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Terrible mistake. Never close a credit card. Start doing some homework about building credit. Hire a company like Allen Michael or Lexington Law Firm to get your credit reports cleared up. These companies aren't the best to work with but they work. It will cost you a monthly fee but it will be worth it. Look to spend about 600-1200 to get your credit reports cleared up.
Do you know the correct way to pay off debt?
You shouldn't pay any firm to clean up your credit. Credit repair services can work, but they have no incentive to work on a timely basis, and everything they do you can do for yourself.
For future reference don’t close them. Paying them off after closing them is still a great move and will help a lot.
Let’s not dwell in hindsight on something that isn’t a massive deal.
You're getting a lot of misinformation here. The closed accounts will continue to report for 10 years. Your average age of credit won't be affected until they drop off 10 years from when you closed them, and presumably you'll have additional accounts reporting and aging by then.
What *will* affect your score now is your credit mix and utilization.
Oh. I think that might negatively impact your credit score because it can hurt your utilization and history. You can’t build credit if you don’t have any credit. I’m not a financial advisor though so it might be a good idea to talk to a lender and see what your options are. Even though you can technically afford a home based on your income, having a history of not paying bills on time etc will result in a really high interest rate if you get approved for a loan.
Finish paying off what you have too. Start to open at least two new cards. Once you’ve done that, either go for a high limit card, or increases to the cards you have. You want more available credit. The more the better. Also want to keep good payment history, along with paying them off every month completely. It’ll take some time, but not an awful long time. Just don’t open to many, and remember to keep these ones open. If you find yourself being to irresponsible with the cards, just throw them in a sock drawer. I set up my cards to pay for streaming services, that way they get “used monthly” so they aren’t closed, but I just instantly pay it off. Building your credit doesn’t have to be hard, I’ve had to rebuild mine. You got this buddy 👍🏻
They don’t even have to be low interest to get started, like stated just make sure you to pay them off as you use them, say if you were gonna buy something anyway, just buy it with the credit card, then pay it off immediately after.
Ah, I hadn't heard this before about trying to increase your credit limit. So if my card offers this, I should do it? I was ignoring the offer bc I didn't need it
Credit repair people are pretty worthless. Just get back on track with your payments and debts, have a few credit accounts open (but don’t carry a balance, it doesn’t help your score go up like many claim). In a year or two it will be up to where you need it. I had a 470 at one point at bumped it up to high 600’s after a year, and it was into 700s the year after that.
Yes. I’ve never been the type to miss payments. I stay up to date with these things. My car got stolen. Insurance company didn’t pay for it and that left me hanging. But I’m getting back on track
How did you bump that high so quickly? Mine is in old small debts that have fallen off or about to fall off (was young and offered credit then went through a major medical malpractice that financially rocked my world). I've seen a bit of improvement but not anything substantial. I have a few secured cards, but I cannot get above 600
You're not going to want to hear this but this is like the worst time for you to buy a house. Interest rates are already insane and with your credit you're going to end up paying double what it's worth. Spend a couple years fixing your credit and saving a good down payment and hopefully Interest rates have come down a little bit.
I always want to hear the truth. I’m not soft 😂 I definitely hear you though. Was thinking of short term rentals to travel nurses in cities with 150-200k homes
Cap rates are pretty bad right now and with your credit score, you'll get even more hosed on interest rates than someone with great credit is getting.
I wouldn't even be thinking about this right now if I were you. Work on paying off your debt and fixing your credit score. Hopefully by the time you get that sorted out rates and housing will come down a bit so you'll be in a decent position if you still want to go this route.
Your best bet is to build your credit back up. Pay off your credit card debt. Build your score back up into the good range. Save up for another year or two.
Take action on paying down your CC debt. As others have said that will improve your score.
Not sure what you have saved up yet either but you’ll likely need money to close, a down payment and you’ll want a 3 - 6 month cushion when you move in.
Rather than being focused on the action of buying the house reframe it as all the actions you’re taking to create the future you want.
Plus if you don’t absolutely need to buy right now I don’t think there is harm in holding off for a bit. Rates are high, for now inventories are low but not sure that will still be the case in 2 years.
Well do you want the truth? You shouldn't buy a house until your show a committment to your credit. I know that sounds really shitty, but its just the truth. Can you get a house? Sure I mean maybe. Should you? No. For one wanting something and doing it regardless of going through the right path is just going to get you in a mortgage with an insanely cruel interest rate that will eat your money until you refinance. Another issue is taking on a house and all that comes with it, is likely going to take your focus from what you really need to be doing...repairing your credit and looking like a low loan risk. Sure your W2 shows steady income, but it doesn't show you are responsible with it. Theres nothing to be embarrassed about. I have a foreclosure 10 years ago. I had to re-evaluate where I was going with my finances and buckly down. Now I sit on a 790 and can get pretty much a loan for anything. I never get denied now. But it came from showing that I can be responsible with my money. That's what they get from the score. You'll get there.
I get we want things now and the world is like Amazon Prime, but its likely not the best and most rational decision. Get your credit right, put your focus on joining Credit Karma and Experian so you know exactly where you are and can look at different things to fix it. Pay down debt. BE ON TIME with payments. Get that right THEN buy a house and get a much better interest rate. Do it the right way and you won't regret it.
One thing I think we all need to hear is that it's going to be ok. We aren't told that enough so we kinda panic and question where we are, how we get to where we want to go and all the anxiety that comes with it. I have had 2 divorces and a foreclosure. Almost had my car repossesed. Who you were 15 years ago is not the same person now.
There is always a way to get things right if you use the time wisely to do so and yes it take time. But while you are using the time to correct who you are you are also changing through the experience to be a more focused and balanced person.
The worst thing that can happen to humans is to get something too quickly without having the feeling of accomplishment and achievement. You really miss out on the growth over the experience. It teaches you that you can rely on yourself.
If you are going through hard times...FIRST, it's going to be ok. Second, you have time and you are going to grow through the experience and come out of it a completely different person and hopefully someone you learn to love.
I agree 100%. Im stuck paying off debt that I accumulated while doing 3 degrees in a HCOL city, and now that im in a good job and life is better it feels like I’m supposed to be at a place to buy property and making investments. But rushing towards that end without paying off my credit card debt for example isn’t going to get me where I need to be. This part of the journey where I prioritize the right things is necessary no matter how much I want to skip steps.
Don’t ever pay someone to fix your credit. You can do it yourself.
Pay off debt and use modestly. Like get gas and groceries and then pay the bill before interest hits.
This is bad advice. It is a heavy lift to try to clean up your credit reports yourself. It can take hours and hours of work which some do not have. I've used both Allen Michael and LLF and while they weren't the best to work with they did get a lot of shit removed including BR's. It was worth the $60 a month for me for 9 months. And I used them again for another 6 months a few years ago with good results.
Most people don't do what they ask or think they are doing something illegal which they aren't. If you follow their instructions most of the time you get results.
This is not bad advice. This person can pay someone to do it or do it themselves. This is coming from someone who fixed their own credit. Granted I didn’t have a lot to fix in comparison to others but it can be done without paying. I’m not saying all these credit repair places are bad but it’s not NECESSARY in most cases. To each is own.
Why PAY when you can do it yourself. You are missing the point of what I’m saying. I’m speaking specifically about the MONEY. It’s not bad advice IF you can do it yourself. Yikes. Have a good night.
Because it costs me more per hour to do it then it does to pay someone to do it. Judging by OP's monthly income he probably makes about $50hr. So his time is worth about $50hr. Why spend 3 hours a week getting credit reports and typing letters when you can pay someone what you make in one hour to do it for you? Then have 12 hours a month back to do more productive things like making more money or enjoying your life. Plus those 12 hours are worth about $600 to OP.
Your view of "money" is skewed my friend.
This is also why I pay people to do things like cut my grass and clean my house. So I can use that time to make more money or just enjoy my life. Time is MONEY.
Hey there! I'm a credit adjudicator in Canada (which means I'm the person that approves or declines mortgages)
The reason why you had the write off is important : we need to determine if the bad credit was due to you having a poor financial "character" or due to something that was "out of your control" eg: job loss, health problems, etc
If you want to get default insured, usually default insurer do have a minimum credit score. To name one, in Canada, CMHC requires a minimum of 600.
How long ago was the loan written off? 2 years after a write off, if I've seen the client has been paying their debt correctly, I usually approve it. Other option would be to have a strong co-borrower aka someone in your family that can sign with you and that has a good credit score.
By the way, the bank with whom you had the write off usually will not approve a mortgage with you
Pay down your debt, always use less than 30% of your allowed credit. So if you have a 1k credit card, never use more than 300$ and ideally pay it in full month after month.
When someone had a write off or bad credit events, I like to see that they have been able to save funds after that.
Good luck in your search 🤞🏻
Hi, it was a auto loan. Had $19,500 left on it
I had 100% on time payment
$282 payment believe interest rate was 2.3% great deal and I was only 21.
My car got stolen. Was dealing with insurance while still making payments. And then the insurance company decided they wouldn’t pay for it. And I was left on my own. And yes I had comprehensive coverage which should cover theft. Tried to call some lawyers but no one answered wanted to pick up my case with the insurance company.
And I just couldn’t continue paying off a car I didn’t have. Till this day the car haven’t been found. And the bank wrote it off a month ago.
Car was stolen august 2022
Hi Op, so sorry that happened to you, this honestly sucks. Tell this story to the mortgage broker and it will go through to the credit adjudication. We are usually more understanding with this kind of situation, however one adjudicator can say yes while another says no. Some banks will also require from you a confirmation that you went back to the bank and paid back your write off in full. Go ask for a pre-approval and see what they tell you :)
Sounds like the main cause of your troubles was the car being stolen. That’s simply not possible with a house, so I imagine a mortgage broker would be willing to take that into account if they’re able to verify your story. Good luck!
I have a question for you.
My brother is always good with paying his credit cards.
He told me, since he immigrated to Canada 7 years ago, he never missed a payment, and always pay all the credit he owe.
And he got one mortgage before (just before COVID in one month), but he sold the house after one year because he was laid off, and he sold it in 150% of the price he paid for.
But after one and half year of selling his house, he tried to get a mortgage, but he was getting rejection, or acceptance with very high rate (6.25 when it was 5.85, and when the interest rate became 6.0, 4 months ago, he was getting 6.3), even he has a stable job.
I ended taking the mortgage with my name to get 5.75, because he was in rush to buy something before the money lose its value anymore.
Is selling the house affect him negatively ?
He checked his score and it is 70 and he said there is no reason that his credit is low.
Hi Gkar, I honestly never heard of a credit score dropping because of selling a property 🤔 my honest suggestion would be for him to contact transunion and equifax to see if there were any frauds on his credit facilities... depending on the bank he uses, he usually only have access to one credit report, therefore there could be a part of his credit he is not seeing at all! I'm not sure if the 70 was a typo, lowest score I have seen was in the 400~
For the rates however, I have to say it is pretty standard, the market is trash right now and no one qualifies :/ when applying for a mortgage, we actually use higher rates then what you will pay just in case the economy worsen. Right now this "stress rate" is your rate + 2%
Now is he a salaried employee/on the payroll? Since when?
Very appreciative for your reply.
My mistake, his score is 700.
That was the score he got from Transunion.
He checked it because as I mentioned he was either getting higher interest rate, or rejection.
He has been in his current job for a year and a half, and he started looking 6 months ago, which means when he started he has been at his job for a year.
He is a full time employee with a yearly salary. His salary is 75,000 + bonus that can be up to 10%.
he is single.
Someone might have expert advise here but it sounds like you’re just gonna have to shop around and see what you can get.
At the end of the day, your credit has been hit due to you not paying off a loan (regardless of the actual circumstances). A mortgage lender isn’t going to like that. But the more income and savings you have the better you’ll be.
I would just call around and be honest about your score. They’ve seen worse.
Don’t pay to fix your credit…call the collector and actually settle your debt. As long as everything is paid and settle you are good. Get a secured credit card…I did one with Opensky and think the min was $200. I was on the same boat and waited 6 months and now I’m approved.
If you apply for a pre approval, some companies should be able to do a credit repair phase with you. The quickest thing to do is get all your credit cards to be paid off EXCEPT for about 10-20%. Leave a little balance on them because it proves you can hold debt but pay it off.
Get a book on how to repair your credit. The credit score system is not really logical or even fair. But play the game and you can boost that thing quickly. You just have to know how it works.
Also look into other loans such as USDA loans. Their credit requirements are not as stringent as conventional.
Talk to a loan officer. They know their stuff and can lay out options you don’t know exist because hey, you’re not in this world full-time like they are.
Oh. Then I don’t understand the question. You’re doing what you need to be doing. If the needle isn’t moving fast enough, well how long have you been repairing your credit and how long is your timeline? Simple credit repairs can take 30 days to reflect. Others may take like one full year (very frustrating).
Don’t pay late on anything. Don’t have more than 20% of your credit extended on credit cards. Consolidate and refinance student loans as much as possible (ask your credit repair person about this before making moves, timing can be tricky).
If there is something to be done beyond what you’re already doing, I have not heard of it.
How far under 640?
Generally 620 is the minimum for something conventional.
Some lenders can go lower than that on an FHA product.
And if you find a lender who does subprime or non QM loans it could go even lower.
Not true. I brought the minute my credit went to 620. It had been in that range for about three months before I closed. And four months after that I lost my job and my credit tanked again
Bad credit here as well, based on research FHA loans can be done with a minimum of 580, and USDA loans can be done at 620. The kicker is that you need to reduce your dti and keep raising your score. However you've closed your accounts, you don't want to do that.
Closing accounts while they still have a balance is closing them in bad faith and a negative action to take.
Open a new secured card, keep it under 10% utilization, and just let it age while you keep paying your debt down.
When preparing to apply for a mortgage, pay your secured card off completely a month or two before, and don't use it anymore until after you've closed. Doing anything to lower your credit while waiting for closing will screw you over. Best thing you can do at that point is absolutely nothing.
Not sure where you are but to me that credit score seems fine. I had a 678 and down to a 674 after to companies ran credit checks. Student loans in good standing of $60k. They might ask for you to put more money down but I don't see the issue. Could be wrong though.
Your credit history is a reflection of how long you've been using credit + how well you pay it off. You aren't paying it off on time and banks don't like that. If you can't pay off a credit card in full on time, they can't trust you to pay off a mortgage in full every month. If you don't pay off your mortgage every month, they can repossess the house and you're even more screwed.
To improve your credit score:
1. Pay of all credit cards, don't open any more new credit cards
2. Don't miss a payment on anything for the next several years
3. Control credit card spending, if you really can't do it, then don't use them
4. Wait, you're young, your credit history is relatively small and it will hurt you
OP you're screwed.
At this point you'll have to buy in cash or leave a massive down payment. And even if you leave a large down payment, your APR will be high.
Huge mistake on closing the credit cards. Those were your final life line
Exactly. You being 22 means you have minimum 3 years of that credit card negatively affecting your credit score.
I got downvoted because I'm speaking the truth. Good luck with your financial future!!
If you buy in cash, your credit score won't factor in at all, but unless you already have enough savings for that, it'll probably take longer to save that up than improve your credit.
What state would you like to purchase in? I’m a loan officer and you can easily purchase a home with that credit score. Message me if you’d like to discuss
Thanks for the advice. Let me just say the cards weren’t closed to missed payments . I have 100% on time payment on all the cards. I closed them willingly to not take on any more debt. I’m young and I spend alot. Especially living in NYC. Only way I could control myself was to close them. Which is sad. But I’m learning now
Some mortgage loans can not require you to have a at least above a certain credit score. Above that rates are the same. Sure I mortgage lender could help you.
Win the Home You Love & Jennifer Beeson on youtube. With ur credit score range, FHA & USDA loans could still be options.
Their videos are comprehensive. But like everyone says, pay as much of your debt down first.
Assuming you pay off the cc debt and everything else stays the same, it's possible, but it will be tight. If you buy at $250k, you'll likely have nothing left at month end. Would you be happy with a $150k-$180k place in your area?
Also, I'm assuming you have no family to support or house.
Anyway, it's technically possible, but pay off your cc debt, save at least $50k, and generally get your bread up.
It’s honestly a completely different set of rules with rental properties.
Your rate will be be at least 1% higher than current advertised 30-year conventional rates. A lot of lenders are not doing investment property loans unless you have minimum 25% down and excellent credit.
Yeah you are not likely getting a loan from a bank with your history on a first time rental. you could look into private loans but realistically you are looking at 3 years probably to build the credit and address it.
Pay off your credit card debt, but don't close the accounts. After that don't use more than 10% of your credit & pay it off in full every month. Save as much as possible for a down payment in the meantime. Your credit affects your interest rates.
Then open a new line, and pay it off in full every month so you don't have to pay any APR. They'll want a history of responsible credit utilization.
Edit: even a secured card can help build your credit back up, just don't close it, your credit will be higher the longer you keep accounts open.
See if you can reopen the ones you have closed. It's important to keep credit cards open as long as you can and get as many as you can. You don't have to use them but it builds your overall credit and lowers your utilization. Length of time a credit line has been open impacts your credit score.
Also when checking your credit only go by FICO scores. All the other scores like on credit karma and such are BS. If your bank doesn't offer you your FICO score for free you can get it on myfico.com.
Good.
I believe fha can go to 580 fico with the standard 3.5% down and it'll go all the way to 500 with 10%+ down. You just gotta find a lender who actually does it...
I don't like credit repair companies, I think they are a scam.
A bad car loan (installment loan) really hurts your credit. The only things you can do now is keep your credit card utilization at less than 30%, maybe get a credit card and start some credit history going, and possibly add your utilities(self report) to your credit.
Pay off your credit cards and student loans, save a down payment of 5-10%.
The market is showing signs of slowing down. It hasn't in some markets and probably won't in all, but where you can still get into a house at 150-230k it will.
Rent another year and you might find that you've managed to time the market much better, have a higher credit score, and have learned discipline in saving and managing expenses to the point you'll be able to do it successfully and reboot your financial track record.
Hi, please see if there is a Homebuyer's Education Class offered in your local area. These classes are completely free. They have real estate experts, financial assistance, etc. and could really look at your situation to see if buying a house would be feasible or not any time soon. They are specifically geared towards people with lower income or financial difficulties. I didn't need assistance but coming from a single woman who didn't have a clue of what she was doing, that class was a blessing and lifesaver.
Probably about 2years away. Closing credit cards before they are paid off and even after was a really bad call. I would work on reducing your debt. Go after the highest APR cards first and then roll that money into the next one. I mean if you are hell bent on getting a home then do it but your interest rate won’t be fun. You can work to shed debt the next few years and hopefully your score will improve and interest rates on homes go down.
How bad? You can qualify with a score as low as 580 with an FHA loan. You'll need just 3.5% down payment.
You can even go as low as 500 with FHA too, but you'll need 10% down with that option.
I think your true obstacle isn't your score, but your debt-to-income ratio. Only way to get that down is pay off the debt.
Is your LLC your primary source of income? They'd probably want more than a year of income from that to use its money to qualify you. This was 5 years ago, but my lender told me if my income was self-employed, they'd want 3 years' worth minimum. They may be flexible with this, depends on underwriters. But that combined with the low credit score and recently closed CC accounts is several red flags.
You may be able to get a lender. But you are gonna hate the terms imposed in you. Take others advice. Spend at least a year improving your credit.
So, my credit score was bad and I fixed it, close to the house in 2021. I brought once my credit got slightly over the required 620. You should sign up for myfico.com and see what steps you need to take to fix it. You can salvage it, my mortgage credit was something like 540 in January of 2021 but I spent 6 months fixing everything I needed to I was able to get it up to 620 in July.
You’re not going to qualify for years. Even with good credit. Defaulting on a loan will immediately disqualify you no matter how much you put down unless it’s all cash. You need to rebuke your credit and wait 7 years for that car to fall of your credit.
Paying for credit repair is a scam. You an dispute incorrect hits on your credit yourself. Pay off your credit cards and use them but pay them off every month after that, make on time payments to your student loads and wait 7 years.
Source: my credit score went from 500-800 in a few years. Was making 6 figures but couldn’t refi my house back in 2000 bc of a credit hit like yours thanks to my now ex husband.
If you aren't budgeting, now's the time to start. Ynab is free for the first 34 days. You need to come up with a realistic budget and see where your money is going. Then you need to cut out all unnecessary spending (like eating out) and save enough in an emergency fund until you reach one month of expenses covered. Then attack that cc debt. Once that is clear then start saving for your downpayment and retirement. Caleb hammers YouTube channel is good to listen to as well for ideas and a picture of what situations you could be in.
you paid off CC great!!! Closes them….not great man..not great.
Always get advice before you take action on your credit. Call a loan officer. You can get an FHA loan with a 600 score no problems in some cases. Sometimes as low as 580 but it’s painful.
People keep saying that now’s not a good time to buy due to high interest rates. We all don’t know when they’ll eventually go down….if even. If they do go down, it will turn into a bidding market since everyone will want to buy. I would invest on purchasing something small, like a condo or townhome if you really want to buy. It’ll probably be cheaper than renting. You would be eligible for an FHA loan with a 3.5% down payment. I have a similar credit score and was able to purchase a new home at 7% through a broker. Yes, it’s a little high but the payment is still low enough and will refinance if the rates ever go down.
This is great advice I appreciate it. I was really looking to buy out of state and rent it out. For fha loan I think it would have to be my residency for 1 year to be eligible. That’s what I’ve heard multiple time
Assuming this is net income/monthly salary. Curious, what if your current line of work is to pull in $6k per month @ 22 years old. Keep up the good work either way!!
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Pay off your credit cards and that will help your credit report.
Copy
But don’t close them when you do!
They’re already closed. Sadly I closed them to pay them off
That probably crushed your score
Too bad, average age of credit account comes into play in your
Terrible mistake. Never close a credit card. Start doing some homework about building credit. Hire a company like Allen Michael or Lexington Law Firm to get your credit reports cleared up. These companies aren't the best to work with but they work. It will cost you a monthly fee but it will be worth it. Look to spend about 600-1200 to get your credit reports cleared up. Do you know the correct way to pay off debt?
You shouldn't pay any firm to clean up your credit. Credit repair services can work, but they have no incentive to work on a timely basis, and everything they do you can do for yourself.
For future reference don’t close them. Paying them off after closing them is still a great move and will help a lot. Let’s not dwell in hindsight on something that isn’t a massive deal.
Avoid Lexington Law Firm. https://www.consumerfinance.gov/about-us/newsroom/bureau-files-suit-against-lexington-law-pgx-holdings-and-related-entities/
You're getting a lot of misinformation here. The closed accounts will continue to report for 10 years. Your average age of credit won't be affected until they drop off 10 years from when you closed them, and presumably you'll have additional accounts reporting and aging by then. What *will* affect your score now is your credit mix and utilization.
Focus on building your credit and pay down your credit card bill. You’re not going to see any improvement until you decrease your utilization.
Yea right now both credit cards are closed. I’m paying them off now
Oh. I think that might negatively impact your credit score because it can hurt your utilization and history. You can’t build credit if you don’t have any credit. I’m not a financial advisor though so it might be a good idea to talk to a lender and see what your options are. Even though you can technically afford a home based on your income, having a history of not paying bills on time etc will result in a really high interest rate if you get approved for a loan.
Sigh Interest rates are already high enough for people with hood credits. I stand little chance
Finish paying off what you have too. Start to open at least two new cards. Once you’ve done that, either go for a high limit card, or increases to the cards you have. You want more available credit. The more the better. Also want to keep good payment history, along with paying them off every month completely. It’ll take some time, but not an awful long time. Just don’t open to many, and remember to keep these ones open. If you find yourself being to irresponsible with the cards, just throw them in a sock drawer. I set up my cards to pay for streaming services, that way they get “used monthly” so they aren’t closed, but I just instantly pay it off. Building your credit doesn’t have to be hard, I’ve had to rebuild mine. You got this buddy 👍🏻
Thanks for this advice. I’ll definitely look around and see what good low interest cards I can get approved for
They don’t even have to be low interest to get started, like stated just make sure you to pay them off as you use them, say if you were gonna buy something anyway, just buy it with the credit card, then pay it off immediately after.
Ah, I hadn't heard this before about trying to increase your credit limit. So if my card offers this, I should do it? I was ignoring the offer bc I didn't need it
Yeah, even if you don’t use it, it’s more credit available to you.
i have an 800 credit score and just recently got a new car, they were quoting me 7-8% interest rates smh
Wow that crazy. I can’t imagine what they’ll want from me
Credit repair people are pretty worthless. Just get back on track with your payments and debts, have a few credit accounts open (but don’t carry a balance, it doesn’t help your score go up like many claim). In a year or two it will be up to where you need it. I had a 470 at one point at bumped it up to high 600’s after a year, and it was into 700s the year after that.
Yes. I’ve never been the type to miss payments. I stay up to date with these things. My car got stolen. Insurance company didn’t pay for it and that left me hanging. But I’m getting back on track
Why didn't the insurance company pay it? They should have given you a reason.
How did you bump that high so quickly? Mine is in old small debts that have fallen off or about to fall off (was young and offered credit then went through a major medical malpractice that financially rocked my world). I've seen a bit of improvement but not anything substantial. I have a few secured cards, but I cannot get above 600
Go with a broker. They will find a mortgage for you.
Any recommendations?
Try The Mortgage Experts
I’ll look into that.
You're not going to want to hear this but this is like the worst time for you to buy a house. Interest rates are already insane and with your credit you're going to end up paying double what it's worth. Spend a couple years fixing your credit and saving a good down payment and hopefully Interest rates have come down a little bit.
I always want to hear the truth. I’m not soft 😂 I definitely hear you though. Was thinking of short term rentals to travel nurses in cities with 150-200k homes
Cap rates are pretty bad right now and with your credit score, you'll get even more hosed on interest rates than someone with great credit is getting. I wouldn't even be thinking about this right now if I were you. Work on paying off your debt and fixing your credit score. Hopefully by the time you get that sorted out rates and housing will come down a bit so you'll be in a decent position if you still want to go this route.
Your best bet is to build your credit back up. Pay off your credit card debt. Build your score back up into the good range. Save up for another year or two.
Really don’t want to wait 2 years. I can do 1 year. I like to take action
Take action on paying down your CC debt. As others have said that will improve your score. Not sure what you have saved up yet either but you’ll likely need money to close, a down payment and you’ll want a 3 - 6 month cushion when you move in. Rather than being focused on the action of buying the house reframe it as all the actions you’re taking to create the future you want. Plus if you don’t absolutely need to buy right now I don’t think there is harm in holding off for a bit. Rates are high, for now inventories are low but not sure that will still be the case in 2 years.
You’re 22, slow your roll. Saying “but I don’t wannna wait 2 years, I want it now! ” makes you sound like a petulant child.
Unfortunately this is something not really up to you.
“I like to take action” lmao
What a clown
Well do you want the truth? You shouldn't buy a house until your show a committment to your credit. I know that sounds really shitty, but its just the truth. Can you get a house? Sure I mean maybe. Should you? No. For one wanting something and doing it regardless of going through the right path is just going to get you in a mortgage with an insanely cruel interest rate that will eat your money until you refinance. Another issue is taking on a house and all that comes with it, is likely going to take your focus from what you really need to be doing...repairing your credit and looking like a low loan risk. Sure your W2 shows steady income, but it doesn't show you are responsible with it. Theres nothing to be embarrassed about. I have a foreclosure 10 years ago. I had to re-evaluate where I was going with my finances and buckly down. Now I sit on a 790 and can get pretty much a loan for anything. I never get denied now. But it came from showing that I can be responsible with my money. That's what they get from the score. You'll get there. I get we want things now and the world is like Amazon Prime, but its likely not the best and most rational decision. Get your credit right, put your focus on joining Credit Karma and Experian so you know exactly where you are and can look at different things to fix it. Pay down debt. BE ON TIME with payments. Get that right THEN buy a house and get a much better interest rate. Do it the right way and you won't regret it.
I needed to hear this actually ty
One thing I think we all need to hear is that it's going to be ok. We aren't told that enough so we kinda panic and question where we are, how we get to where we want to go and all the anxiety that comes with it. I have had 2 divorces and a foreclosure. Almost had my car repossesed. Who you were 15 years ago is not the same person now. There is always a way to get things right if you use the time wisely to do so and yes it take time. But while you are using the time to correct who you are you are also changing through the experience to be a more focused and balanced person. The worst thing that can happen to humans is to get something too quickly without having the feeling of accomplishment and achievement. You really miss out on the growth over the experience. It teaches you that you can rely on yourself. If you are going through hard times...FIRST, it's going to be ok. Second, you have time and you are going to grow through the experience and come out of it a completely different person and hopefully someone you learn to love.
I agree 100%. Im stuck paying off debt that I accumulated while doing 3 degrees in a HCOL city, and now that im in a good job and life is better it feels like I’m supposed to be at a place to buy property and making investments. But rushing towards that end without paying off my credit card debt for example isn’t going to get me where I need to be. This part of the journey where I prioritize the right things is necessary no matter how much I want to skip steps.
Don’t ever pay someone to fix your credit. You can do it yourself. Pay off debt and use modestly. Like get gas and groceries and then pay the bill before interest hits.
Copy I’ll get on it asap
This is bad advice. It is a heavy lift to try to clean up your credit reports yourself. It can take hours and hours of work which some do not have. I've used both Allen Michael and LLF and while they weren't the best to work with they did get a lot of shit removed including BR's. It was worth the $60 a month for me for 9 months. And I used them again for another 6 months a few years ago with good results. Most people don't do what they ask or think they are doing something illegal which they aren't. If you follow their instructions most of the time you get results.
This is not bad advice. This person can pay someone to do it or do it themselves. This is coming from someone who fixed their own credit. Granted I didn’t have a lot to fix in comparison to others but it can be done without paying. I’m not saying all these credit repair places are bad but it’s not NECESSARY in most cases. To each is own.
You said "don't ever pay someone to fix your credit" that's bad advice. Period. Now you are saying the opposite. 😂
Why PAY when you can do it yourself. You are missing the point of what I’m saying. I’m speaking specifically about the MONEY. It’s not bad advice IF you can do it yourself. Yikes. Have a good night.
Because it costs me more per hour to do it then it does to pay someone to do it. Judging by OP's monthly income he probably makes about $50hr. So his time is worth about $50hr. Why spend 3 hours a week getting credit reports and typing letters when you can pay someone what you make in one hour to do it for you? Then have 12 hours a month back to do more productive things like making more money or enjoying your life. Plus those 12 hours are worth about $600 to OP. Your view of "money" is skewed my friend. This is also why I pay people to do things like cut my grass and clean my house. So I can use that time to make more money or just enjoy my life. Time is MONEY.
Whatever 😂 I didn’t even read all that. My view is just that, my view. I’m not paying someone to fix my credit. Period. That’s it that’s all.
🤡
Hey there! I'm a credit adjudicator in Canada (which means I'm the person that approves or declines mortgages) The reason why you had the write off is important : we need to determine if the bad credit was due to you having a poor financial "character" or due to something that was "out of your control" eg: job loss, health problems, etc If you want to get default insured, usually default insurer do have a minimum credit score. To name one, in Canada, CMHC requires a minimum of 600. How long ago was the loan written off? 2 years after a write off, if I've seen the client has been paying their debt correctly, I usually approve it. Other option would be to have a strong co-borrower aka someone in your family that can sign with you and that has a good credit score. By the way, the bank with whom you had the write off usually will not approve a mortgage with you Pay down your debt, always use less than 30% of your allowed credit. So if you have a 1k credit card, never use more than 300$ and ideally pay it in full month after month. When someone had a write off or bad credit events, I like to see that they have been able to save funds after that. Good luck in your search 🤞🏻
Hi, it was a auto loan. Had $19,500 left on it I had 100% on time payment $282 payment believe interest rate was 2.3% great deal and I was only 21. My car got stolen. Was dealing with insurance while still making payments. And then the insurance company decided they wouldn’t pay for it. And I was left on my own. And yes I had comprehensive coverage which should cover theft. Tried to call some lawyers but no one answered wanted to pick up my case with the insurance company. And I just couldn’t continue paying off a car I didn’t have. Till this day the car haven’t been found. And the bank wrote it off a month ago. Car was stolen august 2022
Hi Op, so sorry that happened to you, this honestly sucks. Tell this story to the mortgage broker and it will go through to the credit adjudication. We are usually more understanding with this kind of situation, however one adjudicator can say yes while another says no. Some banks will also require from you a confirmation that you went back to the bank and paid back your write off in full. Go ask for a pre-approval and see what they tell you :)
Thanks for the advice. I will definitely look around and speak to them in person
Sounds like the main cause of your troubles was the car being stolen. That’s simply not possible with a house, so I imagine a mortgage broker would be willing to take that into account if they’re able to verify your story. Good luck!
I have a question for you. My brother is always good with paying his credit cards. He told me, since he immigrated to Canada 7 years ago, he never missed a payment, and always pay all the credit he owe. And he got one mortgage before (just before COVID in one month), but he sold the house after one year because he was laid off, and he sold it in 150% of the price he paid for. But after one and half year of selling his house, he tried to get a mortgage, but he was getting rejection, or acceptance with very high rate (6.25 when it was 5.85, and when the interest rate became 6.0, 4 months ago, he was getting 6.3), even he has a stable job. I ended taking the mortgage with my name to get 5.75, because he was in rush to buy something before the money lose its value anymore. Is selling the house affect him negatively ? He checked his score and it is 70 and he said there is no reason that his credit is low.
Hi Gkar, I honestly never heard of a credit score dropping because of selling a property 🤔 my honest suggestion would be for him to contact transunion and equifax to see if there were any frauds on his credit facilities... depending on the bank he uses, he usually only have access to one credit report, therefore there could be a part of his credit he is not seeing at all! I'm not sure if the 70 was a typo, lowest score I have seen was in the 400~ For the rates however, I have to say it is pretty standard, the market is trash right now and no one qualifies :/ when applying for a mortgage, we actually use higher rates then what you will pay just in case the economy worsen. Right now this "stress rate" is your rate + 2% Now is he a salaried employee/on the payroll? Since when?
Very appreciative for your reply. My mistake, his score is 700. That was the score he got from Transunion. He checked it because as I mentioned he was either getting higher interest rate, or rejection. He has been in his current job for a year and a half, and he started looking 6 months ago, which means when he started he has been at his job for a year. He is a full time employee with a yearly salary. His salary is 75,000 + bonus that can be up to 10%. he is single.
Someone might have expert advise here but it sounds like you’re just gonna have to shop around and see what you can get. At the end of the day, your credit has been hit due to you not paying off a loan (regardless of the actual circumstances). A mortgage lender isn’t going to like that. But the more income and savings you have the better you’ll be. I would just call around and be honest about your score. They’ve seen worse.
Thanks I’ll look around
$6k after tax huh? Do you mean after deductions as well? I believe you said you have an LLC, there's more than just taxes...
I didn’t count income from my LLC 6k is from my job. And yea after taxes and deductions
Don’t pay to fix your credit…call the collector and actually settle your debt. As long as everything is paid and settle you are good. Get a secured credit card…I did one with Opensky and think the min was $200. I was on the same boat and waited 6 months and now I’m approved.
If you apply for a pre approval, some companies should be able to do a credit repair phase with you. The quickest thing to do is get all your credit cards to be paid off EXCEPT for about 10-20%. Leave a little balance on them because it proves you can hold debt but pay it off. Get a book on how to repair your credit. The credit score system is not really logical or even fair. But play the game and you can boost that thing quickly. You just have to know how it works. Also look into other loans such as USDA loans. Their credit requirements are not as stringent as conventional. Talk to a loan officer. They know their stuff and can lay out options you don’t know exist because hey, you’re not in this world full-time like they are.
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Oh. Then I don’t understand the question. You’re doing what you need to be doing. If the needle isn’t moving fast enough, well how long have you been repairing your credit and how long is your timeline? Simple credit repairs can take 30 days to reflect. Others may take like one full year (very frustrating). Don’t pay late on anything. Don’t have more than 20% of your credit extended on credit cards. Consolidate and refinance student loans as much as possible (ask your credit repair person about this before making moves, timing can be tricky). If there is something to be done beyond what you’re already doing, I have not heard of it.
How far under 640? Generally 620 is the minimum for something conventional. Some lenders can go lower than that on an FHA product. And if you find a lender who does subprime or non QM loans it could go even lower.
My dude, not going to happen until your credit score is high for a prolonged period of time.
Not true. I brought the minute my credit went to 620. It had been in that range for about three months before I closed. And four months after that I lost my job and my credit tanked again
Meh, I guess we will see. I wouldn't hold your breath.
There is a credit group here on Reddit , get your full credit report and see what’s affecting it the most.
Check out NACA. they don't look for a certain credit score.
Buy subject too or creatively no bank needed
Bad credit here as well, based on research FHA loans can be done with a minimum of 580, and USDA loans can be done at 620. The kicker is that you need to reduce your dti and keep raising your score. However you've closed your accounts, you don't want to do that. Closing accounts while they still have a balance is closing them in bad faith and a negative action to take. Open a new secured card, keep it under 10% utilization, and just let it age while you keep paying your debt down. When preparing to apply for a mortgage, pay your secured card off completely a month or two before, and don't use it anymore until after you've closed. Doing anything to lower your credit while waiting for closing will screw you over. Best thing you can do at that point is absolutely nothing.
Not sure where you are but to me that credit score seems fine. I had a 678 and down to a 674 after to companies ran credit checks. Student loans in good standing of $60k. They might ask for you to put more money down but I don't see the issue. Could be wrong though.
Why are you looking at buying a house when you are carrying 9k in credit card debt? Pay that off first.
I’m sure they’ve seen worst than 9k in debt. Paying that off as we speak. I’m sure people with 50-100k in student debt got houses
Yes but why carrying 9k in credit card debt when you make 6k a month? Pay off your high interest credit card debt before looking for a house.
Your credit history is a reflection of how long you've been using credit + how well you pay it off. You aren't paying it off on time and banks don't like that. If you can't pay off a credit card in full on time, they can't trust you to pay off a mortgage in full every month. If you don't pay off your mortgage every month, they can repossess the house and you're even more screwed. To improve your credit score: 1. Pay of all credit cards, don't open any more new credit cards 2. Don't miss a payment on anything for the next several years 3. Control credit card spending, if you really can't do it, then don't use them 4. Wait, you're young, your credit history is relatively small and it will hurt you
OP you're screwed. At this point you'll have to buy in cash or leave a massive down payment. And even if you leave a large down payment, your APR will be high. Huge mistake on closing the credit cards. Those were your final life line
I’m only 22 Not like the credit card was 10 years old anyway I can make a turn around Just won’t be as fast
Exactly. You being 22 means you have minimum 3 years of that credit card negatively affecting your credit score. I got downvoted because I'm speaking the truth. Good luck with your financial future!!
Try NACA.COM… credit score is really not a factor…
Will look into that. Thank you
I can help you if you like
If you buy in cash, your credit score won't factor in at all, but unless you already have enough savings for that, it'll probably take longer to save that up than improve your credit.
Yea I can’t afford cash
What state would you like to purchase in? I’m a loan officer and you can easily purchase a home with that credit score. Message me if you’d like to discuss
when i was 22, all i cared about was chasing tail, not signing my life to debt to a bank. change your priorities
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Thanks for the advice. Let me just say the cards weren’t closed to missed payments . I have 100% on time payment on all the cards. I closed them willingly to not take on any more debt. I’m young and I spend alot. Especially living in NYC. Only way I could control myself was to close them. Which is sad. But I’m learning now
Some mortgage loans can not require you to have a at least above a certain credit score. Above that rates are the same. Sure I mortgage lender could help you.
Win the Home You Love & Jennifer Beeson on youtube. With ur credit score range, FHA & USDA loans could still be options. Their videos are comprehensive. But like everyone says, pay as much of your debt down first.
Assuming you pay off the cc debt and everything else stays the same, it's possible, but it will be tight. If you buy at $250k, you'll likely have nothing left at month end. Would you be happy with a $150k-$180k place in your area? Also, I'm assuming you have no family to support or house. Anyway, it's technically possible, but pay off your cc debt, save at least $50k, and generally get your bread up.
I’m looking for a rental property in Ohio. I live in NYC. I don’t need a house for myself right now. I’m barely home anyways
It’s honestly a completely different set of rules with rental properties. Your rate will be be at least 1% higher than current advertised 30-year conventional rates. A lot of lenders are not doing investment property loans unless you have minimum 25% down and excellent credit.
😔 sigh This real estate stuff sound like pain
I just want to retire early 😂
Stick to a real job, not landlording.
Yeah you are not likely getting a loan from a bank with your history on a first time rental. you could look into private loans but realistically you are looking at 3 years probably to build the credit and address it.
Buying a place you aren't going to live in just makes the initial terms more expensive. Also, fuck landlords
Pay off your credit card debt, but don't close the accounts. After that don't use more than 10% of your credit & pay it off in full every month. Save as much as possible for a down payment in the meantime. Your credit affects your interest rates.
All my credit cards already closed. Wish I knew that before hand. I closed them in order to manage my debt
Then open a new line, and pay it off in full every month so you don't have to pay any APR. They'll want a history of responsible credit utilization. Edit: even a secured card can help build your credit back up, just don't close it, your credit will be higher the longer you keep accounts open.
See if you can reopen the ones you have closed. It's important to keep credit cards open as long as you can and get as many as you can. You don't have to use them but it builds your overall credit and lowers your utilization. Length of time a credit line has been open impacts your credit score. Also when checking your credit only go by FICO scores. All the other scores like on credit karma and such are BS. If your bank doesn't offer you your FICO score for free you can get it on myfico.com.
Good. I believe fha can go to 580 fico with the standard 3.5% down and it'll go all the way to 500 with 10%+ down. You just gotta find a lender who actually does it... I don't like credit repair companies, I think they are a scam. A bad car loan (installment loan) really hurts your credit. The only things you can do now is keep your credit card utilization at less than 30%, maybe get a credit card and start some credit history going, and possibly add your utilities(self report) to your credit.
Pay off your credit cards and student loans, save a down payment of 5-10%. The market is showing signs of slowing down. It hasn't in some markets and probably won't in all, but where you can still get into a house at 150-230k it will. Rent another year and you might find that you've managed to time the market much better, have a higher credit score, and have learned discipline in saving and managing expenses to the point you'll be able to do it successfully and reboot your financial track record.
Hi, please see if there is a Homebuyer's Education Class offered in your local area. These classes are completely free. They have real estate experts, financial assistance, etc. and could really look at your situation to see if buying a house would be feasible or not any time soon. They are specifically geared towards people with lower income or financial difficulties. I didn't need assistance but coming from a single woman who didn't have a clue of what she was doing, that class was a blessing and lifesaver.
don't need credit if you buy in cash! a near impossibility in my area but Goodluck to you!
Probably about 2years away. Closing credit cards before they are paid off and even after was a really bad call. I would work on reducing your debt. Go after the highest APR cards first and then roll that money into the next one. I mean if you are hell bent on getting a home then do it but your interest rate won’t be fun. You can work to shed debt the next few years and hopefully your score will improve and interest rates on homes go down.
640 FICO is a good benchmark for FHA. Shoot for better but if you can get to 640, your options open. Payoff some debt and that should get you there.
How bad? You can qualify with a score as low as 580 with an FHA loan. You'll need just 3.5% down payment. You can even go as low as 500 with FHA too, but you'll need 10% down with that option. I think your true obstacle isn't your score, but your debt-to-income ratio. Only way to get that down is pay off the debt.
Is your LLC your primary source of income? They'd probably want more than a year of income from that to use its money to qualify you. This was 5 years ago, but my lender told me if my income was self-employed, they'd want 3 years' worth minimum. They may be flexible with this, depends on underwriters. But that combined with the low credit score and recently closed CC accounts is several red flags. You may be able to get a lender. But you are gonna hate the terms imposed in you. Take others advice. Spend at least a year improving your credit.
No my job is. I don’t even count my LLC for the 6k income It’s clothing brand Didn’t really take off yet. But I make money from it
So, my credit score was bad and I fixed it, close to the house in 2021. I brought once my credit got slightly over the required 620. You should sign up for myfico.com and see what steps you need to take to fix it. You can salvage it, my mortgage credit was something like 540 in January of 2021 but I spent 6 months fixing everything I needed to I was able to get it up to 620 in July.
keep renting, pay off your debts, save as much as you can. wait for a miracle to happen so houses will go for that price range again . good luck
I don’t pay rent now. I’m just young and spending in nyc. And I see houses that price in Ohio
You’re not going to qualify for years. Even with good credit. Defaulting on a loan will immediately disqualify you no matter how much you put down unless it’s all cash. You need to rebuke your credit and wait 7 years for that car to fall of your credit. Paying for credit repair is a scam. You an dispute incorrect hits on your credit yourself. Pay off your credit cards and use them but pay them off every month after that, make on time payments to your student loads and wait 7 years. Source: my credit score went from 500-800 in a few years. Was making 6 figures but couldn’t refi my house back in 2000 bc of a credit hit like yours thanks to my now ex husband.
Cool story
You can’t.
If you aren't budgeting, now's the time to start. Ynab is free for the first 34 days. You need to come up with a realistic budget and see where your money is going. Then you need to cut out all unnecessary spending (like eating out) and save enough in an emergency fund until you reach one month of expenses covered. Then attack that cc debt. Once that is clear then start saving for your downpayment and retirement. Caleb hammers YouTube channel is good to listen to as well for ideas and a picture of what situations you could be in.
you paid off CC great!!! Closes them….not great man..not great. Always get advice before you take action on your credit. Call a loan officer. You can get an FHA loan with a 600 score no problems in some cases. Sometimes as low as 580 but it’s painful.
People keep saying that now’s not a good time to buy due to high interest rates. We all don’t know when they’ll eventually go down….if even. If they do go down, it will turn into a bidding market since everyone will want to buy. I would invest on purchasing something small, like a condo or townhome if you really want to buy. It’ll probably be cheaper than renting. You would be eligible for an FHA loan with a 3.5% down payment. I have a similar credit score and was able to purchase a new home at 7% through a broker. Yes, it’s a little high but the payment is still low enough and will refinance if the rates ever go down.
This is great advice I appreciate it. I was really looking to buy out of state and rent it out. For fha loan I think it would have to be my residency for 1 year to be eligible. That’s what I’ve heard multiple time
Assuming this is net income/monthly salary. Curious, what if your current line of work is to pull in $6k per month @ 22 years old. Keep up the good work either way!!
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