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Thread: ok, so now what.....

  1. #1
    God/dess greenidlady1's Avatar
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    Default ok, so now what.....

    I did pay off a few things on my credit hoping to increase my score. I would like to finance a car and eventually a house at a reasonable rate. The only things I have left now are medical bills which equal about 5k. I was able to get a couple of things deleted, one to say "paid" and another that is "paid collection". Does anyone have any idea how much this will make my score go up if any at all?

    My husband had no credit, 0, he was "invisible". He applied for a secured credit card. He thinks we can finance a house at a lower rate then we can a car and if we do go ahead and finance a house it will be easier to finance a car. What do you guys think?

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    God/dess montythegeek's Avatar
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    Default Re: ok, so now what.....

    green, most of the time everyone can finance a house for less than a car in terms of a rate, especially a used car. Houses normally rise in value and cars usually go down in value, hence they are more secure for lenders. Plus, most house have much more collateral (downpayment requirements) than cars do.

  3. #3
    buffie06
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    Default Re: ok, so now what.....

    I say try for the house, even if the interst rate is a little more than you like, you can refi. when your scores are up, not to mention the paments alone will help the score go up. House first, imo not car b/c like was said before you are buiilding equity. Good luck!

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    Default Re: ok, so now what.....

    What monty said ...

    Basically, if you have 'some' sort of credit and a decent sized down payment, you should have no problem obtaining financing for a house. The rationale is that if the house has a current market price of say $200,000, and if the buyer puts down say $40,000, then the lender basically holds title to an asset which is worth more than the outstanding loan balance even if real estate markets should decline slightly in the future. However, when the buyer doesn't have much of a down payment available, secondary lenders such as PMI or MGIC become involved to finance the (typically) last 20% of the mortgage loan. There are also many other 'creative' financing options available. In general, the more 'creative' the financing, and the less of a down payment involved, the more expensive the financing becomes over the life of the loan (reference to 'loss leader' low initial interest rates that quickly readjust upwards, ARM's, 'flexibles' )

    Also keep in mind that the home (or car) purchase is going to be automatically reported to the IRS as soon as the deed/title is registered. The IRS is going to be informed in regard to the value of the property, the amount of the down payment, and the terms of the loan. The IRS computers will then undoubtedly check past tax returns to see if there is sufficient declared income to explain where the down payment came from, and where the monthly payments are going to come from.

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    God/dess greenidlady1's Avatar
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    Default Re: ok, so now what.....

    Yes, we filed income taxes

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    Featured Member scorpio's Avatar
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    Default Re: ok, so now what.....

    Your husband has a serious problem. being a credit "ghost" is worse than having bad credit. Get him to open secure cards, a small car loan, whatever, and make at least 12 months on time payments-or it will be your name only on any home loan. Also, if you are paying rent, make sure you pay with a check, not cash, not money orders, so that you can present the bank with 12 months cancelled rent checks-this is a very strong factor in getting a home loan when your consumer credit is bad or shallow.

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    Featured Member Vamp's Avatar
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    Default Re: ok, so now what.....

    I think the best bet is to build your credit score up first before getting a house. Fact is mortgage rates are going up. The better your credit score the better the interest rate will be and the more options you will have at closing. If you do not have 20% to put down on a house you will also pay PMI. PMI is an insurance you will be required to pay to insure the loan against default until you reach 20% equity. Those payments will eat up the mortgage interest you can write off at the end of year on your taxes.

    Getting the car and secure cards is a beginning with building good credit.

    Car loans are easier to get as well.

    Do your home work. There is really 30 factors that go into your credit score. The biggest flaw most have isnt deliquent payments but debit to income ratio can kill even a perfect credit score. Keeping outstanding debit to less or around 50% ratio to your income looks good.

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    Featured Member Vamp's Avatar
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    Default Re: ok, so now what.....

    p.s. If you do go for the house Be careful of "creative financing". Interest only and ARM mortgages are popular right now. If you plan on keeping the house for long time the safest is a 30 or 15 year fixed rate mortgage. No matter what anyone says mortgage rates are going up. It is better to get into a fixed rate now. In two years they will be much higher.

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    God/dess greenidlady1's Avatar
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    Default Re: ok, so now what.....

    If I apply for a secured credit card will it cause my credit score to initially go down?

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    Featured Member Vamp's Avatar
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    Default Re: ok, so now what.....

    From what I know secured credit cards are not reported as a secured card. But it wont make the score itself go down only if you are late. If you are looking for a good secured card call credit unions. Many credit unions have fixed interest rates that do not change even if your late. The interest on cash advances are same as a purchase. The secured money is put into a seperate account and accumlates interest. So when you are ready to a regualar card you will get more back then you put in. The fees are lower and if you have any problems they are more willing to work with you.

    Then again I'm am a huge fan of credit unions.

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    God/dess Deogol's Avatar
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    Default Re: ok, so now what.....

    ^^^ Me too. Banks suck ass.

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    God/dess Bridgette's Avatar
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    Default Re: ok, so now what.....

    Be sure to keep your balances low on any credit cards you get. Ie, keep the balance below 50% of the credit limit. If you have a $500 limit, make some charges every month but keep it paid down to below $250. That will help your score in a few months. If you make all your cc payments on time, but carry high balances (50% or more of the limit) this can actually hurt you - even tho you've been making on time payments every month. Have to pay more than the minimum each time. Preferably pay it off every month.

    Quote Originally Posted by pheno View Post
    When you lead a nontraditional life don't try to measure it with traditional milestones.

  13. #13
    AudreyLeigh
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    Default Re: ok, so now what.....

    Another option... buy Suze Ormans books... "Road to Wealth" and "Young Fabulous and Broke"... they put credit issues into simple terms... helped me a lot...all questions and answers rather than actually reading a book...

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