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Thread: Credit score

  1. #1
    Featured Member Muyaha's Avatar
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    Default Credit score

    im thinking of buying a house. My credit score as of right now is okay I guess creditors would call it fair. Well my question is how can I up my credit score a little more? I've closed accounts that I don't use. I do have past late payments but none in the past 6 months. I need help from all you financial wizards!!!!

    I may have many faults, but being wrong ain't one of them.

  2. #2
    God/dess Emily's Avatar
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    Default Re:Credit score

    you can buy a house with fair credit, but to get a no-doc or stated income loan, you need good credit...like 680+. I'm just saying this because that's the route a lot of people in cash business choose to go.

    there is no quick fix to increase your score. A credit score shows credit-worthiness and that's the type of thing you can only prove with a long history of getting loans and paying them back on time and in full.

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    Banned Melonie's Avatar
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    Default Re:Credit score

    Emily is correct about a no-doc or stated income loan needing at least a 675 credit rating to even be considered seriously. Your score won't be above 600 if you still have records of late payments lingering on your credit report (which typically spans a period of 39 months) even if you do everything else in the world correctly from here on out.

    You've basically got two possibilities -
    A.) wait another 33 months until your late payments fall off of your personal credit report, or
    B.) attempt to create a new business entity (whose credit rating won't be affected by your personal late payments) and after 12 months allow the business to apply for the loan and purchase the house instead of you personally.

    Obviously option A. is much simpler and less expensive than option B.), but it will take you 2 years longer to qualify personally for a no-doc or stated income loan.

    Another thing to consider seriously is that the vast majority of 'financial gurus' are of the opinion that the Federal Reserve needs to raise interest rates soon to quell inflation and boost the exchange rate of the US dollar. Thus within a year it's entirely possible that mortgage lending rates may increase by 2% or more versus currently available rates. This may increase the monthly payment on the same house by $150+ per month, thus reducing the amount of a home loan you would qualify for. Your best bet is to start putting aside money right now as if you were already making a mortgage payment, for the purpose of making as large of a down payment as possible when you do become eligible for a no-doc or stated income loan. A large down payment, say 25% of the purchase price, would give bankers more equity in any loan they might make, reducing their risk and therefore increasing your chances of approval.

    If you're willing to wait out option A.), you will also be in a position to file three years worth of tax returns between now and the time that you'll be applying for a home mortgage. With three years worth of tax returns showing steady income to your lending institution, it's possible that you'll be able to qualify for a standard mortgage with a smaller down payment.

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    Default Re:Credit score

    Actually were I am at you can get a stated loan with around a 620 credit score aand probably less, your interest rate will just be higher.You do need a better score for the no doc non stated because you will be considered more of a risk.Actually there are things you can do to up your score a little.There probably are some web site out there that offer advise.I know a few things are not applying for credit and having you credit pulled too often.No late payments(thirty to sixty days) for a year and not carrying high ballances on your credit cards.Infact when you buy a house they may make you pay off some of your high credit ballances and my morgage lender only went back one year and looked at late payments etc.Hope this helps.

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    Default Re:Credit score

    Here's a link from a link that doc catfish posted in the Teach me to buy a car thread...



    maybe some info will be helpful.

    "Scoring Higher
    Knowing your credit score is important. Perhaps even more important, however, are the reasons detailed in your score report about why your score isn't higher than it is. Possible reasons for lower scores may include:

    *Too much debt on existing accounts
    *Past delinquency on accounts
    *Too many accounts opened in the last twelve months
    *Collection history
    *Excessive number of accounts with balances owed
    *No recent account history

    These are action items that you as a consumer can have an effect on. Your credit report changes day to day as you make payments or increase balances. For example, if you pay off your credit cards in full every month and maintain a responsible credit history, your score will gradually start to reflect those balances. "


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    Banned Melonie's Avatar
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    Default Re:Credit score

    Actually were I am at you can get a stated loan with around a 620 credit score aand probably less, your interest rate will just be higher
    .

    I agree, providing that the applicant has tax returns and other documentation to partially substantiate the stated income claim.

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    Default Re:Credit score

    Yes mellonie they would need those things otherwise it would have to be a no dod or no stated income loan.Those require and even better credit score.

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    Featured Member cash's Avatar
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    Default Re:Credit score

    ok this question is for melonie... its kinda off topic but, i'll ask it anyways... i was reading elsewhere where they said "too many credit enquiries can have a negative impact on you credit now what i would like to know is how many inqueries is considered too many? and who decides how many is too many?
    us: us: us: devil in disguise....

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    Banned Melonie's Avatar
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    Default Re:Credit score

    how many inqueries is considered too many? and who decides how many is too many?
    This information is proprietary to TRW and the other credit reporting services. However, the conclusion these services will draw from multiple credit inquiries is that a person is having problems getting a loan approval on a purchase they really can't afford, and is jumping from one bank/loan company to another in hopes of finally finding one who will approve them (with each bank requesting a credit report). The obvious way to avoid racking up multiple credit report inquiries within a short span of time is to make sure any big ticket purchase you are contemplating is something that banks will know that you CAN afford, based on your reported income !

    If your tax returns don't show sufficient income to justify the big ticket purchase, to avoid damaging your credit you're better off not even applying for a loan. Simply save up your money and buy the item outright. However, be aware that any purchase over $10,000 ( even lower in some states - NY is $3,000) will cause an automatic transaction report to be generated in your name and sent to the IRS.

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    Featured Member scorpio's Avatar
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    Default Re:Credit score

    I am a mortgage lender, and I can tell you you can get a 90%loan stated with a 580 score, or a 100% stated with a 600. The loans are out there. To increase your credit, close any paid off cards, dont max any card out (hurts you more than a late pay) and make payments on time. Most banks give you a break if you have been on time for 12 months.

    inquiries are bad because the banks fear that you might have opened additional accounts that are not reporting, thus increasing your debt to income ratio. 1 or 2 inquiries a month arent going to hurt you, but car shopping and filling out store and credit card applications can put 10-20 inquirieson your report in a month. remember, the banks look at the number of inquiries in the past 90 days.

    btw, stated means ( NIV-No Income Verified) you do not verify income. that means no paystubs or bank statements required, but you still need to prove employment and assets(bank statements).

    NIV-NAV: No income or assets verified. employment is verified.

    No Doc: You verify nothing. You can get a no doc loan with a 600 score, but you will need 20% down.


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    Banned Melonie's Avatar
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    Default Re:Credit score

    thanks Scorpio for providing specifics in regard to actual financial industry requirements for these various types of loans. Also, if you would, please give us some idea of the interest rate premiums involved for a no-doc loan, a no income verified no assets verified loan, and a no income verified loan with proof of assets, versus a conventional mortgage ?

  12. #12
    Featured Member scorpio's Avatar
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    Default Re:Credit score

    Melonie, when you get into the ALT-A (stated/low/no doc loans) There are so many variables. I'll will give you one example:

    I wrote a loan for a dancer who went NIV. This means that she stated her income and proved her assets. Assets will overcome most bank objections. (This girl had 6 months of her mortgage payment equivalent in the bank) She also has great credit. (700 FICO) This lender did not require an IRS form 4506, which means the Lender cannot alert the IRS by pulling tax transcrips. She did a 95% purchase. She put 5% cash down, and we split her loan 80/15. This means she got 2 mortgages. A first loan for 80% of the home value means no mortgage insurance. Her rate on a 3 year interest only ARM was 6%. Her 2nd loan was for the remaining 15%. This was a home equity line of credit and had a rate of 4%, with interest only payments. She bought a 130K condo and had combined payments of around $900 per month.


    I also just wrote a loan for a friend who owns a limo business. He has a 584 FICO, and went NIV. He bought a 320,000 home for 5% down on sub-prime loan with no mortagage insurance. His rate was 7.8% with interest only payments, which is the equivalent of paying 5%.

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