Trying to buy a home. Will removing authorized user help me?

[Anonymous]

Hi.  When I was in college I messed up and later settled with all of my credit cards.  This was 2-3 years ago.  To help rebuild my credit, I asked to be put on my dad's credit cards as AU since at that time he had perfect credit (800+).  Now I am trying to buy a home with a credit score of 690.  I am not doing FHA but my loan does have a penalty if the score is below 700, so I a motivated to increase my score 10 points asap.  If I fall below 680 though, I will have to pay an additional 2K to what I am going to have to pay with a 690 score.  

I have 2 credit cards on my own with a 0 balance. I have a student loan I am paying back--no late payments (it is on auto).  I am an authorized user on 4 of my dad's credit cards.  3 of those have a 0 balance, but the fourth card has jumped in the last 2-3 months from zero to a 6K balance on 13K limit.  My dad had to make unexpected purchases.  This account is 2 years old.  Since I owe nothing in credit card debt, I am worried to stay on as authorized user on this card--if I ask to be removed will it help raise my score?  Or if I am removed, is there a chance I will lose points?  I don't know what to do!  If I do nothing, is that best?  Sigh.  Thanks in advance.

Message Edited by Homebuyer24 on 12-04-2009 01:53 AM

[marty56]

Welcome to the forum.  IMHO I would have your Dad remove you from the card with the balance unless he can PIF and have the 0 blalnce report.  Even if your score drops (I dont think it will IMHO again), you can charge a small balance on your card and have it report.

My feeling is that with the AU removed, your score would be over 700 but no one here can say that for certain.  LOL its always easy to have a balance report.

[Anonymous]

Hi Marty56--thanks for the welcome!  I am so nervous but I called this morning and had myself removed as an authorized user--you can remove yourself.  I then asked for Chase to contact the credit reporting agencies and was told that it was done in regular intervals and done fairly quickly but that makes me nervous.  I really hope I helped my credit (vs going down).  I think I must have because I saw the balance was 5500 and because it is the only card on my account to carry a balance so I can't imagine that would be a positive for my credit score.  

One of my cards currently has a negative balance due to a return--not sure if that makes a difference.  I feel real pain knowing 10 points can cost me 2k in either direction.   Right now with a 690 I have to pay a 4K penalty--if at 680 I will have to pay 6K and at 700 I am going to have to  pay a 2K penalty.  To avoid any penalty I have to be at 720 or up which probably is not going to happen.   

[marty56]

I did a refi recently and I let 0% util report.  I lost 3 points on EQ put my TU was at is current value and I loose 10 - 12 if I let any balance report.  Remember most likely the lender will use your middle score of your 3 scores but for the refi, the CU only pulled EX which actually was my middle score.

For what is worth, you could always refi if you had too or even max etra principle payments if you are able to make up the lost money.  I really think you will be pleasently suprised once the AU is removed. 

[Anonymous]

While I can't comment on your original question, I would like to share a little experience I had with my home purchase last December. You mentioned FHA and that it wasn't that type of loan. I used the rural development loan which pays out %100 and there is very little if any out of pocket initial expense. I didn't have to deplete bank accounts for a down payment, there is no PMI, and they only do low fixed rate loans. They can take some time to go through, but if you live in an area that can qualify I would definately look in to it. I let my coworker know about it a couple months ago and he closed on his house yesterday @ %4.75. I did it in the middle of switching jobs, the DOW was 4k points lower, major financial giants were crashing, and I had a 640 credit score and a 34k income. For the right people in the right location it is definately worth looking into IMO.

Now that my shameless plug for RD loans is done:

Chase isn't quick to do anything?! At least not for me lol. Have you shopped around for a different home loan at all? I know when I was looking my CU turned me down because I wasn't 680, but I don't recall those fees (PMI?) even being discussed. That could just be because I was too low to qualify and they didn't want to bother with bringing me down even more. Lady actually said to come back in two years, you can't get a house now. I am glad I didn't listen to her.

Message Edited by Not2Savvy on 12-04-2009 11:09 PM

[Anonymous]

HI--I am doing a state teacher loan and the interest rate doesn't vary in terms of your credit---it does vary as does regular rates due but is the same for all buyers at the same time doing the same loan (they do have different loan options) no matter your credit score (I think lowest accepted is in 500s) but you have to pay a penalty (not points--but like them I think) depending on your credit score.  The penalty is in my closing costs but it cannot be paid by the other party because there is a max in terms of what I can ask for (in closing costs from the seller) on my loan--so I have to pay the 4K.  We looked at FHA but this loan was better (no PMI) 3% down, etc . . .  My husband was told he was 790 I think so it's just my credit score causing the penalty.  

I did see there are some special HUD loans for teachers in areas where there is a need for teachers due to rural or low income area where I could get as much as up to 1/2 off the price of a home, but none of the homes in the town where we are trying to buy qualify.  

Message Edited by Homebuyer24 on 12-05-2009 08:33 AM