Post # 1
Darling Husband & I had high hopes of buying our first home last july when that all got shot down-no credit.
So we prompty opened a couple lines of credit, have been managing them well-always paying them off on time. Now, we get credit card offers in the mail almost daily.
We plan to meet with our lender in July (1 year later) and re-evalute our credit & see what we have to work with in terms of getting a home loan.
Anyone have experience with this? How long does it take to establish enough credit to get a modest home loan (less than200k)?
Post # 3
I had my first credit card at 18 and took very very good care of my credit as far as paying on time, paying off debt and keeping a balance ect. I am 23 now and I have a score in the 700 range as of 2012. Not sure if that will help at all.
It takes quite a bit of time to build credit
Post # 4
A year should be long enough to build some credit. I paid off my car and have a few accounts open and my credit is mid 700s (I’m 20). The bank was ready to give me a loan but we decided to put it in FH’s name.
Post # 5
Just know that if a lender pulls your scores/report it drops your scores. You only have 30 days once that score/report gets pulled to shop around/get your loan approved before you take another hit.
It’s my understanding that it takes several years to establish credit. Utilities, credit cards, having paid off a car loan, paying regularly on student loans, etc all help. I can’t see only having a credit card for a year helping you guys that much. In any case, even if you have credit now, you likely will not be eligible for the great rates out there right now.
Post # 6
You should probably sign up for FreeCreditReport.com and just do the free trial so you can see your credit score and track it. Checking it yourself doesn’t hurt your score but having someone else do it does knock off a few points each time. I know if you search it there are a couple other sites that let you do a free trial and check your credit score once a year, but Darling Husband and I just decided to pay so we can check our score whenever we want and as often as we want.
Post # 7
I have a very good credit SCORE, but very little credit HISTORY, so – much like your experience – when Darling Husband and I intiially applied for a mortgage with Bank of America they turned us down and just said, sorry, establish some credit history and come back to us in a year.
Of course I understand the (very important!) reasons banks look for credit history, but this drove me crazy since the reason I have no credit history is because I never put myself into debt and I maintained a comfortable savings! Shouldn’t that be a good thing?! lol…
Anyway… That same day I called the mortgage broker that my friends were working with on the purchase of their new home, and this guy was much more helpful. He was way more willing to work with us and to help us find a way to make this happen. He spoke to his underwriter and was able to use our renting history toward my credit history, and ultimately we were approved for an FHA loan.
Now, FHA loans aren’t for everyone; they definitely have their pros and cons. But if you find a mortgage broker who’s willing to work with you, and work with the credit you DO have, you definitely could be in a position to buy now.
Good luck! 🙂
Post # 8
- Wedding: October 2011 - Bed & Breakfast
A hard credit pull will only ding your score by 5ish points, so it may not hurt to talk with a mortgage broker. A broker may be more aware of lenders who accept alternative documentation of credit worthiness (e.g. rental history, utility payment history) that could help bolster your prospects. Do you have everything else in line? Stable employment history and wages (as docuimented by 3 years of W2s), and down payment/closing cost/multi-month emergency fund chillin’ in your accounts?
Post # 9
@lovekiss: yes, we have everything else going for us. Stable jobs. $$ in savings
Post # 10
@mrshoneybee: It takes a long time, as part of your score it is longevity of your credit. Make sure you are carrying a balance each month, but keep it low. And don’t apply for any new credit within six months-year of applying for your mortgage. They will ask you about inquiries to your credit. Try to get a mixture of credit (revolving and installment), keep low balances, make your payments on time, and give it time.
Post # 11
@LoveMikey: Establishing credit doesn’t mean having to put yourself into loads of debt. Even if you only carry a $20 balance each month on a $300 card and are paying $5 a month, you are building a credit history and don’t have any more debt than what you could pay off in an instant 🙂
Post # 12
@BluePeaches: no, no, I totally get that! Just in that moment, when the guy at BoA was like, “no mortgage for you!” my exaggerated reaction was towards the extreme. 🙂 I have a credit card now, and I do exactly what you described.