Boosting Credit

Skiuseme

Chief Petty Officer
Joined
Jun 18, 2003
Messages
409
Ok guys and Ladyfish and Bassy. Im looking at purchaseing house in about 3 or 4 monthes. Im 23 years old and I have decent credit already and my girlfriend is 24 with good credit. We need your ideas on giving us the last minute kick to be approved for the house. we have been using our credit cards as much as possible latley and paying the balance off at the end of the month. Any ideas would be very helpful.
 

rogerwa

Commander
Joined
Nov 29, 2000
Messages
2,339
Re: Boosting Credit

You can meet right now with a loan originator and find out where you sit. When my wife and I were engaged we met with an originator well over a year before we bought our house, just to understand where we needed to be when the time came.<br /><br />If you don't already know, they will look into your past history and see any out the ordinary cash inputs to ensure you have not taken any unmentioned gifts or loans that may affect your true position. They will also check your cards to ensure you have not taken any 'loans' from your CC's.<br /><br />YOur best bet is to do as I said earlier and meet with somebody to see where your at..
 

boatingfool

Chief Petty Officer
Joined
Nov 30, 2002
Messages
610
Re: Boosting Credit

Get pre-approved for a loan.<br /><br />With most banks that will drop your interest rate at least 1/2 point.<br /><br />They will pre approve you for the max ammount they will finance you.<br />This has 2 benefits.<br /><br />1- Lower intrest rate<br /><br />2- You will know your max price range according <br />to the bank so you do not look at houses you cant buy.<br /><br />Also, Do not get anymore credit cards and do not apply for any credit.<br /><br />We were told that when a credit report is run and they see a bunch of creditors also running reports on you it looks bad.<br /><br />They said it looks like you are going all over town trying to get credit.
 

LadyFish

Admiral
Joined
Mar 18, 2003
Messages
6,894
Re: Boosting Credit

Stop using the credit cards now that you have shown that you will pay on time.<br /><br />Also cancel all but 1 or two credit cards. When a lender looks at your credit they do in fact look to see if you pay on time, but more importantly they add up all your available credit.<br /><br />Now that you have been so good paying on time, these credit cards company probably want to up your limit or you'll get inundated with new cards in mail. Don't do it.<br /><br />Your available credit on VISA $5,000 and MC and AMX is $5,000 not to mention the available credit on Penneys, or other store cc's works against your credit. If you add it all, its the same as if you owe it. Its called your available credit and will be used against you.<br /><br />Ditch the credit cards except for 1 or 2 and keep credit limit available down.
 

mellowyellow

Vice Admiral
Joined
Jun 8, 2002
Messages
5,327
Re: Boosting Credit

they will look at debt to income ratio. even though<br />you pay in full on end of month, it will show as<br />a debt in the meantime. cancel as many cards as<br />possible right now, don't need the extra couple<br />months of payment history IMO.<br />also, very important, do NOT apply for any addl.<br />credit until after closing.<br />good luck,<br />M.Y.<br />(edit) dang LF is faster :p
 

neumanns

Lieutenant Commander
Joined
Mar 1, 2003
Messages
1,926
Re: Boosting Credit

All excellant advice, also no new cars and start saving for down payment as well as unforseen closing costs. Down payment can make lower intrests rates as well as save you some fees associated with low down payment packages. Better to avoid these if at all possable as it can save you considerably over the life of the loan.
 

mattttt25

Commander
Joined
Sep 29, 2002
Messages
2,661
Re: Boosting Credit

1. eliminate as much debt as possible.<br /><br />2. maximize your income and liquid assets.<br /><br />3. only maintain a handful of revolving accounts (credit cards). more does not equal better credit. but get your bank to raise your limits of credit on the accounts you maintain.<br /><br />4. don't make late payments on anything.<br /><br />most of these suggestions are easy and improve your credit. sometimes, only time will heal bad credit. pay the $25 and get a good credit report and learn about what really affects credit. you may be surprised.
 

bh357

Chief Petty Officer
Joined
Jun 12, 2003
Messages
471
Re: Boosting Credit

If you haven't already, order your credit reports from the three major credit bureaus, and check them for mistakes. Mistakes do happen, and it is up to you to get them corrected. I've had a couple of accounts which I had closed but they still showed up as open on the report. Also, I had a small store account still open which I hadn't used in years, and had forgotten about.<br />You may have to pay to order copies of the reports, but depending on what state you live in you may be able to get a copy for free.
 

Knightgang

Lieutenant
Joined
Oct 6, 2003
Messages
1,428
Re: Boosting Credit

I did not read through the Ralph Spence post, but here is what I know.<br /><br />Sometimes no credit is as good as good credit. My wifes mom is a bank loan officer and now days, many lender don't calculate total available credit into the picture, but they used to. Now they look at average monthly payment. So stop using the cards now and be sure your balance is zero.<br /><br />Even though they do not look at available credit, it is just a smart credit decision to only have 1 credit card with a reasonable limit and don't open a revolver account at a store just because they give you 10% off your first purchase if you apply for their card. One Visa or Mastercard will sufice anywhere.<br /><br />Go to the Equifax website or another major credit reporting agency and order your credit reports. Many of these agencies will give you one per year free.<br /><br />Take a good look at the credit report. Sometimes companies will report when you owe them a balance, but will not report that it was paid. The will not have negative comments like you were late, just never cleared the debt off of your credit report. This could have the bank thinking that you have more outstanding debt than you actually do.<br /><br />Do the calculations yourself, you do not want to have a house payment that exceeds 35 to 45% of your monthly income. This can lead to major credit problems. By doing this, you can limit the cost of the house you want to buy and be sure your payments are at a comfortable level. If you want to run some numbers, let me know. I can email you an excel spreadsheet that will allow you to plug in all of the loan factors, amount, term and interest and tell you what the payment will be. I use them everyday as I am an accountant.<br /><br />Good luck on your credit and your home searching.<br /><br />Knightgang
 

jinx

Senior Chief Petty Officer
Joined
Sep 25, 2003
Messages
739
Re: Boosting Credit

Remember that old saying about the largest purchase you will make is you house? <br /><br />It is not true.<br /><br />The single largest purchase is the MORTGAGE! The interest paid will be almost twice the amount financed, even at todays rates.<br /><br />Shop around, watch for hidden costs, and no prepayment penalty. <br /><br />You have, or will, spend a lot of time looking for the right house to buy.<br /><br />A few days of research on the mortgages can easily save you a 100K dollars.<br /><br />Jinx
 

mattttt25

Commander
Joined
Sep 29, 2002
Messages
2,661
Re: Boosting Credit

some info from a c&p. dispels some common myths...<br /><br />"There's a lot of misinformation being propagated about what does and doesn’t hurt your credit score, and much of it is coming from sources who should know better: mortgage lenders.<br /><br />Now, let me say first that I’ve worked with several excellent lenders who really knew their stuff and kept up to date, not only on loan trends but on the information that’s available about credit scoring. That’s important, because the FICO credit score, in its various permutations, is used in three-quarters of all mortgage lending.<br /><br />But what I heard from several lenders responding to my recent column, “8 big mortgage mistakes and how to avoid them,” was the kind of bad advice that can cost you money and keep you from getting the best loans.Check out your options.<br />Shop for rates<br />before you borrow.<br /> <br /><br />So if your mortgage broker gives you any of the following advice, take a tip from me: Find a new broker.<br /><br />Closing accounts can help your credit score<br />No, no, no. For the umpteenth time: Closing accounts can never help your credit score, and may hurt it.<br /><br />Every time I write this, I get more e-mail from people who say their mortgage lenders told them exactly the opposite. It’s true that having too many open accounts can hurt your score. But once you’ve opened the accounts, you’ve done the damage. You can’t repair it by shutting the account, and you may actually make things worse.<br /><br />The credit score looks at the difference between your available credit and what you’re using. Shut down accounts, and your total available credit shrinks, making your balances loom larger, which typically hurts your score.<br /><br />The score also tracks the length of your credit history. Shutting older accounts can also make your credit history look younger than it actually is, which can hurt your score.<br /><br />Rather than closing accounts, pay down your credit card debt. That’s something that actually can and usually will improve your score. <br /><br />Checking your FICO score can hurt your credit<br />Unfortunately, I heard this one from a mortgage broker who is otherwise pretty smart. He was confused about which type of inquiries hurt your score and which don’t.<br /><br />Applying for new credit is generally what hurts your score. Ordering a copy of your own credit report or credit score doesn’t count. Those mass inquiries made by credit card lenders, who are trying to decide whether to send you an offer for a pre-approved card, also aren’t going to hurt you, either -- unless you actually take them up on their offers.<br /><br />If you want to minimize the damage from credit inquiries, make sure that when you shop for a mortgage you do so in a fairly short period of time. The FICO score treats multiple inquiries in a 14-day period as just one inquiry and ignores all inquiries made within 30 days prior to the day the score is computed.<br /><br />For most people, one inquiry will generally knock no more than 5 points off a score (and scores typically run from 300 to 850, so that’s not a big percentage). <br /><br />Credit counseling will hurt your score as much as a bankruptcy<br />The current FICO formula ignores any reference to credit counseling that may be in your file. That’s been true for the last three years, after researchers at Fair, Isaac, the company that created the FICO scoring system, noticed that people getting credit counseling didn’t default on their debts any more often than anyone else.<br /><br />Your ability to get a loan could still be hurt by credit counseling, however. Your current lenders may report you as late, because you’re not paying what you originally owed or because your credit counselor isn’t sending your payments in on time. Late payments do hurt your credit score.<br /><br />Lenders consider other factors besides credit scores in making their decisions, as well. The factors they look at can vary widely. Most want to know your income, for example. Some want to know how much savings you have or whether you’re a homeowner. Some will find credit counseling disturbing, while others see it as a good sign.<br /><br />The mortgage lenders who don’t like credit counseling generally treat its enrollees the same as if they had filed for Chapter 13 bankruptcy. Chapter 13 is the kind of bankruptcy that requires a repayment plan and is looked at somewhat more favorably than Chapter 7, which allows you to erase many of your debts. You might still be able to qualify for a loan from one of these lenders, although your interest rates will almost certainly be higher than if you had perfect credit.<br /><br />If you plan to get a mortgage soon, and you’re not already behind on your debts, it’s probably smart to steer clear of credit counseling. If you’re already in trouble, however, a good credit counseling agency might be able to help you get back on track. <br /><br />Your FICO isn’t the only score you need to check<br />This came from lenders who thought the FICO score is offered by only one of the three credit bureaus: Equifax. <br /><br />In reality, all three of the bureaus offer FICO credit scores using the formula developed by Fair, Isaac, but they each give the scores a different name. At Equifax, the FICO is known as the Beacon credit score. At TransUnion, it’s called Empirica. At Experian, it goes by the unwieldy title of “Experian/Fair, Isaac Risk Model.”<br /><br />Complicating matters further is that you’ll probably have three different scores from the three different bureaus, largely because the bureaus don’t all share the same data. One bureau may list more accounts for you than another, for example, and the differences (in types of accounts, payment histories, credit limits and balances) will be reflected in the score that bureau computes for you.<br /><br />Because of those differences, it does make sense to pull and examine your credit reports from all three bureaus before you apply for a big loan like a mortgage. Many mortgage lenders take the middle score from the three bureaus when making their decisions, so fixing errors in all three reports before you shop for a loan is smart.<br /><br />When it comes to comparing your scores, however, you may be stuck. Equifax is so far the only bureau that makes it easy for consumers to get the same FICO score that lenders see. The scores typically provided to consumers by Experian and TransUnion aren't FICO scores, and they're different from the scores these bureaus provide to lenders. <br /><br />But the ways you improve your credit score are the same in any case: Correct errors. Pay your bills on time. Pay down your debt. And apply for credit sparingly."
 

eurolarva

Rear Admiral
Joined
Jun 24, 2003
Messages
4,182
Re: Boosting Credit

Lots of good stuff here. Also you want to have at least 20K downpayment over and above closing costs unless you are a vet using a va loan. If you dont pay that amount down you will probably have to pay 50 bucks a month hazard insurance. This insurance does not go against the mortgage and is like throwing 600 dollars a year away.
 

BassMan283

Petty Officer 1st Class
Joined
Aug 26, 2002
Messages
277
Re: Boosting Credit

Excellent info, mattttttt. <br /><br />In addition, if you've got about 38 bucks to spare and a keen curiosity about your credit standing, go to <br /><br /> http://www.myfico.com/ <br /><br />for that amount you can get your credit reports from all three agencies with the applicable FICO score. In addition, you get access to a huge amount of info about credit. I found it very valuable. No, I don't get a commission.
 

crab bait

Captain
Joined
Feb 5, 2002
Messages
3,831
Re: Boosting Credit

interestin' story...<br /><br />when i left the west coast in '85 ..i paid off everthin'.. then another month.. and i got all my statements from everbody ..they all said zero balance owed.. <br /><br />i left for the east coast..took months to get back here.. i took the long way home ;) ..<br /><br />called home a few times an my pop says been gettin' alot of mail from SEARS..<br />said he opened one letter said i owe sears $30 bucs.. <br /><br />i said no i don't ..thats what i OWED 'em..i now have statement in my hand sayin' zero balance owed.. i be home soon , i'll take care of it..<br /><br />got home to delaware,, but my hometown sears could'nt help me.. had to deal with west coast sears.. <br /><br />finally,, it got straighten out... i was rite,, they were wrong.. life went on..<br /><br />8 years past.. i went for a fanny mae home.. they interview an scope ya to death.. it's a 5 part/round process an mostly if ya make it to round 3,,, your pretty much good-to-go..!!<br /><br />round 4 interview,, they shot me down.. sayin' that my credit is marred cause i still owed sears 30 bucs since 8 years ago, still...<br /><br />well, i flipped..!! <br /><br />i told them i didn't owe them anything an i could prove it..<br /><br />they said thats ok,, there's minor other things ,also.. like not a steady yearly gross income.. it flacuates to much cause i'm in constrution trade.. but i did always meet the minimum ammount required..<br /><br />but still they shot me down...<br />it just didn't seem right but o'well,,my luck..<br /><br />fast forward 6 years.. i ran into a girl i went to high school with... <br />she was all happy ..buzzin' a mile-a-minute..<br /><br />she said she was in process for a fanny mae home... she says it's really a hard process..!! she says "credit has to be spotless.. they were telling me that they once shot a guy down cause he owed sears $30 bucs. can you believe that crabby..?? a lousy $30 bucs..!! an shot him down !!"............... <br /><br />they're usin' me as a freakin' example.!! :)
 

roscoe

Supreme Mariner
Joined
Oct 30, 2002
Messages
21,788
Re: Boosting Credit

I disagree with canceling any ccards at this point. I was told by my lender, that a closed account, for any reason, will effect your credit score. Contact your lender before doing anything.
 
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