topic Re: Can Someone Tell Me..... in Mortgage Loans

Can Someone Tell Me.....

Anonymous — Wed, 23 Jan 2013 22:51:51 GMT

We are trying to get financed for a home mortgage. I am having a rough time understanding some things. First, my husbands credit score is 622. We pay our bills on time, no foreclosures, no bankruptcy, nothing.

There is an ambulance bill from about 7 years ago for $800.00 that went into public records for being unpaid. We don't utilize all of our credit monthly. However, every time we check his score its in the low 620s. They say we need more installment credit, but he has a truck payment through the bank (always on time.) The only problem with this, is that the bank doesn't report monthly to the credit agencies.

I guess what I'm asking is how to get more credit (installment,) faster. We have tried to finance a house for several months now, but his score is always too low. We have 10% to put down. I guess we could get more credit cards, but that's revolving credit. Just looking for someone a little smarter at this than me.

Oh, and should we pay the public records dept off? It's been 7 years for that ambulance bill, and it's still going to be on the credit report, no matter if we pay it or not. That is the only thing negative we have
.

Thanks for all your help!

Re: Can Someone Tell Me.....

Anonymous — Wed, 23 Jan 2013 23:09:55 GMT

That ambulance bill should be dropping off very soon if it's 7 years. When exactly was the bill originally due (month/year)?

Re: Can Someone Tell Me.....

tooleman694 — Wed, 23 Jan 2013 23:27:15 GMT

How many credit cards does he have.

That is a low score if your oldest baddie is 7 years old. I scored higher with a BK with many collections with one as old as 2 years.

Re: Can Someone Tell Me.....

StartingOver10 — Thu, 24 Jan 2013 00:48:33 GMT

Toolman is right. You need more revolving credit lines, not additional installment.

What credit cards does your husband and you have? What is the credit limit and the balance on each card?

Re: Can Someone Tell Me.....

Anonymous — Thu, 24 Jan 2013 02:59:32 GMT

Yes me too. I have a Ch 7 BK reporting and an unpaid collection and my mid fico is 703. I have just paid off an auto loan and I am now paying a new auto loan, along with 3 student loans, and two credit cards reporting. I just got my third credit card and it will be reporting soon. All my open trade lines are in good standing and so are my closed accounts and all report never late.

I think he needs more trade lines. Two more credit cards will definitely help and that auto loan needs to be updating every month. That is hurting him as well. Credit cards should be used for everyday expenses and then paid in full every month.

Re: Can Someone Tell Me.....

Anonymous — Thu, 24 Jan 2013 03:01:34 GMT

I'd start by contacting the bank and asking them to report all his payments. I know someone who did business with a small town bank in a similar situation. He finally realized that's why his credit score wasn't very high and all he had to was ask and within a month his score had skyrocketed to over 740!

Re: Can Someone Tell Me.....

Anonymous — Thu, 24 Jan 2013 03:02:20 GMT

By public record do you mean a judgement? Just wondering as we are in a similar situation.

Re: Can Someone Tell Me.....

Anonymous — Thu, 24 Jan 2013 03:06:57 GMT

Also, if you don't have any credit cards I would apply for an easy one to get. Capital One or Credit One. They give credit to people with lower scores credit...they did me when I was rebuilding. I'm still rebuilding but I'm up in the 665 range middle score. The way I see it, since they aren't reporting on your husbands auto loan, the worst thing that can happen is they will just refuse to report but if they agree, his score will reap tremendous benefits! Whatever you do, don't give up!

Re: Can Someone Tell Me.....

Anonymous — Thu, 24 Jan 2013 03:15:06 GMT

Oops, looks like I misread. Sorry. You have credit cards. Yet, you say you don't use "all" of the credit. Do you keep it below 20%. If not I would focus on getting that paid down and ultimately paid off. I would still talk to the bank about reporting his truck payments. If they refuse, I think I would look into trying to find another bank to take over the loan. Just tell them you want to become a home owner. Banks want your business, especially if you are considering buying a home. Just my two cents worth. I'm by no means an expert. I'm still learning myself. Good luck!

Re: Can Someone Tell Me.....

Anonymous — Thu, 24 Jan 2013 03:33:12 GMT

+1, I think you made a good point about the credit cards. We don't know how many OP has and it may just be one. I would try Capital One first as Credit One has a lot of fees.

I would recommend that OP start using the cards each month for everyday expenses instead of cash/debit and then pay in full every month or leave a low balance of <10% on one card. If you get the Capital One Cash Rewards Card, you will actually earn cash back for all those purchases. I have earned $98 in cash back since I opened the card in July as every purchase I make, I get 1% cash back. And then there is 50% bonus cash back every year! I just got the Chase Freedom which gives 5% cash back on bonus categories each quarter. This quarter, it's gas, drugstores, and Starbucks so I am going to be using my Chase Freedom for all my gas purchases through March. LOL!

If you apply for Capital One's green Cash Rewards card, be sure to click to apply for the one for average credit as there are two options on their website. Applying for the one for excellent credit will lead to a denial because of his low score.

Re: Can Someone Tell Me.....

Anonymous — Thu, 24 Jan 2013 04:06:13 GMT

Hi. I am the original poster. This site didn't keep my original login, so I had to add the 2004.

Just to clear some things up, so you all will have a better understanding:

The ambulance bill of $800.00 was back in 2006, actually filed the end of 06. It was a judgement, because it never got paid. (This was before we were married.) Someone told me that wasn't that big of a deal, since it was an old debt, and would be on record regardless of whether or not it was paid?

Second, my husband has 2 Capital one CCs. His limit is 350 on one, and 400 on the other. For the 350, we try and keep it less than $75/month, and pay it off at the end of each month. For the other one, we try and keep it less than $100.00 and pay it off as well.

It really aggravated me that my bank does not report his $8000.00 auto loan. He has paid it on time (289/month) and most of the time we pay $350/month, with only $5000 remaining on this loan. Do most small banks report if you ask them to?

My thoughts are: WHAT IF: We only used less than $20/each on the credit cards, and paid them off each month for 3-4 months. Would his score go up then? Would it be better to not pay them off each month?

Just wanted to add this bit of information about the CC and judgement to try and get some help. It's very frustrating.

BTW, for the person wondering about me. I do have a credit card, paid off monthly, my score is in the 680s, but I am a stay at home mom, so the chances of me getting the mortgage loan are much less.

Re: Can Someone Tell Me.....

StartingOver10 — Thu, 24 Jan 2013 04:18:08 GMT

It would be best if one card reports zero (paid off) and the other one has a balance of less than 10% of the credit line, that way your husband will maximize his score. If he can get his bank to report his monthly payments on the auto loan that would be great. Just ask the bank, see what they will do. Just reducing the balances on the credit cards ought to help. Your husband might consider getting a Jared's card too if you aren't getting the mortgage for another few months. I say that because the Jared's credit people give very large lines and you don't need high scores to get a very good credit line. That will help your husband with his utility which will increase his score. The inquiry will give an initial ding that 's why I said do it if the mortgage application is not for several (6+) months.

Re: Can Someone Tell Me.....

Anonymous — Thu, 24 Jan 2013 04:37:54 GMT

No. You should use more credit. You should use 75-80% of the credit limit and then pay it off in full each month and repeat. I encourage your husband to contact Capital One and ask for a credit limit increase and a Product Conversion of one of his cards to the Cash Rewards card. The limits seem too low for the Cash Rewards card. How long has he had his cards with Cap1? If you don't get anything changed by calling and talking to a rep, I suggest you email the Executive Office as many have received tremendous help by going that route. I would visit the credit card forum to find out how to email the Executive Office.

Also, what kind of credit card do you have?, what's the balance and credit limit? Depending on your answers to those questions, it may be beneficial for you to add him as an authorized user to your credit card. This could give him a nice boost if the credit card is used responsibly.

A lot of people here say that they seen the biggest boost in credit score from utilization when they paid all but one card down to zero and left a 7% balance on one card.

Ideally, you want to use credit richly to show lenders you can manage credit. You should put as much of your living expenses on credit as possible without maxing them out. Maxed out is when your balance is 90% of the limit so charge no more than 75-80%. Charging very little on your cards each month shows lenders you are apprehensive about credit and that sends a red flag to lenders that you might not be able to handle more credit. Charge all your bills, groceries, food, etc on your credit cards and pay them in full each month, it is that simple. I charge $1500-$2000 on one card ($2500 limit) and $500 to my other card ($1100 limit) each month and pay in full by the due date. To have the paid in full balance reflected on your credit report, you must pay the balance in full before the statement cuts. This is how you effectively manage credit to show lenders you are worthy of a mortgage loan which is the biggest chunk of credit you will ever have. The low limits on your husband's cards are hurting him too.

Re: Can Someone Tell Me.....

Anonymous — Thu, 24 Jan 2013 14:08:24 GMT

I do not agree to use 75-80% of your credit and pay it off. This has no baring on scores.

The only thing that matters is to have only a small balance under 9% on only 1 CC to report when statement hits. All other CC's should report 0 when statement hits.

I have only 6 CC's. I only make 1 purchase a month for gas which cost about 70. I alternate the use of my cards monthly. When statement comes I pay that bill in full.

My credit scores as of Dec 2012... EQ 809 TU 797 EX 804.

So with that being said its not how much you put on the card it is how you use them.

Re: Can Someone Tell Me.....

tooleman694 — Thu, 24 Jan 2013 14:34:44 GMT

JM_AM

I do the same thing, I don't use them much and rotate them around. If I know im gonna need a credit pull I plan ahead and make sure the util is perfect.

Re: Can Someone Tell Me.....

Anonymous — Thu, 24 Jan 2013 15:20:19 GMT

I disagree. I'm living proof. I have been doing it every month since July. You can't knock it until you try it. It is analogous to paying every card to zero except one and leave one card at 7%...you can't knock it until you try it. As neither of those tips are in any manual on how to manage credit. I spend part of my time on the credit card forum learning from the pros...the folks that have $50,000 in credit limit. I wouldn't have my Chase Freedom in my wallet today if it weren't for them on that forum, and I am very serious when I say that and I mean it.

The way you get bigger limits is by charging more...but not too much like I said. My Orchard Bank card sat at $300 when I first got it, and it climbed to $1100 over a period of two years. When I spent 75% of $1100, it showed Capital One I needed at least $1100 on their card if not more. When you hear of someone that has a unsecured card with a limit of $400 and that has been sitting at that limit for more than a year, you know they are doing something wrong.

When you charge very little to your cards, it shows credit card lenders you don't need more credit and since you only use $20 out of $400, lenders say $400 is sufficient. Having low limit cards hurts you...even the fico score simulator shows it. It may not simulate accurately, but that particular piece of simulation is there because it has an impact on your score. Plus, when you get higher limits, and during a time when you are NOT buying a house, you can charge a big ticket item on your card that may only be 7% utility on a card with a $15K limit versus 50-90% of a low limit card. The higher limit card allows you to be able to take advantage of 0% APR for a big ticket item and carry a balance without it negatively impacting one's score because the utilization is less than 10%!

Also, if you don't use your credit cards to the max potential, you don't reap as many rewards. The more you charge, the more 1% or 5% cash back means to you. In order to get $98 of cash back from July to now, I had to charge at least $1500 to the card every month. And all my charges are bills, groceries, etc. that I would have paid cash/debit for but instead used my credit card. You can see how little someone will make in Cash Back if they charge only $20 a month. That is less than $5 a year in Cash Back...not even enough to offset the annual fee! That is a waste of a good rewards program that pays you simply for using the lenders card, and a waste of the annual fee you paid for the card.

Re: Can Someone Tell Me.....

Anonymous — Thu, 24 Jan 2013 15:30:39 GMT

One last thing...I wouldn't recommend getting any major type of rewards card like the Chase Sapphire that has a large annual fee, if you don't use credit generously because you will waste your money. These cards provide $100-$500 in cash just for spending $500-$3,000 in the first 3 months. Low spenders will never get the rewards. So it is best to just carry plain vanilla cards with low or no fees and no rewards.

Re: Can Someone Tell Me.....

tooleman694 — Thu, 24 Jan 2013 15:36:32 GMT

I have maxed all of my cards at one point to test this. And then paid it off.

I have 4 cards and only once on one card was my CL increased.

Re: Can Someone Tell Me.....

Anonymous — Thu, 24 Jan 2013 15:45:18 GMT

You can't do it just once and maxing it out cards does not look good to lenders. 90% of the limit is considered maxed out. Lenders that are reviewing your credit want to see a high balance to show you are using the card fruitfully, but not too high. There has to be a pattern of this not just one occurrence. You also have to be proactive and not reactive when seeking higher limits. These two go hand in hand. It isn't all about score even though the final result is a higher score. There are steps that I outlined in my previous posts that you have to take to get there. It isn't a one step then results thing.

Re: Can Someone Tell Me.....

Anonymous — Thu, 24 Jan 2013 15:55:28 GMT

We can go back and forth.

I understand your concept if looking for higher limits, but even in that concept If Im paying it off in full then it doesnt show on my statements and then doesnt show on my credit reports. But I can see how you can take the initial hit in UTIL and then the following month start paying in full.

As far as credit scoring purposes it really is not necessary. I am also living proof as my credit was down in the dumps for several years.

I am not debating of what worked for you or myself. Too many different scenarios take place from one report to another.