Posted on: 01st Jun, 2008 09:50 pm
Hello,
I will be graduating with master's degree in library science next spring, and I'm thinking about purchasing a home once I'm employed full-time. I made a lot of mistakes with credit cards during college (3-5 years ago) and I'm now in the process of paying off my old debt. My credit score has risen to 533 from 487 in March, but I would like to get it over 600 before attempting to qualify for an FHA loan.
I have taken some positive steps in this direction. I have a credit card with a $300 limit that I've made on-time payments on for almost a year, and I am up to date on my car payment. My only concern at this point is a few old utility bills that I didn't pay ($133 electric, $200 old cable bill, etc.) Should I be thinking about those also, or should I focus on taking care of the big credit card bills first? Will an old utility bill from five years ago hurt my chances of getting a loan?
Once I graduate, I will be making about $40,000/yr, and I'm hoping to purchase a home for around $90,000-$100,000 (which gets you a nice two or three bedroom home in my area of Ohio.) Is this feasible with my poor credit?
I feel a lot of guilt about my credit mistakes, and I guess I'm looking for some reassurance that I still can get on good financial footing.
I will be graduating with master's degree in library science next spring, and I'm thinking about purchasing a home once I'm employed full-time. I made a lot of mistakes with credit cards during college (3-5 years ago) and I'm now in the process of paying off my old debt. My credit score has risen to 533 from 487 in March, but I would like to get it over 600 before attempting to qualify for an FHA loan.
I have taken some positive steps in this direction. I have a credit card with a $300 limit that I've made on-time payments on for almost a year, and I am up to date on my car payment. My only concern at this point is a few old utility bills that I didn't pay ($133 electric, $200 old cable bill, etc.) Should I be thinking about those also, or should I focus on taking care of the big credit card bills first? Will an old utility bill from five years ago hurt my chances of getting a loan?
Once I graduate, I will be making about $40,000/yr, and I'm hoping to purchase a home for around $90,000-$100,000 (which gets you a nice two or three bedroom home in my area of Ohio.) Is this feasible with my poor credit?
I feel a lot of guilt about my credit mistakes, and I guess I'm looking for some reassurance that I still can get on good financial footing.
Welcome ms.librarian.
Good to see that you have at least learnt from your mistakes. Not only you need to improve your credit score but you will have to save a certain amount of money to buy a house for yourself. After you start working at least 2 years of employment history is needed to get the home loan and you should not have any late payments in the last twelve months.
Good to see that you have at least learnt from your mistakes. Not only you need to improve your credit score but you will have to save a certain amount of money to buy a house for yourself. After you start working at least 2 years of employment history is needed to get the home loan and you should not have any late payments in the last twelve months.
Hi Ms.librarian.
Welcome to the forum.
FHA is not a score driven program. But you should definitely try to improve your credit score. You can get FHA with even 3% down payment. But if you want to avoid the mortgage insurance then try to pay at least 20 % of down payment. So try to save money for that. BTW 2 years of employment history in the same industry is very much needed to get approve to check that you have the affordability to pay back the loan.
Feel free to ask if you have any further questions.
Best of luck,
Larry
Welcome to the forum.
FHA is not a score driven program. But you should definitely try to improve your credit score. You can get FHA with even 3% down payment. But if you want to avoid the mortgage insurance then try to pay at least 20 % of down payment. So try to save money for that. BTW 2 years of employment history in the same industry is very much needed to get approve to check that you have the affordability to pay back the loan.
Feel free to ask if you have any further questions.
Best of luck,
Larry
don't be too concerned with the 2-year employment history cited above. your educational years will be sufficient to document what you've been doing for the period preceeding your job.
as for those utility bills, they may not prevent you from obtaining credit, but you will likely be required to pay them in full prior to actually closing on a new mortgage loan. why not pay them now (or very soon)? that will also serve to improve your credit score, which is one of your goals anyway.
having a large down payment is a wonderful thing, but you'll also want to have some funds left over once you do make a purchase. after all, there will be necessities that relate to the home as well.
keep doing the good things you're doing, like paying your car loan and credit card account on a timely basis, but also do something with those small utility bills and that will work to your benefit.
as for those utility bills, they may not prevent you from obtaining credit, but you will likely be required to pay them in full prior to actually closing on a new mortgage loan. why not pay them now (or very soon)? that will also serve to improve your credit score, which is one of your goals anyway.
having a large down payment is a wonderful thing, but you'll also want to have some funds left over once you do make a purchase. after all, there will be necessities that relate to the home as well.
keep doing the good things you're doing, like paying your car loan and credit card account on a timely basis, but also do something with those small utility bills and that will work to your benefit.
Thanks for the helpful advice. I was hoping that my education would count towards my job history since it is a very specific degree. I definitely will tackle those old utility bills. Luckily, I think the total is under $1000, so I should be able to do that shortly.
It is possible that my father (who has near perfect credit) would co-sign as a non-occupant co-owner to help me get a better interest rate once I'm finally ready to take the plunge. Would that be a good possibility? I'd rather do this myself, but if it would make the process easier, then I'd consider it.
It is possible that my father (who has near perfect credit) would co-sign as a non-occupant co-owner to help me get a better interest rate once I'm finally ready to take the plunge. Would that be a good possibility? I'd rather do this myself, but if it would make the process easier, then I'd consider it.
actually a non-occupant coborrower won't help you with a better rate, but might assist with debt ratios. if your debt load exceeds certain parameters, it is possible that adding your dad might alleviate some of the concern of an underwriter.
i think, nonetheless, that you're on the right track. keep moving forward and you'll be quite all right, i should think.
i think, nonetheless, that you're on the right track. keep moving forward and you'll be quite all right, i should think.
HI Ms. librarian,
Your questions are very important. As for your credit questions. Do not pay your past collection accounts unless they are willing to delete the accounts. In paying a old collection it will resurface the debit and actually harm your credit score. If the items are deleted it will improve your credit score. The way to increase your score is to get 3-5 active accounts on your credit that you stay below 50% of the limit. So if you get a 500.00 credit limit only spend 250.00. Don't pay it off keep some kind of balance and make all payments on time. That will improve your credit the fastest.
Please feel free to visit my website for more tips on credit.
Malissa Harris
Credit Specialist.
Your questions are very important. As for your credit questions. Do not pay your past collection accounts unless they are willing to delete the accounts. In paying a old collection it will resurface the debit and actually harm your credit score. If the items are deleted it will improve your credit score. The way to increase your score is to get 3-5 active accounts on your credit that you stay below 50% of the limit. So if you get a 500.00 credit limit only spend 250.00. Don't pay it off keep some kind of balance and make all payments on time. That will improve your credit the fastest.
Please feel free to visit my website for more tips on credit.
Malissa Harris
Credit Specialist.
Hi Malissa.
Welcome to the forum.
You have asked Ms. librarian not to pay the old debts. But will it have a positive impact on your credit report? Don't you think that you should pay off your debts whether it is old or new? Definitely you should pay the new debts first but you should not also neglect the old debts unless you cannot pay or it is forgiven.
Best of luck,
Larry
Welcome to the forum.
You have asked Ms. librarian not to pay the old debts. But will it have a positive impact on your credit report? Don't you think that you should pay off your debts whether it is old or new? Definitely you should pay the new debts first but you should not also neglect the old debts unless you cannot pay or it is forgiven.
Best of luck,
Larry
telling somone not to pay a debt is some of the worst advice i have ever seen. it is a fallacy that paying off an old collection will worsen your score. there is no reason to not pay something except an absolute inability or an absolute unwillingness. in the latter case, there ought to be no creditors willing to lend to someone who would be unwilling to pay.
as for the credit card "advice" - do not believe that keeping balances at 50% of the limit will be of assistance to your scores. the threshold is 30%, and i seriously advise that it is best to keep your balances as low as is possible (zero is the best balance you can ever keep on a credit card).
we have had this argument in the past, and it gets truly tiring. if i owe someone $200 and refuse to pay it, how would it make sense to a creditor to honor my request for a loan? in this specific case, ms librarian is trying to restore her good credit by taking care of some old debt. i applaud this effort. not only that, but the debt totals she mentioned are minimal ($200...$133).
while paying off the debt, it would be worth the trouble to ask the creditors if they would delete the reference. if so, wonderful. if not, pay the bill anyway.
some of these posts boggle the mind - especially when they come from a "credit specialist."
as for the credit card "advice" - do not believe that keeping balances at 50% of the limit will be of assistance to your scores. the threshold is 30%, and i seriously advise that it is best to keep your balances as low as is possible (zero is the best balance you can ever keep on a credit card).
we have had this argument in the past, and it gets truly tiring. if i owe someone $200 and refuse to pay it, how would it make sense to a creditor to honor my request for a loan? in this specific case, ms librarian is trying to restore her good credit by taking care of some old debt. i applaud this effort. not only that, but the debt totals she mentioned are minimal ($200...$133).
while paying off the debt, it would be worth the trouble to ask the creditors if they would delete the reference. if so, wonderful. if not, pay the bill anyway.
some of these posts boggle the mind - especially when they come from a "credit specialist."
If you pay all your old debt make sure to get documentatiom that you die pay it,then send all docs to all 3 credit agencys,you will be fine!