Posted on: 18th Mar, 2011 09:47 pm
So I am not sure if my situation is unique or backwards or nothing special?
I have a low credit score, 537. I have been through a real rough past 5 years and although I struggled and did my best this is where I sit. It seems a little backwards.
I managed to pay off all of my credit card debt over the past 5 years, and although there were many 30 day late payments and what not I have nothing written off and nothing in collections. I do however have about 95K in student loan debt, with late payments. I even just discovered a loan today that I am 10 months behind on. Set up payment and will look positive from here on out but dang, that is a lesson learned for looking at your credit report for sure!! The backwards part to me is that I have a debt to income ratio of less than 6%. With that said, I have finally paid my dues and have landed a good paying position at the company I have been with for 4 years.. So here is what my stats are;
Credit Score 537
Monthly Debt payments $538 (my credit report shows $468)
Gross monthly income $6,200
Down payment $28,000
With that said I am looking to try and get a house in December. I am not sure how much I can repair my credit score in that time... Maybe 50 points? Is 10 months even a realistic time frame to be looking at getting a mortgage of around 150K? I understand the lower my score the higher my rate, but lets say I move my score up to 587 by December, do I even stand a chance with these numbers?
Thanks in advance for the help. I am sure you see these a lot, but I have read and read and read online and just can’t seem to get any real advice. I am doing this on my own like I have everything else in my life.
I have a low credit score, 537. I have been through a real rough past 5 years and although I struggled and did my best this is where I sit. It seems a little backwards.
I managed to pay off all of my credit card debt over the past 5 years, and although there were many 30 day late payments and what not I have nothing written off and nothing in collections. I do however have about 95K in student loan debt, with late payments. I even just discovered a loan today that I am 10 months behind on. Set up payment and will look positive from here on out but dang, that is a lesson learned for looking at your credit report for sure!! The backwards part to me is that I have a debt to income ratio of less than 6%. With that said, I have finally paid my dues and have landed a good paying position at the company I have been with for 4 years.. So here is what my stats are;
Credit Score 537
Monthly Debt payments $538 (my credit report shows $468)
Gross monthly income $6,200
Down payment $28,000
With that said I am looking to try and get a house in December. I am not sure how much I can repair my credit score in that time... Maybe 50 points? Is 10 months even a realistic time frame to be looking at getting a mortgage of around 150K? I understand the lower my score the higher my rate, but lets say I move my score up to 587 by December, do I even stand a chance with these numbers?
Thanks in advance for the help. I am sure you see these a lot, but I have read and read and read online and just can’t seem to get any real advice. I am doing this on my own like I have everything else in my life.
I would like to add that my credit card debt was $32,000. Not sure if it matters but after 5 years I am very pround of what I managed to do and haven't really shared it with anyone.
No longer a guest! :)
Thanks James. That is quite dissappointing. I have looked at the thread you posted, thank you for that!!
I currently have ,0 open credit cards and now with this score, I fear that I can't even get one with a $500 dollar limit to start showing a more positive credit history.
Wow seems like I am stuck between a rock and a hard place, I think one major negative on my report is the 9 installment student loans I have.. I need to do some research and see if consolidating these more will have a good effect on my credit rating. Again with a score of 537, I am not sure anyone would even do that for me.
I currently have ,0 open credit cards and now with this score, I fear that I can't even get one with a $500 dollar limit to start showing a more positive credit history.
Wow seems like I am stuck between a rock and a hard place, I think one major negative on my report is the 9 installment student loans I have.. I need to do some research and see if consolidating these more will have a good effect on my credit rating. Again with a score of 537, I am not sure anyone would even do that for me.
holmesdh, you'd be smart to do a couple of things, even though it might not turn around your score in the desired timespan.
Consolidating your student loans might bring you a lower payment, which might make it easier for you to prepay - not necessarily all that beneficial for a credit score, but an interest savings. The length of time that you are current on indebtedness is far more important than the lack of debt, etc.
As for obtaining a credit card, there are lenders who'll grant you a secured credit card (dollar for dollar, essentially). Simply deposit your $500 or so in a bank or credit union that offers this service, and they'll place a permanent hold on your funds, giving you a credit card that you can then use to help yourself repair credit. BofA is one of the lenders who'll do this, but I like credit unions for a lot of reasons. If you can find one locally, then try them first.
There are also the First Premiers of the world, but avoid them like the plague. They are, in my view, ripping people off with their arrangements. any online credit card issuer is probably off-limits to anyone with some sanity.
Your desired timing is going to be difficult for you to attain. You'll want to get your score upwards of 600 before even speaking to most lenders, though if you can find one that's friendly and will assist you in this process before you're ready to purchase, then that'll be beneficial. Yes, they do exist.
Consolidating your student loans might bring you a lower payment, which might make it easier for you to prepay - not necessarily all that beneficial for a credit score, but an interest savings. The length of time that you are current on indebtedness is far more important than the lack of debt, etc.
As for obtaining a credit card, there are lenders who'll grant you a secured credit card (dollar for dollar, essentially). Simply deposit your $500 or so in a bank or credit union that offers this service, and they'll place a permanent hold on your funds, giving you a credit card that you can then use to help yourself repair credit. BofA is one of the lenders who'll do this, but I like credit unions for a lot of reasons. If you can find one locally, then try them first.
There are also the First Premiers of the world, but avoid them like the plague. They are, in my view, ripping people off with their arrangements. any online credit card issuer is probably off-limits to anyone with some sanity.
Your desired timing is going to be difficult for you to attain. You'll want to get your score upwards of 600 before even speaking to most lenders, though if you can find one that's friendly and will assist you in this process before you're ready to purchase, then that'll be beneficial. Yes, they do exist.
All the time I hear people say these things, like to get a loan you're going to need a really great credit score.
But no one ever mentions cosigning.... I think that should be talked about more often, from my experience of what I know cosigning can help out big time and can actually help you get the mortgage if you don't qualify on your own. My Aunt bought a trailer and she could not own it on her own because her credit wasn't good at all, it was probably around 550 or so. I haven't asked I just heard it was not good. She got my Dad ( her brother ) to cosign for her and she got it easily, she didn't make a few payments and ruined my dads credit, so don't do what she did. But definitely find out if you can find someone to co sign for you, like your Mother or Father or someone in your family that trusts you and has good credit. That is what a lot of people do when they buy their first home because they have not established credit yet, like me. I am only 20 so I definitely am going to need a cosigner.
Make sure the mortgage you get - you can truly afford as well.
Also I know there is a bank in my town called Forcht bank and on their website it says no minimum credit score required, is that just to advertise?
So definitely go get a cosigner to help you get a home, and let us know how it works. :)
But no one ever mentions cosigning.... I think that should be talked about more often, from my experience of what I know cosigning can help out big time and can actually help you get the mortgage if you don't qualify on your own. My Aunt bought a trailer and she could not own it on her own because her credit wasn't good at all, it was probably around 550 or so. I haven't asked I just heard it was not good. She got my Dad ( her brother ) to cosign for her and she got it easily, she didn't make a few payments and ruined my dads credit, so don't do what she did. But definitely find out if you can find someone to co sign for you, like your Mother or Father or someone in your family that trusts you and has good credit. That is what a lot of people do when they buy their first home because they have not established credit yet, like me. I am only 20 so I definitely am going to need a cosigner.
Make sure the mortgage you get - you can truly afford as well.
Also I know there is a bank in my town called Forcht bank and on their website it says no minimum credit score required, is that just to advertise?
So definitely go get a cosigner to help you get a home, and let us know how it works. :)
Noenoe, that's a fine example you give us to describe the possibility of obtaining cosigners - hah!
Cosigners must recognize their situation - that they're 100% liable for payments. Defaults will jeopardize them, not only from a credit standpoint, but also because they might actually have to make payments.
Credit scores still make a great deal of difference. Rates are lower for people with higher scores, costs are lower; and there are very few lenders who'd take a risk with a sub-600 score just because there's a cosigner.
If "Forcht" bank were to renege on their offer to lend with "no minimum credit score required," they'd be subject to false advertising claims, and that wouldn't be pretty for them. I just checked their website to see if I could find that language, and it's right there.
Let's not get all enthused about not needing a minimum score, of course. I would assume that their approval authority is still going to take into consideration someone's ability to repay, and that the borrower has a history of making payments to someone at least.
Cosigners must recognize their situation - that they're 100% liable for payments. Defaults will jeopardize them, not only from a credit standpoint, but also because they might actually have to make payments.
Credit scores still make a great deal of difference. Rates are lower for people with higher scores, costs are lower; and there are very few lenders who'd take a risk with a sub-600 score just because there's a cosigner.
If "Forcht" bank were to renege on their offer to lend with "no minimum credit score required," they'd be subject to false advertising claims, and that wouldn't be pretty for them. I just checked their website to see if I could find that language, and it's right there.
Let's not get all enthused about not needing a minimum score, of course. I would assume that their approval authority is still going to take into consideration someone's ability to repay, and that the borrower has a history of making payments to someone at least.