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Grandgran
Posts: 8
Registered: ‎05-24-2012
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Low credit score

My life partner and I own a home together.  We purchased another home for investment and are renting it out to a family member.  Now our credit scores are very low.  We have tried to refi our car for a lower interest rate but have been denied because of this.  We are on social security and do have other income.  Do we put a message in our credit bureau files that the other mortgage is being paid with rent of the property?  Do we wet up an LLC?  How do we get around this situation?  The other home will be sold to renters in one year.

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pizzadude
Posts: 9,659
Registered: ‎01-28-2010
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Re: Low credit score


Grandgran wrote:

My life partner and I own a home together.  We purchased another home for investment and are renting it out to a family member.  Now our credit scores are very low.  We have tried to refi our car for a lower interest rate but have been denied because of this.  We are on social security and do have other income.  Do we put a message in our credit bureau files that the other mortgage is being paid with rent of the property?  Do we wet up an LLC?  How do we get around this situation?  The other home will be sold to renters in one year.


Can you share some additional information ?   Were you denied the auto refi due to your debt to income ratio ( having two mortgages ) or because of your credit ?   Do you have any negative items on your credit reports, like late payments, etc... ? 

March2010 FICO® ~ 695 TU, 653 EQ, 697 EX
New Member
Grandgran
Posts: 8
Registered: ‎05-24-2012
0

Re: Low credit score

We have been denied because of debt ratio.  All bills are paid on time and usually ahead of due date.  i only have one ding at this time for late payment.  This is Home Depot. I signed up with them for paper billings but it went to email billings.  I did not see the bill and therefore I was late.  I filed a complaint with them just recently.  I/we have had store credit cards which we recently closed.  I have a JCP credit card that I have requested a lower credit limit and a freeze on any further credit increases.  I show many inquiries on my credit report as I was working on a job where I had to use my personal information on credit.    This is a total overload on my side of credit reporting. 

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pizzadude
Posts: 9,659
Registered: ‎01-28-2010
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Re: Low credit score

 

Ok, it sounds to me like your problem is not related to credit at all but due to the fact that you are paying two mortgages, which makes your DTI ( debt to income ratio ) look bad to lenders.      What documentation do you have showing the payments for the rental property, and were you able to provide this to the creditor who was evaluating your auto refinance ?

 

 

March2010 FICO® ~ 695 TU, 653 EQ, 697 EX
New Member
Grandgran
Posts: 8
Registered: ‎05-24-2012
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Re: Low credit score

 I have the direct deposits to my checking account and rent receipts.  Maybe should we have a seperate banking account just for the rental?  When applying for a refi we were denied but we did not expand our conversation to the subject of why we had the DTI:re: rental property.  You have by the way been great in bringing up all of these questions. You are making me think clearly on this.

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pizzadude
Posts: 9,659
Registered: ‎01-28-2010
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Re: Low credit score

 

It probably would make sense to keep the rental account ( income & payments ) separated from your regular checking account, it would probably make it easier to provide documentation to creditors.     Having this should make a difference in your DTI and hopefully it will make it easier to refinance your car.

 

 

 

 

 

March2010 FICO® ~ 695 TU, 653 EQ, 697 EX
New Member
Grandgran
Posts: 8
Registered: ‎05-24-2012
0

Re: Low credit score

Thanks for all of your help. As we replied back and forth to each other you gave me good insight.  We are going to hang in there until we sell the house to my daughter, who is renting.  then we should be in good shape. 

Valued Contributor
rootpooty
Posts: 1,748
Registered: ‎10-28-2011
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Re: Low credit score

This happened to my parents last year. A few years ago they purchased a house for me and a new car so I could make the payments on them. My credit was shot so they helped me out. Last year they went to refinance their house and they were shot down cause of debt to income ratio. When they explained their situation to the credit union how I pay for the other house and car they requested my bank statements and as long as I could prove that I was paying for the loans myself they would approve the loan. Needless to say they got the refinance

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New Member
Grandgran
Posts: 8
Registered: ‎05-24-2012
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Re: Low credit score

Wow thank you for the information.  I never thought of this.   It's so great to hear other people having the same issues and that we can all help each other.  Hope you are doing well.

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webhopper
Posts: 7,230
Registered: ‎09-16-2011
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Re: Low credit score


Grandgran wrote:

Wow thank you for the information.  I never thought of this.   It's so great to hear other people having the same issues and that we can all help each other.  Hope you are doing well.


I have the same issue...

 

Mortgage on a rental property is 1465

Mortgage on primary resident is 1430

 

You always want to include rental income when you apply for credit, and bring your tax documents into the finance office, so that they can see that you make that income


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