Advice on getting a mortgage with limited history.

[Anonymous]

Having been out of the states for 5 years, in June 2009 I returned to the US.

I was 16 when I left the US so of course I had no credit at the time, so since June I have been working hard to rebuild my credit.

MY husband is a permanent resident now in the US so he is also rebuilding his credit.

I have 1 secured credit card at $300 and 2 capital one cards, $750 and $300.

My husband has a cap one card also for $500, but we are going to have to ride my credit for any purchases of any kind

As of February my fico score is 632, as I am using my cards keeping a balance of around 40% of the limit on the cards. All my payments are all on time and things are going quite nicely, no hits or problems apart from the lack of history.

We currently pay $750 for rent and know that for a similar monthly payment we could buy a 3 bed 2 bath home here in Pensacola Florida, our rent lease will end august 31st.

Realistically I know my credit score will hit around the 650 maybe a little more by the end of August, but will my 15 months of perfect credit history be a complete no no for a lender?

Many of my friends have suggested buying a car and paying the car loan off quickly that will look great as a big purchase and boost the score, but we both have cars which we have bought outright.

[Boldilocks]

I also have very limited history - like, VERY.  I just got my permanent residency and social security number in Feb.  I think there are 3 things that have helped my scores start high-ish.  And almost all of DH's positive credit is pretty recent - he has an old paid loan reporting well from 10 years ago, but all of his cards were opened in 2009.

1.  Low util.  You should have 1 card report a balance of 1-9%, and the others report $0.  If you are authorised users on each other's cards make sure that you are working in synch to keep to that model.  This alone will up your scores a good bit and is the first thing you should do.

2.  Talking of authorised users, I am an AU on DH's Orchard Bank and Walmart cards.  Only the Orchard card really helps me with age as it was opened in Feb 2009 (after a year it stops being "new credit"), but I wanted the store card for a good mix, even though it was only opened last October.  I have 2 Cap One cards of my own.  If you could be an AU on someone with older accounts it could help you - but only if their history is great and they keep their utility low.

3.  pull your reports and see if there are any baddies on there.  My EQ and TU are clean, but there was an old book club collection on my EX from 2003 that I didn't know about.  It is due to fall off in Dec of this year, but in NY paid collections have to fall off after 5 years not 7, so I paid it last week and it should fall off right away. 

DH and I just applied last week and were pre-approved for $200,000 through FHA.  I don't think that your short history should be a problem if you go with them - they even take people with no history. 

[Anonymous]

This is the husband here.....

Both of our SS# have no nasties on them, my SS# is only 7 months old and of course my wife's has been active since she was born.

But the credit history for her is only since August.

Both of her parents have absolutely perfect credit, car loans, mortgages and credit cards all paid on time.  If we were to become authorized users on their credit card would that seriously help us out? I thought only the main account holder would benefit from this?

[Boldilocks]

No, whatever card you become an AU on, you will get all the positive history that goes with it.  But also try to get your own util down.  And make sure that whatever card(s) you become AUs on, there is a zero balance every month.  Or else a balance between 1-9% and keep all your own cards at zero.

[MonkeyMan17]

If you are only going to use one persons credit history then you can only use that persons income to qualify as well (job length?). Also if you are in a community property state your spouses credit history will be used.

I qualified just on my income because my spouses credit has a tax lien from 8 years ago that will not drop (if it goes uncollected) for 2 more years and we are purchasing in a non-community property state.

[Anonymous]

Ok so we will go ahead and get AU on their cards (of course we will never see the credit cards!)

And i will clear those credit cards, keep it below 9%, is it true they flag you as a higher risk if you use more than like 50/60% utilization?

And we will see what happens up until Aug/Sept!