Credit Rating for Mortgage

[Anonymous]

Hi, I am new here. I am a little stressed out and I need some advice. My fiance wants to buy a house suddenly because the home we have been renting has been sold. He wants to buy one NOW. I am a little unsure of my credit worthiness. Here are my stats.

Scores: 672, 674, 678

Had a cc charge off about 6 1/2 years ago

I have a couple 30-days (all of which technically should be off but my CC hasn't reported since April and they are exactly 2years old this month)

My income is 39,140 (set to increase 3% July 15) from my job (will be here 2 years as on July 14)

Min monthly debt payment is about $500 ($377 car payment, the rest CC)

I have two open CC, one with a 3,000 limit open for 8 years, the other 400 limit open for 3-4 years

CC debt 1300- hopefully 0 within 2 months

Car dept 12,000

About 3000 in 401k

virtually no savings (although FI would be providing the downpayment and possibly some supplemental from my parents)

No property (FI has a 80 acre farm)

Asking price of home is $149,900 (forclosure, hoping to get it for around 130,000)

My fi has an income around 50,000, glorious credit rating, no cc debt, 10,000+ in 401k and not sure of savings per say but probably in the 5000-10000 range

car payment of around 400/month, a farm worth about 300,000 that he has financed i think he makes about 2 payments a year of 7,000.

Basically what I want to know is if my lower score is going to hurt us. He is a bank branch manager and I really don't want to embarass him with my credit report. I know you are supposed to be open and honest about this stuff but it should all be off my report by the time the actual wedding rolls around so I would kind of like to avoid the subject if I could. I have done wonders to turn around my financial stability ( i know i need to work on savings but I really wanted to get my CC's paid off then that $$ is going straight to savings) Anyway, would I even qualify? I really just don't want to get a loan through his bank b/c i don't want his boss to see my report. I am completely embarrassed even though it was 6+ years ago and I was 20 years old and dumb.

[ShanetheMortgageMan]

I won't spend too much time on this part, but I believe you should really be open about finances.  I know it may not be in your or his nature, but finances rank high for reasons of divorce, same with hiding stuff from your spouse.  Honesty is always the best policy, it may hurt a little, but in the end it's the right decision to make and I truly think it'll make your bond/love for each other that much stronger.  It's your call though, just putting my $.02 in because you made it a significant part of your post, made me think you wanted some input on it.

On to the qualification part of this response...

If you were the only one on the mortgage, it appears you'd qualify with your situation now.  Your bad credit isn't really that bad at all, everyone makes mistakes and yours are so long ago you've definitely proven that you have re-established yourself as a person who manages their debt & credit.  Did your get your scores here though?  You can only get 2 from this website, so that is why I ask.  Scores from other websites will be your "FAKO" scores and not your actual FICO scores.  However your FAKO scores still look good enough, and your negative items are far enough back, to make me think your FICO scores shouldn't be a lot lower, if much at all.

Your debt to income ratio should be OK too, around 28% for the housing portion and 43% overall (assuming you don't live in a high tax state like TX, NY, NJ, or CT, amongst some others).  31/43% is ideal, so you can see you are looking good in that department.

FHA requires a 3.5% down payment, USDA requires 0% down payment but the property you are buying must be in an eligible area and your household income must be within eligibility limits (which if he is living with you, which it certainly sounds like he is, then $90k/year of household income may very well be too much).  You can check USDA eligibility income limits & areas out at http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do

If he was added to the mortgage it would help your housing debt ratio move down to about 12-13%, however since he has the $1,166/mo farm payment + $400/car payment, the total debt ratio would only drop to about 39-40%.

[Anonymous]

Thanks Shane, I completely understand the necessity of honestness in a marriage especially about something that will affect both of us, like finances. I just kind of think since it will be a closed chapter in about 3 months there is no need to humilate myself over it. I know it may be wrong but just how I feel. He knows basically everything else about my finances from the balance of my checking account to my salary to my cc debt amount to my 401k balance so I feel like we are pretty open and honest. I just hate this one thing that I was SO stupid about. Can anyone tell me how I can assure that it is immediately removed from my report when my 7 years is up? Thanks, RW

[Anonymous]

and where can I make sure I am getting my actual credit rating numbers?

[llecs]

Ditto to Shane...I wouldn't worry about it. I bet if you look at his boss's (or boss') CR you'd see some bad stuff on there too. We all go through a blip or two (or more).

By law, based on the Fair Credit Reporting Act (see Sect 605)  negative information must be removed within 7 to 7.5 years from that action. So stuff like lates, collection agencies, judgments, etc. have to be removed within 7 yrs and charge-offs up to 7.5 yrs, though in my experience, it was less than 7 yrs. Some baddies like charge-offs can remain past 7-7.5 yrs all the way up to 10 yrs but any negative information must be removed by the 7-yr mark. The OC account would report as a positive account for 3 more yrs.

Other than myFICO.com, you can also get your EQ FICO from Equifax.com or from your lender. Other than myFICO.com, you can also get your TU FICO from transunioncs.com (note the -cs) and from your lender. Finally, as of last year, Experian no longer allows consumers to pull their own EX FICO score, but you can get it from your lender or on your checking statement if you happen to have a checking account with a CU in PA called PSECU. Any other score from any other source are not FICO scores, but a knock-off we call FAKOs. Lenders generally don't touch these FAKO scores.

[Anonymous]

Ok, so when I check on myfico.com they are Transunion 633 and Experian 637. Is this going to prohibit my options?

[llecs]

EQuifax..would be at 637 vs. Experian.

IMO, no issues. While I'm no mortgage guru, it is a safe bet you are OK. YMMV based on your lender. If you are looking to bump your scores higher, the fastest way to do so is to improve your CC utilization by paying down CC balances. For max points, pay all to $0 except for one and leave the remaining at a balance of under 9% of the credit limit.

[Anonymous]

ok thanks, I will have one paid off in 2 days and the other will be under 9% soon so hopefully that will help! Thanks for the advice!

[Anonymous]

One thing you can do if you haven't already is Your allowed 1 free credit report a year from each bureau. If you haven't done so do that so you can see exactly what is on your reports.  I think TU and Experian lists the dates of when bad things are scheduled to fall off on your reports. .