ton of money overnight, if you so choose. If you have $30,000 in student loans but no other credit, they wonder why you don’t have any other credit. If you have a huge car payment and some combination of other credit, they’re mad at you for having too much credit, again. 

It’s a delicate balance. 

There are certain loans that give you more leeway on the credit issue. I have excellent credit, my Fiance has no credit (literally, no score). We are able to qualify for an FHA loan, because of my credit. In lieu of a credit score for him, they are considering other credit sources like our television bills, utility bills, and car insurance. But, that’s only because my credit is vouching for us, so to speak. 

VA loans also have much more relaxed guidelines.

Post # 13
Member
187 posts
Blushing bee
  • Wedding: April 2013

@figgnewton:  I am a realtor & I recommend making an appointment with a lender to all of my friends.  Even if you are not ready to purchase a house now; a lender will sit down with you, answer all of your questions, pull your credit, and give you tips as to what you can/cannot afford & what you can do to raise your credit.  This should be a free service they provide (if they will not do this, they probably are not a reputable company) in hopes to establish a relationship with you and that you will bring your business back when you are ready to buy.  They can also educate you on the various assistance programs to help you in your home purchase.  I work with some great lenders in my area and they are a golden source of knowledge!!

Post # 14
Member
2600 posts
Sugar bee
  • Wedding: October 2010

@figgnewton:   A 600 credit score isn’t very good so I kind of doubt it, but I could be wrong.  If I were you I’d work on getting that score up and also making your credit payments on time.  You don’t want any over 30 day late payments on your credit history showing up – that’s very bad. 

Post # 16
Member
3230 posts
Sugar bee

I’ve always paid my bills on time, paid off my car and student loans, try to pay as much on my credit cards as possible, and my debt to credit ratio is less than 10%. I’m 27 and my credit score is 788. Unfortunately, I think 750 might be hard to attain in two years.

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