Ask The Loan Officer
 

Feel free to post any questions you have about Your Credit Report, Empirica Score, Loans, Credit Myths, or anything else concerning Banking here and I'll do my best to answer them.

In addition to loans, I also handle a variety of other tasks, so if you have any questions about checking, savings, certificates of deposits, (ie what is the difference between the annual percentage rate and the annual percentage yield) or Individual Retirement accounts (IRA's) fire away.

Thanks for posting!

[Edit] This thread has gotten quite lengthy, to make it a bit easier to find information I created a couple more specific threads - feel free to continue posting on this one, but for those searching for information I'd imagine these links would be a bit faster than searching through here.

NoSoup's Guide to Buying a Property: The Basics
NoSoup's Guide to Obtaining and Maintaining Excellent Credit

Does my crappy credit ever really dissapear? Say I haven't paid my credic cards in, oh, 6 or 7 years, am in collection, is there any hope?


signed,

In hiding.

(I've actually paid most of the collection agents but some are still outstanding.)

Tricks:

The answer is fortunately, yes.

Depending on the type of collection accounts that they are, they will fall off your credit bureau in 7-10 years...

They sooner you pay them, though, the less they hurt your credit, and although strange, sometimes bad credit is better than no credit at all.

The more time that has passed between now and when the collection was opened, the less it will hurt your credit

Thanks for posting!

If I don't always pay my bills *exactly* on time, does that hurt my credit rating? And what about having a credit card that is maxed out, but is being paid off?

Greg700:

It depends on what exactly means. As long as your bill is paid within 29 days of it being due, the Credit Reporting Agencies (ie TransUnion) will never know you were behind. However, you will probably be charged late fees and your interest rate may be increased. On the 30 day, it will report to your bureau as a delinquent payment, damaging your empirica score as well as your credit history.

As for the second part of the question- Yes, it does hurt your score. Get that balance at least payed down as fast as possible. The Credit Reporting Agencies keep track of the highest balance you have ever owed on a line of credit. My advice is to apply for an increase on your limit as soon as you have paid it down considerably, and don't go over 60% of what the limit is. As strange as it may be, it is better to have two credit cards with balances at 50% of the limit than one card maxed out.

I hope that answered your questions!
Thanks for Posting!

do you HAVE to have a credit card to establish credit? Will my student loans do this, instead? Every time i even THINK about picking up a card, for emergencies etc, my parents freak, so I've been living w/ a checking acct and an atm card for years.
Also, why do I need credit?

Cheerios:

No, you don't necessarily have to have a credit card to establish credit. The reason I would suggest starting with it is because credit cards are by far most abundant (although pricey) way to establish credit, and also the easiest to qualify for.

Unfortunately, there is no clear-cut answer as to whether or not student loans build your credit. They do report to your bureau, but lenders often look at them differently than they would another type of credit, escpecially if they are in deferment.

In response to "Do you need credit, the answer is not necessarily. However, if you plan on purchasing a house some day, or buying an automobile that you can't afford in cash, the answer is yes.

If your parents are uncomfortable with you have a credit card, try contacting a local Bank or Credit Union to see if they offer secured cards. Basically, a secured card is when you give the lending institution $X, and they give you a credit card with $X limit on it. You will receive a monthly bill just like any other card, and it will report to the bureau the same as well. This is a great (and sometimes the only) way to establish your credit. I am sure that you will find that most institutions will be reluctant to lend any money to anyone that doesn't have any credit out there. After you have established yourself, you can contact the institution to see if you qualify for a normal credit card, and get your money back.

The longer you have credit history, the better your credit will be, so it is best to start as early as possible.

Thanks for posting!

I have a question for you. Is it true if you pay off the balance of a credit card and you close it out it will fall off your credit report? How about if you had some late payments. I did a stupid thing. After I purchased my house (I qualified for a mortgage!!) I decided to do a debt consolidation company because I had about $25,000 in credit card debt. Well I got duped big time. They turned out to be "For Profit" and for the first month they held my payment and didn't pay my creditors. Well needless to say they were reported as delinquent on my credit report. I soon switched to a Credit Counseling Service which has been outstanding. However..now I want to refinance my home and get a Home Equity loan to pay off my credit card debt. (My house has appreciated $50,000 in the last two years). So I will revisit my question--if I am lucky enough to qualify for a refinane and Home Equity Loan and I pay off and cancel my credit cards..will they drop off my credit report? Or will it be subject to the 7-10 year rule?

RyeZingSon:

If you pay off your credit cards and close them, the Credit Reporting Agency will see exactly that. They are still subject to the 7-10 year rule. However, because they are closed, (and not charged off) they will impact your bureau less and less as time goes by.

Consolidating your debt either on a first or second mortage, by the way, is an excellent idea. First and foremost, you will almost certainly have a lower interst rate than the credit cards, and the interest you pay on a mortgage is generally tax deductible.

If you don't qualify to refinance your home at a normal institution, see if you can qualify at a more high risk institution. Even if your second mortgage rate is 10%, it is much better than the 20%-29% you are probably paying on your credit cards.

Good Luck! Let me know how it works out.

Thanks for posting.

I'm 30 years old and will be finally joinig the workforce in about 3 years with ~400k of student loans (nope, not a typo). I can expect to earn ~$150 to start and going up to 250-300 within 5 years.

I have pretty good credit (a single 30-day past due about 3 years ago), 3 major credit cards (one with 11k balance of 17k limit, currently only paying the minimum). My credit history only goes back to 1998 though.

Anything I should be looking out for? Any advice at all or thoughts in general? I don't own a home now but will be looking in 3 years.

TIA.

Thanks for the previous reply.

Next question:

The 7-10 year rule. When does the clock start? From the first mark? From when they give up? Do bad marks continue to accrue if you've defaulted? For how long?

Popo:

First of all, for anyone else viewing this post, I PMed Popo for more information. I will copy that message here:

Before I respond to your question, I just wanted to get a little more info.

Do you currently have a source of income? Do you have any other credit cards? And, just out of curiosity, what will you be doing?

Also- do you mind if I post your response?

Thanks,
NoSoup
--------------------------------------------------------------------------------
Thanks for getting back to me.

My only source of income is current student loan and my wife who's a CPA. I have 3 credit cards in total, the other 2 with no balance (15k and 10k limits), plus one BestBuy card almost maxed at 2k but to be paid in full in a month. That's it.

I just applied for a new card that has 0% for 12 months on balance transfers then 8.9% fixed after that. If approved, I will close one card. Or should I close one right now before the application is processed?

I'm a dentist in a specialty program, and no problem with posting this response.

Thanks for the help.
--------------------------------------------------------------------------------

In response to your first post, I would pay down that Credit Card a little bit, you are currently sitting with a 64.7% balance to limit ratio, It is best to stay under 60%. If you pay it down to 10k, you would be under that 60% mark.

In response to the PM that you sent me, I would close out the Best Buy card. Because Best Buy is considered a retail store, any credit that it lends out is considered higher risk, or "bad" credit on you bureau. Another reason you should close it is because it is currently maxed out. Credit Reporting Agencies keep track of the highest balance that you have ever carried on a card. I know that Best Buy generally encourages the use of their cards by offering 0% interest on your purchase for a set amount of time, but it may be better to spend the couple extra bucks now and have better credit later.

Depending on how much money you have extra each month, you may want to start contributing to an IRA account. I would suggest a Roth IRA, simply because in my opinion it is the best deal out there. I understand that in a few years you will be making quite a large sum of money, but with the Roth, there are fixed contribution limits each year-your income has no impact on how much you are allowed to contribute.

My only other advice is to keep your finances in check. I'd imagine it would be very easy to run up those credit card balances knowing that in a couple of years you will be making such a large sum of money, but it will be worth the wait. When you enter the workforce, I would suggest paying off all of your outstanding balances (on any credit cards or auto loans) before moving into a house or making any drastic changes to your lifestyle. It would probably only take a couple months, and it will be much easier to pay them off with your current lifestyle than the one you adopt later.

Good Luck, and if you have any more questions, let me know.

Thanks for posting!

On a sidenote, popo's post is a great example as to how debt is relative. Speaking for myself, I would be in quite a pickle if I had $400,000.00 dollars worth of school loans, but then again, I am not making a quarter of a million dollars a year. Thanks again, popo.

Tricks:

You're welcome.

As for the 7-10 rule, it is ongoing as long as the accounts are open. If you were over 30 days delinquent on a credit card last month, that will continue reporting for 7-10 years from that date.

Collections, however, are a different story. The collections start the falling off process from the date they are opened. If you had an account go to collections 2 years ago, it should fall of in 5-8 years from now.

Bad marks don't continue after you have defaulted, but they do remain on your bureau, and will continue to hurt your score as long as they are there. Having a paid collection hurts your score much less than an open one, having you collections paid off may also make you eligible for a loan of some sort. If you do have several collections out there that you are thinking about paying, contact the collection companies and see if they will meet you halfway. Many time, you can call them up and say "I will give you $X to close the account, and often they will agree, or at least counteroffer.

I hope that answered your question

Thanks for posting!

Thanks NoSoup.

Is there any fear in having such a large sum of debt, even with the income? Will I be making enough so that home/car loans will be possible?

Popo:

I can't answer your question universally, but from my experience you shouldn't have a problem. Generally, most lending institutions base the loan decision off of the person's debt to income ratio. (Total Monthy Payments divided by Total Monthly Income)

It basically depends on your payments. If you are making approximately $150,000 a year, you will be making approximately $9,375 net per month. Most instituion like to see the debt to income ratio below 50%, so as long as your payments (including whatever you are applying for) are less than $4,687.00 per month, you should be fine.

The above rule generally applies, but for people that make an exceptional amount of income, it is usually ok for the debt to income ration to be higher. The reasoning behind this is because it will be much easier for you to afford another $250.00 payment, even if your debt to income ratio is already at 60%, than someone who makes $1,000 net per month to make that extra payment.

FYI: Generally, any debts reporting to your credit bureau are considerded "debt" when calculating your debt to income ratio. Also, Rent/Mortage Payment is also included. If you have a mortgage, but your payments don't include escrow tax, the tax will usually also be included in the calculation. Insurance payments, utilities, and other day to day expenses are not, which is why it is important to leave enough for the person to live on. (Hence the 50%)

If you need anything else, just ask!

Thanks for posting

Thanks again for the great info.

I was just wondering about that new credit card I applied for. If the application includes a balance transfer, should I go ahead and close the card with the current balance right now before the application is processed so that approval of the new card will not give me 4 cards? Or does it not make a difference?

It doesn't really matter if you close it now or shortly after you transfer the balance. Even if the Credit Reporting agency were to see that you had four open credit cards, the next month they would see that one of them was closed.

I hope that clarifies things- if you have any more questions, let me know

Thanks for Posting!

thanks for the patience, but I mean will it make a difference in terms of how it will look for the new card application?

Popo:

Sorry, I misunderstood the question.

It is possible that it will make a difference, however, it really depends on how soon you want that card. Because the Credit Card Companies only report once per month, If you were to close it in May, you would have to wait until mid-July until you can be sure that it has reported closed. I hope that is what you were looking for, if not, let me know.

Thanks For Posting!

I have over 35k in student loans with 3 different lenders. Should I consolidate?

Hey Jesus Pimp... I'll handle this one for No Soup...

The Generic Answer is yes... You should consolidate... UNLESS... you plan on Taking out more student loans. The Reason being is you can only Consolidate your Student Loans once... I think they're working on a law now where you can consolidate a new loan with a consolidated student loan but I'm sure NoSoup can clarify that for ya.

About 2 months ago some places were offering Student Loan Consolidation as low as 2.4% but I think it's averaging about 3% now. If the Economy turns around... look for those interest rates to go back up. I would do it now while the gettings good.

------------------------------------
Now... for my own Question to No Soup.

My wife had a credit card before we were married and quickly charged it up to the $750 limit. She didn't take into account the finance charges so of course.. it went over the limit, resulting in an over the limit fee... which raised the APR... Blah blah blah.

She called the company and they told her what she needed to pay... and she did... taking it back below the limit but... at the higher APR it exceeded the credit limit again and all the charges that went with it. We were having Financial problems at the time so we missed a payment. Over the course of 1 month thanks to all of these bunk ass charges... the Card was about $110 over the credit limit.

We've made payments on it but we could never get it below the Credit Limit. My wife kept making payments on it but they were/are unwilling to stop the excessive charges, mostly because she keeps making payments.

The Bill is now $1600 (Despite paying about $900 last year to the damn card) and there seems to be no end in site.

My question is two fold. Since the company is unwilling to settle (because my wife has an established payment history) should we let it go into collections so the charges will stop. Collection Agencies are more willing to cut a deal (I've heard).

Or should we keep paying essentially putting us further and further into debt. The reason my wife kept paying is because the company doesn't report her as being late as long as she pays by the due date (which I believe is untrue.)

She doesn't want to stop paying because she doesn't want to show late payments on her credit... but I figure being over 100% over the credit limit hurts us more than being late.

Any Thoughts

Thanks Grimlock for the info. I was thinking of going with this company http://www.glsloans.com/ . What do you think?

My Advice would be to go to Sallie Mae or Direct Student Loans (Gov't). I don't know anything about glsloans and doing a google search doesn't bring up too much useful info on the company.

The two I mentioned are pretty darn good about working with you... at least that's been my experience. Another thing they do is lower your percentage rate if you sign up for automatic withdrawl from your bank account. It's only like a half or quarter % but if you have a lot of loans... over time 1/2 or 1/4 percent reduction can add up to thousands.

All I can say is get a paper Application and explanation of policies from gsloans and read over it thoroughly. Do the same with Salliemae and DirectLoans...

Also... I would wait until after July 1st because I think the interest rate may be dropping for loans and will allow you to lock in a lower rate.

Also... I would wait for SOUP to give his 58cents.. as he's a loan expert and me... I'm just a working stiff kicking myself in the butt but locking in that 7.25% Loan eight years ago.

NoSoup *Yelling* You have come to my rescue!

We have recently sold our house and want to build in the spring. We are currently renting at half the cost of our previous mortgage to save for the down payment costs of a construction loan. I also plan to purchase property now, hopefully Land Contract, to lower the land cost when rolling it all into a construction loan.

Any pointers? Suggestions?

Are VA loans any good for building? My previous realtor and mortgage officer stated there is a moutain of paperwork to go through and it ends-up not being very beneficial (interest is higher). Is that true?

Is there any way around having 15-20% down to start construction?

I am sure there is more, but I deeply THANK YOU for sharing your knowledge. If there is anything I can do for you, please let me know!

candyman

Prjkt4:
It depends. Depending on the company, it may report to your credit bureau. It definately could play a role in credit cards or loans, but the most important thing is that you keep making payments, and it doesn't fall delinquent. If it already has, try to pay it off as quickly as possible, if you must, contact the company and see if they will set up a payment plan for you so that it doesn't keep reporting as delinquent to your Credit Bureau.

Thanks for Posting!

Actually, Grimlok hit it right on the head. I would check to see A) Whether or not the interests rates drop in July, and B) How beneficial it would be. (How much would it lower your payment & how much the rate would drop)

Watch those interest rates though! I highly doubt that they will skyrocket anytime soon, (though I am no expert) but if they start to climb, I would consolidate them before the rates go any higher.

As for the law that Grimlok mentioned, the last I heard they were working on it, but I wouldn't recommend depending on it, seeing as how we are in America, and although the laws are usually beneficial, they take forever to pass.

Thanks for Posting!

Well, Grimlok, as you probably know, that is a tough situation. I know what a pain it can be once you have "angered" one of your credit cards.

First off, your wife is correct (I'm sure she'll thank me for this), as long as those payments are made on time it will not report to the Bureau as late.

In regards to being over the limit, paying late is actually the most damaging mark on your Bureau. Granted, it isn't exactly good to be over your limit, but as long as you keep making those payments, your score won't be irreversably damaged.

As far as you collection idea, I would not recommend that. It is true, collection companies generally are willing to cut a deal with consumers because they buy the debt at a discount, but it generally has to be over 120 days delinquent to go to a collection agency.

I have several suggestions.
1) Maybe you could apply for a different credit card, and transfer the balance over. You will probably have a lower interest rate, you will no longer be over the limit, and you may even qualify for a card that offers 0% on balance transfers.

2) You could try to move that debt onto something else, possibly a signature loan. If you have a vehicle that is free and clear, or possibly even a vehicle with some equity in it, you may be able to secure that loan. By doing that, you will probably get at least a fairly low interest rate and finally be able to close that card out.

3) Another choice may be to contact a debt consolidation center. Generally, credit card companies are a lot more apt to listen to a debt consolidation center than you, the consumer. By having a DCC call, it is basically telling them that they are in serious trouble of possibly having you default on that balance. (Regardless of whether or not you really are.) It wouldn't surprise me at all if they lowered your interest rate and backed off all the over the limit charges...(They're thinking, "Hey, some money is better than none."

4) Finally, if none of the above options are feasible/available to you, I would suggest that you just hammer on that card. Make that your numero uno priority to pay it off. Every dime that you can spare, save it until that bill comes, and send it to those greedy bastards. Hack up that card and send it with one of your payments. That will accomplish both not allowing that card to be used by you or your wife, and will probably give you a little self satisfaction. I know it may seem like a heck of a long tunnel, but I promise there is a light on the other end.

I hope this helped!

Thanks for posting!

I would suggest the obvious... Save... Save your butt off.

I am not sure if I would suggest purchasing land now. If you already have a plot picked out and want that specific one, maybe you should, but If you don't, I wouldn't actively look for one.
Instead of making that extra payment each month, I would suggest putting in in some type of savings vehicle until you are ready to start the construction. Better to earn interest than pay interest, no? As long as you save that payment each month, you will actually have less debt at the start of construction than purchasing that land now.

As far as VA Loans go, I am not too familiar with them, but I think you said the answer yourself. "My previous realtor and mortgage officer stated there is a moutain of paperwork to go through and it ends-up not being very beneficial" Your realtor and mortgage officer make commisions if you work through them, the only way to find out for sure is to check. Although there may in fact be "a mountain of paperwork," it'll be worth it if it'll save you thousands of dollars. And besides, aren't first mortgages always a mountain of paperwork?

As far as the 15-20% down, I believe that it depends on the instituion that you go through. It is probably a very wide-spread practice, but you may be able to find that "odd" institution that doesn't require it.

As with all construction, I don't know how handy you are, but if you can do it yourself, do it, it'll generally save you a ton of money. Even if you are not to handy, it will probably be a lot cheaper to hire your brother-in-law or a friend to do some of the work than contractors.

One of my co-workers recently built a home, (doing much of the work using with her husband and brother,) and although the loan was only $114,000 dollars, by the time they were finished the appraisal came back at just under $250,000. Not bad for a little old fashioned elbow grease.

Finally, as far as doing something for me, a simple "thanks" will suffice, unless of course you feel like joining my army in "The Other Revolution" If so, I would be greatful, and all you have to do is click this link -----> Join the Other Revolution and the directions are there.

If you have any more questions, let me know.

Thanks for posting!

Thanks for the help NoSoup!

Simple question: I'm recently out of debt.

I've been thinking about getting a new car, using an up-coming bonus as either a downpayment or as the whole thing, depending on how much it turns out to be, but now I'm thinking it'd be better to get a used car and make a start on a cushion for buying a house.

I'm about to start a new lease at just over $800/month on my apartment, which is what gets me thinking this way. A coworker suggested I could go for a no-money-down mortgage, as a first-time buyer, but I don't feel I have enough cash in the bank just in case my job goes away or some other kind of nasty thing happens.

So far, I have a few grand in investments, a few grand in the bank, and some retirement investments, which I refuse to touch if I can avoid it. It makes more sense to me to go for the new lease renewal and just save like crazy this coming year. What say you? And thanks!

just an amazingly productive, responsive, group effort thread. wow.

I've always thought of candyman as the sweet hookup with the passes. I now know him as a guy looking to buy property and married. Thanks for sharing so much, guys.

denim:

First of all, let me congratulate you on being debt-free. (Wow... I think I am sounding more and more like infomercials everday now...)

Secondly, you are very wise to not touch those retirement investments. You didn't say where they are or what they offer, but you hit the nail on the head by leaving them alone.

As to your question, it is difficult to answer without knowing the amount of the bonus, the payments that your are willing to make on a mortgage, and if your rent is only yours or if you are married, or have roomates, etc.

If you would be able to post a response, I would be able to answer you much more accurately. Sorry for the delay, but I want to do my best to not post any bad information. I would be horrified if someone took my advice and I was completely wrong due to lack of info.

Thanks for Posting

Thanks! Now that I'm there, I get more spam telling me how to do it. :D


I've got a RO (roll-over, not Roth) IRA and an active 401(k), with maximum matching. A buddy of mine is planning on tapping his in a year or so to act as a downpayment for his first house. I think he's crazy, but it's his life.


No other people are involved. Well, there's a cat.

The bonus should be noticable, but I don't think it'll be much more than a good fraction of a 20% down-payment.

OTOH, my mom suggests that adding 5% for mortgage insurance effectively adds to the rate of the mortgage. This strikes me as true.

Okay, I have a question..

I am 19 and have never had a credit card or any credit.

I dont have bad credit but dont have good credit either.

I aplied for a bunch of credit cards and was denied by all on the basis of having no credit.

then i applied for a student credit card and was denied because I had so many recent inquiries for credit cards.

How long do I have to wait untill i should reapply for a student card?


Thanks
Allen


PS....Im trying to get an American Express Blue for Students card

Denim-

Sorry for the delay, I have been pretty busy these last few days. I would suggest that you renew your lease and save money for a down payment. To enable you to save as much as you can, I would either buy the used vehicle, or depending on the condition of your current vehicle, see if you can hold on to that one awhile longer.

If your bonus is enough to pay for the used vehicle outright but you are uncomfortable not having a "just in case" fund, consider a cd secured loan. Generally, you will have a very low interest rate and that way when you are finished paying it off, you will still have that money (plus interest) for that down payment.

As to the 5% for mortgage insurance, I am not really sure. I would check with your local financial institution. As far as I know, it varies from state to state or institution to instituion.

If I can be of any more service, let me know.

Thanks for posting!

Unfortunately Allen, there is no clear cut answer. It depends on who you are working though. A pretty generic time frame would be three to six months.

I see you have delved into the credit paradox. "You need credit to get credit." Your best bet is to try and save up a couple hundred bucks and apply for a secured credit card. Check with a local instituion to see if the offer them. Most instituions will put your money in a certificate that you cannot withdraw from (even with a penalty) until you have established your credit, some have the ability to freeze the funds in a savings account. Be careful with your new credit card, though. Try and keep the balance under 60% of the limit.

If you need anything else, just ask.

Thanks for posting!

Hi NoSoup, great thread!

I'm in a bit of a pickle here. Basically, I've been unemployed now for over a year, and I've got pretty massive debt that I've been unable to pay off (barely surviving with enough to take care of the month to month necessities.) Most of my credit cards and loans have all defaulted and been passed onto collections.

Most of these agencies are offering me deals to pay off the debt for 50% or less of what I actually owe them. Personally, just from what I've read in the past, I've come to the conclusion that that is a bad idea, and that I should try to pay the debt off for the complete amount owed. Is this correct in thinking?

Personally, I'm hoping that my next "opportunity" is around the corner, however I've considered declaring bankruptcy, or once I get a job that pays a little more, perhaps using the services of a Consumer Credit Councellor. I'm REALLY hoping to be able to build/buy a house within a year or so of getting back on my feet, and feel that once I get a real job, I could probably pay everything off within 6 months.

What advice could you give me in my current situation?

Thanks in advance!

LutherMac:

In regards to your question about settling the collection debt, go ahead. The longer they remain open, the more they will hurt your credit. As far as I know it reports the same whether you pay the full amount or pay a percentage.

Pay the collections as soon as possible- close them as soon as you can. That way, when you get back on your feet some time will have passed so that your credit may have a chance to improve.

As far as bankruptcy is concerned, it is difficult to say. It will remain on your bureau for 7 - 10 years, but then you will probably be debt free. If you are going to declare bankrupcy, do it as soon as possible to get the clock ticking. It is difficult to recommend a course of action because I don't know the amount of "massive" debt that you have, nor the amount of income you will be expecting.

I suspect though, that if you are going to be able to pay all the debt off within 6 months, it may not be worth declaring bankrupcy. I hope everything works out for you. Good Luck!

If you need anything else, let me know

Thanks for posting!

Forks:

Fortunately, there is a way to get that mix up taken off your credit bureau. There is a document that you are required to mail in to the Credit Reporting Agency that I can forward to you if you like. It would probably be best to send a copy of the letter stating that the information was incorrect that you had recieved from the governemnt with the document. If you want, you can PM me your name and address and I will mail you one from work. If you prefer not to give your name out to total strangers, I will look around online to see if I can find the document.

As to why you are being charged high interest rates, the only way to find out is to check. I would recommend going to TransUnion and purchasing your credit bureau with score. The link above directs you to that product, it is $12.95 I believe, but it is worth it. It tells you your current balances, your FICO score, what is hurting your credit, how to fix your credit, and how lendors see you. If there is anything else I can do for you, let me know.

Thanks for Posting!

Hello everyone, it's been awhile since anyone has posted...

Does anyone else out there have any questions?

I have 2 student loans, one private, one federal. There's no way for me to consolidate the private loan I just found out. As for the federal loan. Should I consolidate it?

This may be a bit late in the discussion, but I wanted to clear up some misinformation that came out about Roth IRAs earlier in the thread.

If you are filing single, you can contribute the maximum amount to a Roth IRA only until your AGI reaches $95,000. There is a gradual phase-out to the amount you can contribute, until your AGI reaches $110,000, at which point you are ineligible to contribute to a Roth IRA.

We just bought our house in February. Is there a certain amount of principal we have to pay down before we can get a home equity loan? We'd like to pay down some high interest debt, plus put a few home improvements on it, plus be able to deduct the interest...

On paper I make about $7,500 a year. My only assets are four junk cars (all paid for). My only expenses are rent and utilities. I live in a college town where property values and rents are outrageous. I'd like to buy a rental property in the $80-100k range which would consistently rent for $1500 a month. I don't have shit for income but I can put 20% down. Do I have a chance in hell without a better job? With existing leases on the property?

I would be very interested in a rental property in the $80-100k range which would consistently rent for $1500 / month. Rent (yearly) typically amounts to roughly 5% of the property value, so for an $80-100k place, don't expect the monthly rent to be much beyond $400. Note that this describes the situation in Australia, though I assume it would be very similar in the US.

What you describe is a return of between 18% and 22.5% - basically sounds too good to be true.

It seems that I'm an expert at financial calamities:

I've got a couple of credit cards maxed out, i run on a low - to - negative bank account balance, and i've got tons of other bills piling up.

Every couple of weeks whenever I think i can pay some of my debt down (most of my debt is in collections now) something new happens.

I've gone to the hospital from heart-attack symptoms (i'm a 23 year old college student...no insurance), i've had creditors try direct debits from my checking accounts at exactly the wrong times (case in point: my checking account is $-380 right now due to a direct debit). My car broke down and I had to pay about $500 to fix it, then the next day I got pulled over 200 miles from home and had my car impounded. due to my inability to get a ride to go pick it up it sat there for about a month racking up "storage fees", after it's all said and done i'll be out $800 or so on that little adventure. Oh, and since I didn't have a car for a month I lost one of my jobs...the higher paying one :(

anyhow, i'd estimate I've got about $10k of debt going on right now (not even counting my student loans)

what the hell should I do? I've seriously considered faking my own death. Seriously.

Sorry About the Delay! I have been pretty busy lately, and haven't had a whole lot of extra time on my hands... I just got a new job (same field-lending) and I just have a lot of things that I've had to do.

As to your question, Jesus Pimp, I would check it out. See what interest rate it would be if you consolidate it, as well as what the payments would be. If it would be advantagous, consolidate. If you want, you may want to wait to see if the rates go down anymore. I know a few people that have their loans locked in at 9.5%... a great rate at the time, but...

The moment you hear that the interest rate is on the rise (If they raise prime rate) I would consolidate and lock it in if it is lowering your rate.

Thanks for posting!

nicion- you are correct. I just gave the basic info, but thanks for elaborating on my comment. Just goes to show what a great community TFP really is, and what a wealth of knowledge we have if we pool it all together.

Thanks again!

Does the number of credit cards effect you when you apply for a home loan? I have about 10 credit cards and my wife has about 12-15, only like 2k total debt not counting student loans.

Excellent Idea. There is no specific amount of principal that you must pay, it just depends on the institution. Most institutions will only go 100% of the equity, but some will go up to 110% - I've seen some as high as 125%

As far as the appraised value, if you can get some of those home improvements done w/out the loan, you should have more room to play with when consolidating your high interest debt. (Assuming, of course, that the value of the home increases) Something you may want to consider in the future is a home equity line of credit. There are both advantages and disadvantages, but overall it is not a bad product to have.

I hope this answered your question, if not, post again!

Thanks for posting!

Tough situation. Depending on what you mean by "rental property," some institutions may consider your future rent as part of your income. If you were to buy, say, a duplex, and live in one side while the rent you charge would cover the mortgage payment (as well as escrow tax) on paper, some institutions may allow that. I am sure it will be difficult to find an instituion to allow that, though, seeing as how rent is not guaranteed, but it may be possible.

Your best bet would probably be to either get a different/another job where your income on paper is higher, or find some way to show the actual amount of income you make. Granted, you'll pay more in taxes, but even if it only for the time period of buying the property, It'll probably be worth it.

If I can help with anything else, let me know.

Thanks for Posting!

Nicion, you are correct for the most part, however, boredjerk did say that he lived in a college town with outrageous rental rates. The amount of rent you are able to collect varies widely based on your location. For instance, I live in Green Bay, and I am currently renting a 1200 square foot 2 bedroom apartment (vaulted ceilings, fireplace, attached garage) for right around $600.00/month. I was looking at several places in Chicago, and a similiar apartment there would cost me almost $1400/month. I would assume there are similar variations with duplexes or other rental properties.

Ouch... I guess it is true when they say it rains, it pours.

Well, you do have several options. You didn't say how much you make, but I know that it is a terrible, terrible place to be in.

Your first option would probably to call the collection companies and see how low they will settle. Because they buy the debt at a discounted price, they are generally willing to settle for a good deal less than what you actually owe them.

Your second option would be to contact a debt-consolidation company. They generally will try to settle with the collection companies for you, speak with any creditors that you have to have late fees reversed and lower the interest rates, and you'll generally only have to make one payment per month for all of your debt.

Finally, your third option is to consider bankruptcy. Wipe out all your debt, (at the cost of your credit score) chalk it up to a learning experience, learn your lesson and start anew. Take note of what put you in that position in the first place, and don't make the same mistakes again. Your credit history is probably already not too great, seeing as how most of your debt is in collection accounts, and this will give you a fresh start.

I hope this helps, and if you have any more questions, feel free to post or to PM me. Keep me updated!

thanks for the quick reply.

after losing one of my jobs I pull in about $1000 per month. I'm asking my boss if I can go full-time since I don't have another job anymore. I'm currently renting, and I'm a student.

if i declare bankruptcy, will i ever be able to get student loans again?

As it is right now it's like pulling teeth to get a student loan; i need a parent to cosign for me, even then it's iffy.

I'm afraid that with a bankruptcy i'll have to put off school for 7 years.

and of course, i can't pay for school myself :-/

Thanks for the info. Good thread. I sobered up and remembered I asked. I've wrestled with the duplex idea before but I'm living cheaper now than the rent I could collect from the apartment. I need a better job anyway, but had a pipe dream I might be able to avoid it.

Nicion: it's true because renters are college kids and not families. A junky 5-bedroom rents to 6-7 students for $250-300 a piece. Some streets are zoned so no more than 3 unrelated people can live in the same house.

Yes, it does. Financial Institutions don't just look at the debt that you have, but the debt that you could incur. It is best to have three to five credit cards. Any more than that could possibly damage your score. If you feel that you need the extra cards for emergencies, close them and ask for higher credit limits on the best cards that you currently have. (ie low interest rate, No annual fees, etc.) There isn't really any reason to have 25 open lines of credit.

Hmm... It probably will be very difficult to obtain a student loan after bankruptcy, however, Bankruptcy does not necessarily eliminate all debt from student loans.

If you do declare bankruptcy, it doesn't mean that you won't qualify for any credit for the next 7 years, in fact, shortly after you declare it you will generally get a ton of offers for credit cards. (Of course, they'll probably have a 98% interest rate, a $12,000.00 annual fee, require you to sign in blood... you get the drift...) The reasoning behind this is because you can't declare it again for at least 7 years. For the credit card companies, that means at least 7 years of payments/and or 7 years of late fees, over the limit fees, etc that they will either collect on or write off as a deduction.

I have seen people that have declared bankruptcy a couple of years ago that have relatively high credit scores. The more time that passes between the present and a poor mark on the bureau, the less it hurts your score.

Anything else? Just ask... Thanks for posting!

The wife and I recently purchased a primary residence in NYC, I also have a rental property in Las Vegas, and a number of other assets.

I have a 2 mortgages, a home equity loan, car loan, student loan, and misc credit cards. I have a very good credit rating and so does my wife. We don't carry any real debt besides our mortgages, car loan, and student loans.

We are going to renovate our new purchase, we have the cash for it, but would like to keep it liquid because of the current job market. How can we determine if we will still qualify for yet another loan?

Without going very in depth with your finances, I would suggest that the simplest way to find out would be to apply.

As far as what type of loan you apply for, if you currently have the cash for it, you may want to consider a savings or cd secured loan. Generally, your interest rate will be much lower than nearly any other type of loan, and you still have the liquidity that you require. If you were to need those funds, you can pay off the loan and use the remaining balance in whatever way you choose. Hope this helps!

Thanks for posting!

While rental rates do vary greatly from place to place, in general, property values mirror this behaviour. High cost of real estate generally equates to higher rents, and vice versa. That being said, I will have to look into investment properties in college towns in the US - if a 20% return is realistic, it would be worthwhile to purchase four or five of such places.

Forgetting those issues for the moment, and considering this is an "ask the loan officer" thread... let us explore. Here's the situation. I am a US citizen, though I have worked as an expat for my entire career. I have never had a credit card, nor taken out a loan. I earn a good income, and my living expenses are generally fully paid by my clients. I am considerring investing in property in the US, and with interest rates as they are, it makes more sense to put 20-30% down, and take the balance as a mortgage... then sit back and let the tenant pay that off. I see two primary obstacles to this approach:

- I have no fixed address (usually live in hotels)
- I have no credit history

Given the above, how likely would I be to get approved for a mortgage on an investment property (or two or three...)? Is there anything that can be done to improve the view that a lender would have? Despite good income and virtually no expenses, I am certain the lack of credit history, and possibly moreso the lack of a fixed address, would prove to be problematic.

Looking forward to your thoughts.

-N

Thanks Nosoup, this is really great you taking the time to answer these questions.

Hmm... I would guess that it wouldn't be too likely. This lack of a permanent address probably wouldn't be too big of a problem, but it may definately have an effect on whether or not you get the loan. The larger problem, however, would be the lack of credit history. I would suggest obtaining some credit history immediately, possibly even a secured credit card. After several months (which it would probably take to find property anyway) I would try to get a mortgage. Hopefully, the interest rates won't increase before you get the chance to take out a mortgage. The fact that it is an investment property may actually help the cause, just make sure you don't over extend yourself. Although it may seem like a good idea at the time, make sure that you can make the payments without any rental income.

Another factor that will help a lot will be your ability to put 20 - 30% down. Although interest rates are low, pay as much down as you fell comfortable with. It is better to earn 3% than pay 5...

Thanks for Posting! If I can be of any more assistance, let me know

dudemac - Just glad I can help out the TFP community. I really appreciate the thanks, though. If there is anything else I can do, let me know.

Hello everyone...

Just to keep you guys updated, I won't be able to respond for the next couple of weeks. I just got a new job and I will be in Chicago for training. Feel free to post, though, as you can see your fellow TFPers are more than willing to help. As soon as I get back, I will respond to any unanswered questions out there. If someone needs immediate assistance, PM cheese-he can get a hold of me.

Talk to you soon!

NoSoup thanks very much for all your help and answers here. Look forward to your return.

hey, a tip for people who are deep in debt like me. if you get a call from Primerica, don't fall for it. They're a pyramid scheme and use their promises of free financial consultation, debt consolidation, insurance, etc. to lure people in.

Quick question if you're still out there...

My fiance and I are purchasing our first home. Our bank has pushed back the closing date by 2 weeks. Our worry is with the mortgage rate we had locked in with the bank.

When we received confirmation of the loan from our bank, the form said the mortgage rate was locked for 30 days...no problem had we closed on the original date. Now we're scheduled to close 2 weeks after the date on the contract. Since mortgage rates have gone up a full percent since we signed, will our bank now turn around and charge us a higher rate even though they were responsible for pushing back the closing?

It is very possible that they may. I would contact them immediately and say that you are only comfortable with having the date pushed back if you are still going to be at the same rate. Even if they were planning on giving you the higher rate, they may make an exception. (They need your business) The only thing you can do is contact the person you were working with and make sure they aren't changing the rate. If they are, I would suggest taking your business elsewhere

quick question-
in an earlier reply you said that credit given by a retail store is considered "bad" credit, because its a higher risk. could you go into a little more detail about that? Why isn't money lent by Visa the same as lent by Macy's or Filenes?

Great Thread NoSoup

I'm 20 yrs old and the family moved about a year ago. Unfortunately I forgot to change the address for my Cell Phone company and soon enough realized the mistake, however it had been 40 days since the bill was due when I did pay it. Most of my bill are paid on the same day I receive them(online) and this was my first delinquent payment.

Its greater than the 30 days you mentioned but I never received any calls or letters so I dont know if it got in the hands of a collection agency. So my question is how much exactly does this put my credit in bad light? ....or....How many late payments do I need to get turned down for a mortgage?

Thanks

I don't believe it is considered the same because generally Department store credit cards have the ability to use less strict guidelines. (AKA they can approve more people for their cards)

I would imagine that it would have something to do with the "loss" if someone didn't repay them. A store buys their wares at a much discounted price, and if someone who had bought, say, $1000 worth of clothes defaulted, they probably would only be out $200. However, Visa is losing cash. If someone who owed them $1000 defaulted, the would be out the entire amount.

Hope this answers your question! If not, just post again

Thanks!

Well, you may be in luck. It may be possible that your cell phone company doesn't report to the bureau unless you go to collections. Although you were late, generally you must be much later for it to go to collections. (read 90 days + as a general rule of thumb) As far as late payments affecting your mortgage, it depends on the institution. Hopefully it didn't even report, but I would doubt 1 late payment (properly explained) would result in you not being able to obtain one. However, you may suffer a higher interest rate due to a lower score.

After a little time has passed, I would get a copy of your report and check to see if it reported. If I had to guess, I would say that there is a 90% chance that it did not.

If you need any more help, don't be afraid to ask!

Thanks for Posting!

I recently bought a three burueau report, and the same for my wife before getting a car. It turned out okay, but there was alot of wrong information on there. While my wife's employment information was on there, for me all of them listed no employment information. One Bureau even had my middle initial wrong.
Question 1)
I was under the impression that credit reports and your scores were based solely on your credit history, and not income, but would it help my scores to have some form of employment listed? I just finished school and have a very good job.
Question 2)
I have three "little" credit cards I used in college and have not used alot since, they have low limits, about $1200, but very low balances; my wife has a few Store credit cards(Neiman's, Banana Rep., Vict. Sec.etc...)-yes I know they're bad - with much higher limits and balances, though still less than half "full," which we are trying to pay off. Would it do us any good on our credit scores to add our spouse as a user of these credit cards, because we would have more credit available to us, or would it be bad to do so because she would add low credit line credit cards and I would add retail store credit cards to my history?
Question 3) is there any reason to correct all the false information and duplicated accounts if my credit is alright anyway?

Thank you so much in advance for helping me out, and I hope you realize the great service you've been to me and all the previous posters!

NoSoup

follow up.... I did apply and was preapproved, but due to the nature of us own in a co-op we need to stay at a 80% borrow level, we cannot get the Aztechs approved until we pay down some of the mortgage. Our accountant suggested we pay for the renovations in cash as the appreication of the property will outweigh the cash value in the future ( my eyes started to glaze over at this point.)

There was another loan that we could get without the approval of the board, but I will take the accountant's advice. Not to mention it will give us time to live in the apartment and use the kitchen and know hot to renovate better in the future.

---

as far as a friend is concerned, he thinks he's got bad credit for no reason or another. I see that you recommend a secured credit card. Does a secured loan give the same benefit? I thought I had bad credit too, and I got a secured loan, put that into another account and had them draw funds to repay the loan from that account. I didn't have to think about it at all, until near the end of the loan when I had to of course add for interest. Does that give the same benefit?

Makes complete sense to me NS. I've got to thank you for taking time to answer everyone's question, a very noble offer. I've still got a remaining question, though. When processing a credit card application, would the issuing bank look differently upon a GapCard than a Visa? Put another way, is the type of card actually listed on the credit report?

As for your statement about the 500% markup- It truly is sad how much some clothes cost these days.

just a quick question, i did a credit report and found 2 old accounts that somehow got messed up and have been falsely in collection for the last 3 yrs (glad i finally did a credit check for myself) i talked to the companys and its all taked care and is being removed from my credit report, the only credit agency i delt with was transunion tho and i wanted to get the names of the other 2 companys eqifax? and another i thought and there is just 3 main companys right? just so i can contact them and make sure its been taken care of with them too. Thx=)

The other two companies are Equifax and Experian. I'm pretty sure those are the 3 main credit bureaus that everyone uses.

thx alot=)

I seem lots of commercials for various credit counciling services. Lots of them say they're non-profit.

well, even if they're non-profit, they have to pay their employees. If these services are really free, how do they get their operating budget?

Any tips on which types of credit counciling services are best / least likely to rip me off?

thanks again.

It is considered "bad" credit because the underwriting (approving) guidelines are generally much more lax than your conventional credit cards. Most department stores (as noted above) have much less to lose if a customer defaults than credit card companies. Also, people will generally buy more products if they can finance it, and so it promotes business, therefore giving them the reason to approve as many people as possible.

Hopefully this answered your question, if not, post again!

Well, in answer to your questions...

1) Your score isn't based on incomer, however, The score does rely on the length of your current employment to determine the score. I believe that after 5 years of continueous employment with the same company, it will have a tremendous positive impact on your score
2) I would suggest just leaving things how they are, and closing those retail cards as soon as you can. A lot of open credit isn't necessarily a good thing, granted, it shows that you are responsible enough not to max out everything, but future lendors also take a look at the amount of debt you can incur. If you have a lot of open credit, it may damage your score more than it helps it.
3) Tough call... Generally, the answer to your question would be yes, but there are certain situations where I would suggest to let sleeping dogs lie. If you have kept up on your payments and what not, and generally have a good, clean history, I would get the errors corrected. You can do so by contacting the credit bureaus and letting them know that you believe your credit report is incorrect. They are required to send you an investigation form, just fill it out and return it.

If there is anything else I can do to help, just let me know!

A secured credit card does in fact give the same benefit, as with most loans. Secured loans are actually considered "better" credit than unsecured ones, although many institutions report secured credit cards as normal unsecured ones.

As far as your secured loan goes, same story. It gives the same benefits, although it may depend on the institution as to how it is reported to the bureaus.

If I can be of anymore service, just post! Thanks for Posting!

Yes, the institution certainly will. The Visa will generally report as a conventional credit card, but the Gap Card will report as a Retail Card, which I believe is one step higher than finance companies, which are not at all smiled upon.

I hope this helped! Thanks for Posting!

Ah, yes, the never-ending not for profit services....

Well, my advice on this subject is to make sure to inform you that these Services are NOT free. People are often misled with the whole "not for profit" thing, but these are companies, and like all companies, they are interested in one thing, and one thing only. Staying in business, and expanding... (er... I guess that is two things....) These so called non-profit organizations get a large tax break, and so that is why many of them decide to be "non-profit"

I used to work for a credit union, a non-profit financial institution, and they were far more aggresive and concerned about profit than any bank I have worked for. The main differences are basically that non-profit groups don't have any stock, and they get substantial tax breaks.

As for recommending specific companies, I am reluctant to say any specific names, soley based on the fact that I am not all to familiar with many companies and have heard both good and bad about the companies that I know of. I would suggest, though, to call around and check on prices, and to especially look for government funded agencies. Those may actually be free, or at least have greatly reduced costs.

If you need anything else, just let me know! Thanks for posting!

building credit
 

Well, Im 22. Ive decided thats its about time I start getting my act together. I want to eventually get a nice car and a house. However, I have no credit whatsoever.

Does anyone know the methods of obtaining it? Im Canadian, if that makes any difference.

Building credit is something that takes awhile. The first thing is to have some revolving credit lines (i.e. credit cards, finance line at a store) that you use and pay off. What is strange is that the more credit you have and don't use the better it seems (up to a point). Don't be late paying bills as any late payments will show up on your credit report. A very good start is just to get a credit card and use it for enough things to build up a small monthly balance and then pay it off each month to avoid finance charges. A fallacy of the credit system is the more credit you ask for the lower your credit score goes. One of the things they look at is how many "credit inquiries" are made in the last few months. Therefore it is best to only apply for a couple of credit cards and not to apply for many of them just due to the free gifts they give you. Also, it is better if you have things like phone lines in your name so that when they get paid off you get the benefit of paying it off. Building credit is kind of a long thing. There is no easy answer beyond just what I said above.

Building credit takes time, and will pay off later if done properly...

Actually, there's no real need to have credit. just save up for purchases such as the car and other items. Most real mortgage companies use your employment and your rent history. Had I known then what I know now, I would have done my credit much differently. As it stands I'm 25 making 21k a year, and I'm 40k in debt with a car and credit cards..
check out www.daveramsey.com. I've been listening to him for about 8 months, and my financial situation has done a 360.. it's worth a look if you're open minded.

In general I've got to agree with Bamrak: save your money, keep a job, have a good rent history if possible.

I once was buying a house; it was inexpensive and I had the down, but the mortgage company called me in and said, "We have a problem with your credit history." I asked what problem? They said, "You don't _have_ a credit history!" I was totally off the radar at the credit bureau, since I never did credit, and the investors who wanted to fund the loan were nervous. But I had the money and a good employement record, so all I had to do was sign a form saying that I wasn't in the credit database because I didn't believe in credit. I guess they wanted me to go on record saying, "I'm no a crook." No problem.

That said, I do think credit is a good thing for emergencies when you don't have time or opportunity to stare down a loan officer, and I think it's good to have a card -- as long as you don't normally use it. My advice: get a card to buy things over the Internet with (at low prices, save money), pay it off in full every month, and don't use it for anything else. You'll build credit for emergencies.

While credit is not necessary, even for things like buying a home, credit is important to some people and businesses. Home loan interest rates are lower for those with a good job, good rental history, and good credit. While you can get a loan at an X % interest rate without credit, you can often get a loan at X-2 with better credit.

One easy way to get credit is to INTELLIGENTLY use a credit card. I say intelligently since many college age Americans (and in your case Canadians) often get really finiancially screwed with credit cards.

Whatever you put on a credit card has to be paid off BEFORE any interest is due. And no payment can ever be late. Mess this up and you can get into the horrible debt people talk about.

One easy way to build credit is as follows:
* Get a checking/savings account at a good bank (or credit union) with online banking.
* Get a credit card (Visa or Mastercard) from a national bank that has a good online credit card payment system.
* Use your credit card for day to day purchases, like groceries or new shoes.
* No less frequently than weekly, completely pay off the credit card online via the bank account.
*

If you're in the market for a cell phone, that's another way to build credit. My coworker built hers through car payments and getting an unsecured credit card with a very low limit that she paid off every month. Try something with a $500 limit or so, something that will keep you in a realistic range. I can never pay my bills on time *cringes* but that definitely is the best way to build good credit.

Hi NoSoup,
I've read through the entire thread and it looks like the info that you and others have posted will be of great help in the future.

But as for now, I am a student with no credit looking to establish credit so that I may be able to own a home and what not in the future. I am fortunate enough that my parents have a college fund for me (I go to a state school and commute from home so tuition isn't that expensive at all anyways) and have not had to take out student loans for school. From previous posts, I've learned that secured credit cards are a good place to start. What else can I do after that? And how long after getting the secured credit card should I wait before doing whatever you suggest next (if anything)? If I get a secured credit card, I will most likely not ever be using it anyways since currently I have a debit card and I like making sure I have enough money in the bank before making any purchases.

On a related side note, one professor I had was saying that: taking out a small loan, leaving it in your bank account (and not touching it) and paying it back on schedule, and then getting a bigger loan and doing the same, etc. will be worth paying the interest in the long run because the bank will "trust" you with larger sums of money after they've seen that you've had a good history. He said something like "start when you don't need the money, so that when you do need the money you'll be trusted with more." Any thoughts on that?

No Soup...
I am lookign for info on buying a house here in Massachusetts, or ability to get a morgage.

I am engaged, i have 1 consolodated student loan about 10K, 1 misc loan for 10K, and 2 credit cards with total debt of 4K, one now closed for about 2 years while a pay the balance.

My girl has considerably less debt, a few credit cards with Credit Guard of America, closed and in replayment, nearly paid off, and thats about it.

My payment history is less then stellar, i have been less then 30 days late on some payments recently as well as in the past, i havent had any real delinquent payments in at least a year.

I do have debt that had gone to a bureau and is now settled, about 2 years ago.

My fiance is a registered Nurse (6 months on the job same place), makes about 700/week take home, i am a net admin, bring in about 47,000/year or 2 k a month take home (same job nearly 3 years).

We share a 1 bedroom apt for 1340/month, both lease cars with about 260/month payments.

Do i have a chance in hell to get a morgage right now, should i not even apply? Can i apply jointly if im not even married yet.

Whats my best stragedy to get ready to apply for a morgage.

Nash- I the next step after obtaining secured credit via a secured credit card, would probably be to get an unsecured one. Talk with the financial institution that gave you the secured one and see if they will release it, but if they prefer to keep it secured, it's no big deal. Make sure you choose a "conventional" credit card, instead of falling into the retail card trap.

As far as your professor's advice, it is pretty sound, except you don't necessarily need to increase the loan amount. Credit history is exactly that, just a history of you making your payments on time. It may be difficult to keep making smaller payments when you know you are paying additional interest, but keep in mind that spending that extra bit now could potentially save you tens of thousands of dollars in the future. I really like the fact that he said to get the money now, when you don't need it, for when you do. Again, frustrating because you are paying interest, but definately true. Chances are, you will not be able to live your whole life without credit coming into play somewhere. I see far too many people that think they don't need credit have an emergency come up, and when they apply for a loan, just simply don't have any credit. These people are generally declined due to lack of credit history. Unfortunate, but a good example as to why it is important to start early.

If you do end up getting a secured credit card, make sure you use it. Even if you keep track of the balance vs. your checking account balance and don't spend more than you have, make sure that card is put to use. You always can pay it off each month and avoid interest charges, but make sure you keep the balance under 60% of the credit limit, even though you may pay it off each month.


I hope this answered your question! If not, Post again!

Thanks!

swmacneil-
Well, I would say that the best strategy to apply would be to continue making your payments on time, (the less than 30 days late shouldn't show up on your bureau) as well as save as much money as possible for that downpayment.

I am not sure if you feel rushed to move into a house or not, but If you don't, try and pay off your debt first, or at least the credit cards. Those payments may not seem like a whole lot now, but if your house needs some maintenence, it will be nice to have that extra cash.

My next suggestion is to save up as much money for the down payment as possible. (after debts are paid) They higher the downpayment, the less the mortgage payments, the less interest you pay, and the better chance of being approved. If you save up enough, you probably won't have to worry about PMI insurance. I am not sure of the rules where you are, but in Wisconsin it is common for the institutuion to require it if you owe over 80% of your homes value. However, there are institutions that don't require it at all, no matter what % you owe on your mortgage.

As far as being approved, I am nearly positive that you could be. However, the terms of the loan and fees incorporated may be higher than they would be if you had a larger downpayment or better credit. Mortgage brokers are.... shall we say.... very flexible.... with their underwriting procedures, with a cost to you in interest rate and broker fees. Don't get me wrong, sometimes it is better to pay more fees for a lower interest rate, but in a lot of cases, I would check the disclosures to see the total amount you will be paying. Even though a Brokers rate might be .5% lower, if there are 3 points and tons of closing costs, it may be cheaper to go with a conventional mortgage.

If I can do anything else for you, let me know.

Thanks for Posting!

Thanks No Soup, i appreciate your insight.

No Soup,

The info in the thread is great. I hope you can give me some advice about my situation:

I'm 24, single and have been with the same company for 6 years (4yrs part time while in school). I currently make 48k/yr before taxes. My debt has been piling up between school and family financial problems. I have a 40k school loan that was co-signed by my cousin, which I have been paying off on time. I also got a $21k car loan in 1999, which I am paying off on time as well and will be paid off next Nov. My main problem is credit card and some leftover tuition debt. I have about 5k in CC debt, 6k in tuition at a collection agency and 4k in CC debts that are also in collection agencies.

My credit scores are horrible and I have about 16 negatives on my credit reports.

Between rent, car payments, loan payments and other necessities I only have about $200/month to divide among the collection agencies.

Should I look into declaring bankruptcy? How will bankruptcy affect my cousin who co-signed the tuition loan?

I want to turn over the new leaf!

Thanks for the great help

Thanks for the help, NoSoup!

One more question for now:
How can I get my credit union to "trust" me with a loan and how much should the loan be for? To remind you of my situation, I have no credit history right now, and I'm about to apply for a secured credit card with my credit union. I guess you can refer to my previous post for more info, four posts above this one. Thanks again for the help!

Hey No Soup,
I own a Manufactured Home that is in a Mobile Home Park. I am looking to refinance, but I am having problems finding anyone who deals in manufactered homes, that do not have outrageous rates. :confused: I live in CA, and I really do not want to go to a manufactured home dealer to get financing like I did when I bought mine.
I currently have a rate of 8.75% is that good or avg?
Thanks for any help!