Post # 1
Hi ladies, the husband and I are trying to put a plan together for being able to start house-hunting in about 15 months. Unfortunately, we are only just starting to learn about the whole process, so I was hoping to gather some advice here to go with all of our research.
Okay, I have a credit score of 760 right now. My parents had me get a credit card in college, and we would very occassionally use it to pay for books or other little things, and pay it off immediately. Also, my car is in both my dad and my names, so we both paid for it, and it is paid off. The final thing contributing to my score was that we used my card to pay for a lot of wedding stuff, and paid it off immediately. My major point in saying all of this is that using a credit card is not a regular part of my life, and there is nothing I am currently making payments on. So, will my credit score stay the same if I’m not doing anything in my life on credit?
My husband doesn’t have any credit history. He paid for college and an 18,000 car without any credit cards or loans, which I think is really admirable (unfortunately, what I think doesn’t really matter to creditors.) So how does our credit work together now that we’re married? If we start shopping for mortgages, can we qualify based just off of my credit score? (He has a salaried job, and I’m only working about 35 hours a week, if that factors into it as well.)
If we both need to have great credit scores what are the steps we can take? Both of our cars are paid off, and the only thing we really need to buy (beside a house:) is a washer and dryer. If we do that on a payment plan (paying it off immediately) will that put both our credit in good shape in the next 15 months? Should we just start putting groceries on a card and paying it off immediately? Will that be enough?
Post # 3
I can’t really help as far as how the credit process works, but I’m going to reply because I want to follow this 🙂
We’re planning on buying a house next year also…one piece of advice i can give (if you need it) is watch some of those HGTV shows (my first home, property virgins, house hunters) We started getting into these shows a few months ago when we knew we were going to plan to buy a house in the next year, and I’ve already learned so many things! I’m surprised how knowledgable I am with the lingo of house buying!
Post # 4
You will only bw able to qualify on your score alone IF your salary – and yours alone – will support the mortgage. You can’t qualify on both incomes combined if you are not having them consider his creditworthiness. Only your name will be on the house in that case.
Have you checked his credit score? If you don’t know what it is, that’s step #1.
You can put him on your credit card and use the card for your daily purchases, paying them off in full each month. That will help. Him having utilities in his name would also help. It takes a long time to build up a good credit score/history that a bank iwll trust. I’m not sure he will be able to do that in the next 15 months. If you can’t afford a home on a mortgage based only on your income, this is not the time to buy.
Post # 5
I don’t have much advice on the credit stuff but a book that was extremely helpful to me about the entire homeuying process when I bought my first place was by David Bach called Automatic Millionaire Homeowner. I highly recommend it! Good luck!
Post # 6
Your credit won’t go down because of not charging things, but some card companies will close your card if a certain amount of time passes without you using it–that’s bad for your credit score. Can you add your husband to your credit account? (Not just as an authorized user) …My parents did that with me in college and I have a great and much longer credit history because of it.
Post # 7
Mortgage lenders and other creditors want proof you pay your bills and pay them on time. They also want to be sure you are not over extended. Your hubby can begin building a credit history/score if you guys want to get a mortgage one day. He can simply get a credit card and use it every now and then, being sure to make payments and pay them on time. If I were you I’d have hubby charge the washer and dryer and of course then pay for it. Maybe when you guys go out to dinner he can charge it, then pay for it. I don’t know if it will be enough, but it will certainly be more than what you have right now.
Post # 8
@crayfish: Crayfish hit the nail on the head. The only thing I have to add is that having his name on the utilities likely won’t actually help his credit score because most utility companies only report accounts if they’re late or going to collections.
Post # 9
I would have him open up his own credit card and start using it. It’s a start, and even if he can’t build it up enough in the next 15 months, it’s better than nothing. It is really admirable that he was able to pay off college AND a car using cash, so that tells me he will be able to more than handle having a credit card, and using it well.
One couple I know of who were in a similar position took out a small bank loan ($2500), for purchasing appliances. The didn’t have to, they had the cash, but wanted to build up their credit score. It worked well for them, but it’s not always advisable if you don’t have a good rate on a loan. Theirs was 0% for 6 months, so they paid it back within those 6 months. To be honest, I don’t know if it helped their score much, but I thought it was an interesting idea.
Post # 10
Thanks you guys! These were exactly the answers I was looking for!
@crayfish – Thanks so much! That was really well put and gives us some ideas for immediate goals. If we can’t buy in the next 15 months, it isn’t the end of the world but we want to feel like we are going actively in the direction of buying a home.
I guess it’s time to work on some credit!
Post # 11
Fiance and I just bought at house (well – bought land, we’re building) in June. We went through exactly what you are doing now. I am – by no means – a credit expert. This is just my opinion based on what we learned/had to do.
You’re credit sounds good. Just keep doing what you’re doing and it should be fine.
My Fiance was in the same situation as yours. He never had a credit card and paid everything off right away. Although, he did have a car payment and a small student load. We checked his credit about six months before we started looking and in those six months we raised it significantly and qualified for the best rate possible.
The things credit scores take into account:
How MUCH credit you have – ie. The total amount of money you can borrow, so the sum of the limits on your credit cards/other accounts.
How LONG you have had credit. Usually the longer you have an account, the better.
If you pay recurring balances on time. Creditors want to see that you are capable of making recurring payments on time. Credit cards don’t count because the amount is variable.
So I would suggest Fiance getting his own credit card, using it for gas or something, and pay it off every month. I think that would help the most. Like PP have said, check his credit score first.
Oh, and a warning – the free credit score sites are ok to look at, but they changed their scale. So they will report your score based on a scale of something like 900 instead of the 815 (or something like that) that the real score is.
You could always go and talk to the mortgage officer at your bank. They can look up your credit score and give you advice on how to raise it.
Sorry it’s so long!
Post # 12
We’re a few years away from buyin or building our first home, but I would also recommend him opening a credit card account, use it to purchase everyday things (groceries, gas, etc.) and pay it off every month. That at least helps to establish some sort of credit history. My uncle owns a mortgage company and recommended that I take out a small loan ($1k-ish) to show that I’m capable of paying off something on a monthly basis. I don’t have any student loans or a car loan, etc., so my only credit history is with my credit cards. I have a few credit cards (1 that I use for personal purchases, the others I use for business purchases – I have an eBay business and I buy a lot of inventory to resell). I pay for basically everything with the cards (mainly for the rewards) and pay them all off in full every month.
Post # 13
When we got our loan Darling Husband had no clue what his score was bc he had a credit card but maybe used it once or twice during the year. Everything else like school and cars were bought with cash; that’s how he was raised and we’ve continued that into our marriage. We found out when we applied that his score was over 800. So he doesn’t need to have multiple things to help his score, I would just get a card and use it for little things then pay it off in full immediately.
Post # 14
I work in the credit dept at my bank, so I see credit reports all day. Not currently using credit (when you have an established credit history already) will not hurt you. I see credit scores in the 800s all the time and the person has no current credit or installment loan activity.
Crayfish is right that in order for your credit to be considered alone on a mortgage, your salary must be enough (and often times they WILL call your boss/HR dept to verify your employment details).
I am not sure what your husband’s credit score would be with no credit. I have seen credit scores in the high 600s/low 700s with almost no credit. If your husband would sign up for a credit card, use it (although stay well under the limit, like 30% or less), and make timely payments that would probably give him a decent score. That being said, loan officers are going to look at more than just the number, but he won’t be as bad off as someone with bad credit.
When I was 21, I had no loans (no car note, no student loan) and one credit card with a $500 limit that I almost never used, and my credit score was like a 680. By no means an excellent score but generally enough to get approved for most things. I would definitely recommend him getting a credit card.
Post # 15
Pull your scores at all three places, not just one. Confirm that the information is accurate (and correct it now if not).
One thing places look for is diversity of credit, and each place weights things a bit differently. In addition to real estate debt, there’s credit card debt and loans. (And more things, this is my rudimentary understanding here.) I recall one place told me to raise my score by taking on some real estate debt. Well, I was looking at it to possibly purchase a house, so that was useless information (circular in that to get a house I need real estate debt).
PP already mentioned length of history is one factor. You might be surprised at the length of your history if you have a store card or two.
Finally, pay attention to the amount of credit you have available to you and how much you are using it. I do not know the magical ratio, but lenders want to see 1) that you have credit, 2) that you are using it responsibly and paying it back and 3) that you don’t have too much credit. Using fake numbers, having $10k credit is no good from their perspective if you never use it. Using $9999 regularly is also probably not good. But using say $2-5k regularly could be good. (These are all fake numbers…as I said, I really don’t know. It could be 10% ratio, or 70%.) So…Goldilock’s style of banking- not too high of credit, not to low, and used.
Post # 16
I don’t have any suggestions, but our situation sounds almost identical to OP’s. His parents paid for his tuition in college and he worked all the way through, so he always had money. It took forever for me to convince him that credit cards are not evil as long as you pay them off- lol. Thanks for the tips, ladies!