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10/20/2017 1:01:18 AM
9/22/2017 12:11:25 AM
Posted: 9/27/2005 7:39:37 AM EDT
...before I consider applying for a construction loan for a primary residence? For alot of reasons - all of them my fault - I managed to screw up my credit. I've got my shit together now, but the damage is done. I'll be completely debt free in around 3 months, and am looking to locate property suitable for building a new home.

There's no way I'll even think of securing a loan with my credit in it's current state. This is fine, as it'll give me more time to throw tons of money in the bank. Still, I need a goal. It may take years, I don't know. What should my FICO score be, before I begin trying to secure a construction loan?

Is there anything else I should be aware of? I will no doubt be asking alot of questions in the months to come, as I have NO idea how the homebuilding process works. I'm not doing it to save money, I'm doing it because I'm picky. I won't do any of the work myself. I figured that getting financial matters squared away was my first priority.
Link Posted: 9/27/2005 7:51:58 AM EDT
Find yourself a good mortgage broker. Make sure they are experienced. The right guy will know everything there is to know about credit, such as, it's not neccesarily the best idea to pay all your shit off.

IM me if you want specifics. I'm not licensed in OH, nor did I stay in Holiday Inn Express last night, but I do have 10 yrs experience.
Link Posted: 9/27/2005 7:55:18 AM EDT
Step 1: Get your credit reports. All three of them (Transunion, Experian, Equifax.)

Step 2: Cry. Or, drink some beer. Whatever you do.

Step 3: www.creditboards.com

Link Posted: 9/27/2005 8:01:46 AM EDT

Originally Posted By mcnielsen:
Find yourself a good mortgage broker. Make sure they are experienced. The right guy will know everything there is to know about credit, such as, it's not neccesarily the best idea to pay all your shit off.

IM me if you want specifics. I'm not licensed in OH, nor did I stay in Holiday Inn Express last night, but I do have 10 yrs experience.



Well, my cars are paid off. I'm left with around 5 grand on credit cards (near limits on all). We could take it to IM, but the information presented here might be benedicial to others as well. So - what do I need to get together financially before attempting to finance the construction of a new home?

IM me the answers if you must, but posting them here should be just as helpful.
Link Posted: 9/27/2005 8:02:00 AM EDT
[Last Edit: 9/27/2005 8:07:10 AM EDT by mcnielsen]
Not to flame you, Justa_TXGuy, but for most people, reading your own credit report can be like teaching yourself Chinese. Get an expert to help you. Most people won't even charge you for it up front.

ETA: Good suggestion, though. Knowing what's on your CR is important.

SubnetMask, the only reason I suggest IM, is that each person's situation can be unique and needs specific attention. It's not like building an AR, where every part always fits the same way. To use an investing analogy: "Should I invest in Gold or Microsoft?" It depends on your situation and the rest of your portfolio, and other factors like market timing, your age, etc.

So, my suggestion to seek professional guidance for your specific situation stands. Good luck!
Link Posted: 9/27/2005 8:02:26 AM EDT
Link Posted: 9/27/2005 8:03:51 AM EDT

Originally Posted By Justa_TXguy:
Step 1: Get your credit reports. All three of them (Transunion, Experian, Equifax.)

Step 2: Cry. Or, drink some beer. Whatever you do.

Step 3: www.creditboards.com




Step 1: Done it.
Step 2: Still cryin' and drinkin'.
Step 3: I'll give it a looksie.
Link Posted: 9/27/2005 1:08:46 PM EDT

Your credit report isn't the only thing they use to approve a loan. A lot of it has to do with your income/expenses ratio, potential debt, and a variety of other things.

Nearly anybody can get a mortgage, the RATE is what you want to polish things up to improve!
Link Posted: 9/27/2005 1:38:39 PM EDT
It needs to be at least 625, which is still pretty low. If you have 700 or above that is very good.

Also your debt to income needs to be at least 36% the lower the better. You are also going to need some type of down payment, the more the better. 20% will avoid PMI, there are some places that will do 100%, but the rate will be higher, the loan fees will be higher and you will pay PMI.

Also $5,000 is not alot in CC debt but being near limits is hurting your score as well, also the number of inquiries will lower it. The obvious past due loans or unsatisfied judgments will lowewr your score the most and you will not receive financing until they are current and and judgments are satisfied.

I am not a residential, but a commercial loan officer. I am not up to date on all of the secondary market requirments and products for different risk classes. Different banks may have different products to meet your current credit situation. I would try a traditional bank first, that is just me.
Link Posted: 9/27/2005 1:49:04 PM EDT
The number itself can range from 300 to 900. The formula for exactly how the score is calculated is proprietary information and owned by Fair Isaac. Here, however, is an approximate breakdown of how it is determined:

35% of the score is based on your payment history. This makes sense since one of the primary reasons a lender wants to see the score is to find out if (and how timely) you pay your bills. The score is affected by how many bills have been paid late, how many were sent out for collection, any bankruptcies, etc. When these things happened also comes into play. The more recent, the worse it will be for your overall score.

30% of the score is based on outstanding debt. How much do you owe on car or home loans? How many credit cards do you have that are at their credit limits? The more cards you have at their limits, the lower your score will be. The rule of thumb is to keep your card balances at 25% or less of their limits.

15% of the score is based on the length of time you've had credit. The longer you've had established credit, the better it is for your overall credit score. Why? Because more information about your past payment history gives a more accurate prediction of your future actions.

10% of the score is based on the number of inquiries on your report. If you've applied for a lot of credit cards or loans, you will have a lot of inquiries on your credit report. These are bad for your score because they indicate that you may be in some kind of financial trouble or may be taking on a lot of debt (even if you haven't used the cards or gotten the loans). The more recent these inquiries are, the worse for your credit score. FICO scores only count inquiries from the past year.

10% of the score is based on the types of credit you currently have. The number of loans and available credit from credit cards you have makes a difference. There is no magic number or combination of types of accounts that you shouldn't have. These actually come more into play if there isn't as much other information on your credit report on which to base the score.


Link
Link Posted: 9/27/2005 2:02:55 PM EDT
Contact me by IM if you want "Guerilla" credit repair tactics. I'm not selling anything so this is not spam. I've been in your place before and I learned most of this from a friend who is a "B-Loan Co" mortgage broker. (BTW - When we were done I applied with an "A-Loan Co" and got a 5.25% Fixed Rate 30 Year mortgage.

The holier-than-thou bunch here prevent me from sharing the information openly and my asbestos underwear are at the laundry.
Link Posted: 9/27/2005 2:15:10 PM EDT
I always thought the max was 850.

That matrix is dependant on the credit agency. They do keep their actual formulas close to the vest.

I recommend reading www.clarkhoward.com.
Link Posted: 9/27/2005 2:22:59 PM EDT
[Last Edit: 9/27/2005 2:27:57 PM EDT by Duffy]
Mine went up to 758, this from a dumbass (me) in the early 90s that had a BK, repo, lots of credit card debt, etc. from the mid 90s. It'll take some time to repair but if I could do it from the lowest score possible to a pretty good one, you can too! Not sure if there's a quick way to repair your credit. I did use a credit repair service that removed some negative remarks on my report years ago, but it still took time to re-establish it. It's a credit history after all.
Of of the things they told me to do was to get a secured credit card (you have to put down a deposit, the amount then becomes your credit limit), use it on things you'd normally pay cash or write a check for, and pay the balance off every month. Makes sense, without a credit card it'd be hard to rent a car and book a flight these days. After two years I got my deposit back and the card became an unsecured credit card.
I got a car loan and was never late. Car loans are easy to get, you may pay higher interests because of your low credit score, but you can always refinance it.
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