Questions about credit score points & home buying

[aristocatz]

We are getting ready to start saving up for our first home. I checked my credit score and it's only "fair" (50 points away from "good"). Young and stupid & no clue how to manage mixed with some personal issues, I got myself in trouble with credit card debt about 6 years ago. I've been working hard and finally got my last debt paid off. I am no longer delinquent with debt and have been completely on track for about a year now. I still owe student loans and a less than $1500 credit card bill, but I'm in good standing and making regular payments that are the required amount for my student loan and double the minimum for my credit card. I rarely use my credit card now-just making the payments.

How fast can your credit score raise? If I remain on track, could I potentially raise my credit score 50 points within a year or so? I have no idea how this works.

What are ways/tips to further raise my credit score? I know continuing to make regular payments to my current debts, but not sure what else to do?

Also, we are planning to save up 20% down for a house within the next 2 years. If my credit remains "fair" will I be able to qualify for a mortgage?

Thanks!

 

[Cheshire Figment]

First of all, you might want to go over to www.creditboards.com and look at their forums.

Second, what you actually will need to do is go to www.myfico.com which is Fair, Isaacs & Co. They are not a credit bureau and they are the ones who issue "actual" FICO scores. Your scores can be different from each of the three major credit bureaus.

Third, pull credit reports from all three bureas and go over them with a fine tooth comb. Challange any information which is not correct (unless, of course, it is in your favor). When you get your scores, they should also give you suggestions for improvement and possibly even the opportunity to see what effects changes will have.,

But at least you are looking at it now so you will be ready when you have your down payment and are actually ready to buy.

 

[ryanshana]

I raised mine 88 points (I was young and dumb too) from I wanna say April to now. Your credit score can be no lower than 620 to purchase a house.

A few things that I did to help myself, sent a letter in writing to all my credit cards....(even your young and dumb ones)...asking them to prove when I was late. If they do not respond in an allotted amount of time they are required to remove it. You can also ask those debts you just paid to be removed completely. Myfico.com, the forums are great. They will help you with the letters!

Also when checking your credit score, myfico.com is the only "true" score...anyplace else is a load of .... and sometime myfico.com can be a little off, but not as much as the other ones.

Also, w/ the understanding that you have credit cards now. DO NOT, I repeat DO NOT open any new cards, apply for ANYTHING, etc...Each time a creditor pulls your credit it is known as a "hard" pull. Every time it can drop your score 2-5 points (although let's say your get a car, and the dealership tries 3 different lenders that will go under as one "hard" pull)

Myfico.com is your friend!

Also another mistake that I made. I thought paying off the balances in full each month would help my score...it does not (well unless you find out which day the credit card companies report to the bureau (however they can change that at ANY time) and pay it 2 wks prior to that.) Also not using your cards looks bad also. You want your credit cards in between 1-9% of the limit, ie 1000 limit your balance should be no more than $90, remember to factor in fees. I don't care if you have to buy a pack of gum to get it to 1% you should.

It has been the longest 4 months of my life (mine was actually not too bad....some people even take longer). But the rewards in the end are great. We are having our mortgage lender doing the official "hard" pull for our house and I KNOW it is there! It is such a great feeling!

Good luck!

p.s.

"Also, we are planning to save up 20% down for a house within the next 2 years. If my credit remains "fair" will I be able to qualify for a mortgage?" You could have 50% down you need to have a 620.....well correction...you MIGHT be able to find someone...but your have to have your debt to income ratio REALLY low AND your interest rate would probably be ridiculous!

 

[ryanshana]

PS...


On paying off your debts!!!!!!!

 

[aristocatz]

Thank you all for your info so far!

I will check out that website-thanks! & thank you for the vote of confidence. I am very proud of myself for getting back on track. I'll be even prouder when I hit the "good credit" mark

My credit score is 652. It's listed as "fair". I got the report/score from freecreditreport.com. I did not realize that all credit report websites give different info.

Will it make me look bad to get my report from the website you mentioned now or should I wait? I just got the report a few weeks ago. I am also on the verge of applying for a car loan (within the next few days). I heard it looks bad to check your credit score too much-is this true?

I am applying for the loan through a local bank & hoping to get it approved before we buy the car. We have just about saved up our 20% down for the car.

Shoot-I just applied for a Disney Visa a few weeks ago I really did it because I thought it might help my credit to just use it for gas & a Disney trip we are planning in a year or so. So, I should start using my credit cards? One is down to a $200 balance with a $500 limit. The other is down to $1100 with a $1500 limit. I've been paying $100 a month on both & just cannot afford to pay anymore than that each month, especially now that we are buying a second car.

Ryanshana: Wow, 88 points since April?? That's fantastic! I didn't think it could raise that quickly!

I will check out that website-thanks again!

 

[ryanshana]

Thank you all for your info so far!

I will check out that website-thanks! & thank you for the vote of confidence. I am very proud of myself for getting back on track. I'll be even prouder when I hit the "good credit" mark

My credit score is 652. It's listed as "fair". I got the report/score from freecreditreport.com. I did not realize that all credit report websites give different info.

Will it make me look bad to get my report from the website you mentioned now or should I wait? I just got the report a few weeks ago. I am also on the verge of applying for a car loan (within the next few days). I heard it looks bad to check your credit score too much-is this true?

I am applying for the loan through a local bank & hoping to get it approved before we buy the car. We have just about saved up our 20% down for the car.

Shoot-I just applied for a Disney Visa a few weeks ago I really did it because I thought it might help my credit to just use it for gas & a Disney trip we are planning in a year or so. So, I should start using my credit cards? One is down to a $200 balance with a $500 limit. The other is down to $1100 with a $1500 limit. I've been paying $100 a month on both & just cannot afford to pay anymore than that each month , especially now that we are buying a second car.

Ryanshana: Wow, 88 points since April?? That's fantastic! I didn't think it could raise that quickly!

I will check out that website-thanks again!

That's fine with the limits....Do not use the cards until you get them down to under 9%, and even then you don't have to use them until they are under 1%. Were you approved for the disney visa? If not, I believe they should send you a letter and they will give you a "hard" pull that will not hurt your score. Applying for a card isn't gonna hurt you especially if you are looking at a house a year or two from now. Just do it VERY VERY sparingly. Unless there is an ABSOLUTE emergency don't apply for anymore credit. I believe that each time you pull credit it deducts points....but if you have excessive inquiries that will hurt your score also.

I had a fairly easy "account", I think that is why it raised soo quickly. I also had time, which it takes alot of. I forget now but I think they have to respond before 30 days. if they respond you have to try again. and again. It becomes tedious.

 

[DisneyBamaFan]

The best way to tackle credit cards is one at a time. Pay off the lowest first (since it is so much smaller than the other). Only make minimum payments on the larger balance until the smaller balance is gone, then focus all of your attention on the other balance.

If you have many credit cards with high balances, you use the same strategy, but target the card with the highest fees/APR first...

 

[wvjules]

Viewing your credit report from myfico.com, freecreditreport.com, etc will NOT hurt your credit score at all. It is considered a "soft" pull and no one can see it but you.

Definately go to creditboards.com/forums. Very knowledgable people.

Also, you don't write to the creditors to prove you were late. That is not the way to go about it. Read up on it on creditboards. If you are given wrong information here (DISBOARDS) it will hurt you more than help. Let the experts help.

 

[ryanshana]

Also, you don't write to the creditors to prove you were late. That is not the way to go about it. Read up on it on creditboards. If you are given wrong information here (DISBOARDS) it will hurt you more than help. Let the experts help.

actually I said to go to places like myfico and creditboards to get the approriate way to word the letter because I knew I wasn't wording it correctly!

 

[Bren's Mom]

Congrats to you!

Definitely go to creditboards. Don't be intimidated. Read, read, read, read, read. Especially the 'stickies'. Then pull all 3 credit reports from ANNUALcreditreport.com. NOT freecreditreport! The 'annual' one is the true 'free' one, the other requires you to join a credit monitoring service you do not need.

With CBs help you will dispute and, hopefully, delete old stuff off your credit report and correct any errors. This will help your score. Also, keep paying down your cc debt so you're using only a small percentage of your total debt.

I was able to bring my dh's credit score up 50 points in only a few months...and that is after he had a bankruptcy post divorce from his ex. So miracles CAN be worked but you have to work at it.

Be very careful to not pay anything late.

It's ok to pull your own report, just don't apply for other credit or do so very sparingly. CB can also help you determine which credit cards you're likely to qualify for so that each 'pull' results in an actual credit line.

And when you're ready to buy a car don't go from dealer to dealer letting them pull credit. Decide what you want first. Then apply online for preapproval from your bank or credit union or an online bank. Once approved you'll know how much you have to work with plus your interest rate. THEN go to the dealers that have the vehicle you want and negotiate. Don't talk finance at all!!!!! Just decide on the price of the car, tell them you're writing a check. Once the car price is decided on THEN you can let them attempt to beat your confirmed credit...if you got 7% tell them if they can get you 6% you'll take it. Make sure the numbers add up though!

Good luck.

 

[DMickey28]

We are looking to buy our first house in the next few months. Our middle credit score is very similar to yours. We have been pre-approved for our mortgage already and are doing our house hunt. We are doing an FHA loan with 3.5% down.

We have very little debt, dollar wise now so our debt to income ratio is very high. That is looked apon very favorably by the mortgage company. The house budget that we have for a house will put our monthly mortgage payment between 11-18% of our montly income, depending on where in our budget we fall!

Our scores go up every month by between 5-7 points ... you can easily do that with a year or more to do.

Good Luck.

 

[tinatark]

If you applied at a local bank for a car loan, you should ask them which credit report was used and what your credit score was for it. They should tell you.

Also, talk to a mortgage broker - there are many programs to finance a house, even with a low score, with the late payments being over 2 years old and considering your down payment. The broker will have many options for home financing.