Increasing Credit Score/ Mortgage Loan probability, need advice?
Before reading this, please be aware that i have done research on all of the topics i am inquiring about, i am asking that you only share your answers to these questions if you have had real experience with these situations or if you are a professional in this field. I can get the "facts" from the internet about how much you should put down for a home, how to increase your credit, etc. i know where the information is, i am asking for advice from people who are experienced (have gone through this situation) or are professionals in the field/related field. Thanks.
Here we go…
Im currenty putting money aside to try to get into getting approved for a mortagage. I know what everyone else "knows" about mortgages, credit scores and loans from doing research on the internet and these "Answers". Im looking to get a few questions answered:
1. Is it a good time for me to do this? (im not asking if its a good time to buy a home in general, we all know the answer to this, im asking based on my situation after you read this)
2. Am i likely to be considered for approval of a mortgage? Why (not)?
3. Is My credit score considered "Reasonable" and if not, what can be done to get to that point?
Here is detailed information you should read before giving me a standard answer that i have already found online through research:
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Begin Credit Information
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My current Credit score is 660. I have had a Capital One card for over 6-7 yrs that has not been used, i now have begun to use it in late 2010 to try to increase my credit score. I have had five credit Inqueries reported, four of which all range from 3/30/2009 to 12/7/2009. I have Two Sallie Mae student Loans which i have consolidated and have never been late. I have one negative listing from an Old Navy card from 11/1/2004 which says "Paid, was past due 90 days" in the status. So currently my only Open items are my Student Loan which i owe 00 on, and my Credit Card which i only use now to try to build up my score, my limit is 0 of which i use about 0 or less a month and pay enough so that i only owe about of my balance (i keep hearing "never owe more than 30%, 20%, 9%" — who’s to know which of these is correct?)
A few Questions on Credit:
1. Once The Credit Inquiries are removed from my credit history (which i hear that they disappear after two years) will this increase my score, if so, what percentage of my score is based on this section.
2. After the negative entry from Old Navy disappears which i hear takes seven year, will this increase my score, if so, any ideas how it may impact the score
3. What do i do about further improving my credit score?
4. I can pay off my student loan, i have just chosen to pay 0/mo out of the required /mo. If i pay it withing the next 4-5 months, does this help me?
I have a friend who recently purchased a home with his Wife and he told me he increased his credit in a matter of 9 months by getting a secured loan and paying it off right away and writing letters to get negative items removed from his credit history (his case was a bit different since he went through identity theft). Does a Secure Loan really help?
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End Credit Information
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Personal Info, Mortgage Questions
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I currently live with my Mother. She has her job making just shy of K/yr (for over 12 yrs) and has a really great credit history and score of 860+. I run a small business (Est. 10/2009) and in 2011 put myself on W2 at 41K/yr, i am going to speak to increase it to K-55K to see if it helps. I am interested in, and have been digging for information wherever possible about trying to become a home owner by end of 2011 <–> Q1 of 2012. I have been getting a lot of mixed feedback from friends, home owners and people with legal experience (this just causes headaches–>but still focused on the goal)
I will be looking to put down K if this works out and somehow using my mother to get approved for the mortgage.
1. Should i request the Loan and use my mother as a co-signer, or vice-versa, please share your expert/experienced opinion
2. What do you think about the whole idea of trying to do this by end of 2011/start of 2012 with the information i have provided?
3. ANy suggestions or ideas?
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March 5th, 2011 at 4:13 pm
credit-report-score.10001mb.com – try this service to boost you credit score before getting loan. After credit repair you can get the loan with minimal interest rate.
March 5th, 2011 at 4:13 pm
You can get approved for FHA with Fico score as low as 620 (depends on the bank).
Inquiries show up on your reports for 2 years – yet they only affect the fico score for one full year. MyFico/ education. They only lower scores by about 2 to 3 points (minor).
FHA will look at your reports and note the item as paid, and they will act accordingly.
FHA does not focus on the credit score.
That’s why you see people with low scores get homes – they pay off items.
With that old navy item, try disputing it.
It coud be removed from your reports if the date of last activity is more than 7.5 years
Pay that credit card in full each month.
It brings absolutely, positively no benefit to credit scores to carry a balance.
The Fico score has no way of knowing if you are paying interest or not.
Use it for things you need like food or gas and pay in full to continue showing usage.
Student loans are installment loans. Not bad for credit.
More important is to pay that credit card (revolving credit) in full each month.
I would rather see you not pay the student loan, so you can have a bigger down payment.
No need for a secured loan.
You already have 2 forms of credit. A credit card and an installment loan.
A secured loan would only benefit if you had no mix of credit or no credit at all.
A secured loan will bring practically no benefit to you.
Scores of 860+ are impossible.
She is getting a Faco score from some site – not the real Fico score.
You can only get the real score from MyFico.com for a flat fee of about $20.
If you run your own business, you will need to have a steady income for at least 2 years, and have proof with your tax returns. They may require 20% down – be ready for this.
It costs nothing to request to be pre-approved for a loan to see where you stand.
Call them up, and make an appointment.
Banks do this for free in the hopes that you will make your mortgage with them…
March 5th, 2011 at 4:13 pm
1 if you are comfortable with buying a house, it is a good time.
2 don’t worry much about old navy. write a letter if you wish. sounds like you have enough good recent credit to overcome.
3 credit scores were basically invented for people who cannot read a credit bureau. by industry standards, the score is high enough.
4 i would keep the student loan open until i bought a house.
don’t know what type of home you are buying or the cost. so its hard to say if $30K is enough for a $100K home or a $600K home. in my opinion, 8-15% should be enough.
if you are a "w-2" employee, you need to have the title of general manager or operation’s manager instead of business owner. to a lot of people, business owner sounds cool and powerful. to a bank or finance company is sounds like a lot more risk! they might want years of bank records and 2-5 years of schedule c’s and so forth and so forth. the additional risk could be reflected in your APR.
as far as your mother helping you, i don’t think that helps much. her credit sounds great (and yes there are 850-860 scores,) but she may not budget for a home loan due to her income and sounds like you are not going to have a big budget issue.
good luck! hope this helps!
March 5th, 2011 at 4:13 pm
First, pay the credit card balance in full every month. There is no benefit to carrying any balance. It just cost interest. Carrying balances of more than 30% of your limit, hurts your score. Pay off the balance and your score rebounds. Don’t worry about the utilization percentage. It is included in your FICO score but not worth the effort to figure out exactly when the card updated and schedule charges and payments to get the perfect utilization rate. Just use the card and pay in full — that will do the most to build credit.
Second, hard inquiries really only ding you score a couple points. Your score quickly rebounds and by the 12 month point, the inquiry has very little impact on your score. When the age off at the two year point, it won’t make a difference. Also, that late payment has less impact as it gets older. By the time it ages off at the 7 year mark, it too won’t make much difference.
Your student loans are installment loans which build credit by making the payments over time. If you paid them off, the loans would still show on your credit report as paid for at least 10 years. They would still count in your FICO score, just not as much as open, active loans. But most of your score is based on the last 2 years and that would include paid off student loans.
Paying off the student loans would save you interest. It would also improve your debt to income ratio — a big factor used by mortgage companies. Personally, I think paying off the student loans would be the best way for you to go. A lower debt to income ratio is better than the few score points you might get continuing to pay on the loans.
Don’t bother with a secured loan. The cost of the interests just isn’t worth the few score points it might give you. You would be better off to get another credit card. Use it and pay in full. It would add a credit line and avoid interest. But don’t open or close any accounts within 6 months of applying for a mortgage.
Try to buy the house without your mother co-signing. You will qualify for a house that you can afford on your own. Better to settle for a little less house and not end up struggling to keep up with a payment beyond your means.
By the way, FICO scores only go to 850. Vantage scores go to 990 but and 860 Vantage score is probably only a 720 FICO. Creditors use FICO. You should make sure you are looking at FICO scores and not Vantage or Fakko scores.
A 660 FICO could get you a FHA mortgage, but you need 720 FICO for a conventional mortgage. Large downpayments do a lot ot overcome credit issues.
You may want to double check about your self employed status. Most mortgage companies are going to want 3 years worth of tax records. I’m not sure doing W2 for yourself will be enough.
March 5th, 2011 at 4:13 pm
I find most people answering in this forum to be ignorant of how credit and scores really work. Don’t take advice here (Except from me.)
Nine months to raise scores is WAY too long. My clients and referral sources would never stand for that.
Is your middle mortgage credit score is 660? or did you get "consumer scores" online, which are generally much higher than the scores your mortgage lender will get.
Were those "hard" credit inquiries or "soft" ones? Did you authorize them if they were "hard"? What month and year were they? On which Agency’s in-file? You see, even what you provided is NOT enough data for an expert like me. I always comb the Creditor’s / ‘Lender’s / Loan Broker’s credit reports before I can give expert advice.
Mortgage guidelines are changing pretty much every day as they were in summer and fall of 2007.
This is way too much to read, I scanned some of it. Why don’t you just find an honest, experienced loan officer and let them advise you?
March 5th, 2011 at 4:13 pm
, Sounds to me like you are a beginner. You are going to need to learn some
things if you are just starting. If you want to figure it out on your own, thats fine, however I recommend mentoring.
You can either spend $2000 on a prime course or an internet degree for the full value of
that venue, or you can get one source and learn as quickly as you are capable.
I prefer to learn at my pace, and with my strengths. The best location for online
teaching that I found in over 3 years of looking was the Millionaire Society. I suggest
it with my highest recommendations.
March 5th, 2011 at 4:13 pm
I know of a business where you can work from anywhere… you need a phone a computer and you are in business. It’s residual income so your income gets bigger as time goes on .. also they pay instantly when someone buys the product online. pretty cool!