Credit Scores Suck

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Weather you pay on time or not is not a credit building issue. Believe it or not it takes around 3 years for a credit card to reach its full potential, and you should be keeping about 33% of your balance on it. Its fucked up I know - make the credit card company money and your credit score gets better! It doesn't show responsibility - but this country was never founded on that. It's founded on making money. They really don't give a shit if you pay early.

This country's credit reporting system is so fucked up. I have been approached by people trying to collect debts that can't even prove you have a debt! It sounds obserb but happens all the time. Go america.
 


pocketrockets said:
Also, unless you are doing some sort of 5/1 ARM there is no way the current rate for the loan is at 5.5%.
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Nah you can get a 30 year fixed for 5.25 (my parents just got that rate)with good credit and if you go with a broker. The rates are dropping again. The credit industry just doesn't seem to be learning their lesson.

subigo said:
Unless home lenders pull all three? In that case who the fuck knows.
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The do. Actually, they have a 3rd party provider do it for them and they wrap it all in one pretty package. The score used is ususally the middle score from the 3.
 
Tell your current approved lender you are walkingvaway because you got 5.5 with x, tell them you would like to stay with them, but unless they can move on the rate, you'll walk.

I'm sure you've done the obvious, no pre payment penalty and don't pay any points since its almost 90% certain that rates will drop a lot within the next 5 years (and most likely will this year).

The person who said buy down your interest was pretty much giving you the worst advice you could possibly get. Buying down you interest rate is done in two ways, either paying points ( which is money you lose when you refinance within 10 years or put more money down ). (the other way getting the seller to buy down, but thats temporary and its the same as putting more down).

The rate you got is absurdly high. Instead given how likely it is, take a 5/7/10 year Arm based on your credit score, you'll get a nice boost in score and just refi as soon as rates are attractive enough to go fixed, which they will be when your score hits 750. Mortgage for 6 months helps your score, a lot.
 
Priority_Mail90 said:
The rate you got is absurdly high. Instead given how likely it is, take a 5/7/10 year Arm based on your credit score, you'll get a nice boost in score and just refi as soon as rates are attractive enough to go fixed, which they will be when your score hits 750. Mortgage for 6 months helps your score, a lot.
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This is quite risky and one of the reasons for the recent spike in forclosures.

I would only suggest an ARM if you know you're only going to be staying in the house for 3-5 years. (we recommeneded it alot for our military clients). Telling yourself you are just going to refi after a few years is dangerous. You don't know where the rates will be, you don't know where your credit score will be (or your spouses), and even if all of these are fine you still have to pay 2-10K (depending on the area in the country) for refi costs. Yes, usually they can be rolled in the refi but it's still you're money. All that for a slightly lower rate? IMHO, It's usually not worth it.
 
I agree with turbolapp. An ARM makes sense if you are only in the house for a very short amount of time. If you are staying in the house for the long term, then a fixed rate 30 yr or one of those hybrid mortgage checking accounts (instant access to equity without refi) would be the best bet IMO.
 
Jan said:
For mortgages I think they take the middle score of the three credit bureaus.
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Depends on the lender, some will take the middle, some will average the bottom two... varies by lender and program.
 
turbolapp said:
This is quite risky and one of the reasons for the recent spike in forclosures.

I would only suggest an ARM if you know you're only going to be staying in the house for 3-5 years. (we recommeneded it alot for our military clients). Telling yourself you are just going to refi after a few years is dangerous. You don't know where the rates will be, you don't know where your credit score will be (or your spouses), and even if all of these are fine you still have to pay 2-10K (depending on the area in the country) for refi costs. Yes, usually they can be rolled in the refi but it's still you're money. All that for a slightly lower rate? IMHO, It's usually not worth it.
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yeah, one of the reasons is right. Not the primary reason, stupid loans like option arms used by speculative investors flipping and shady brokers put the hurt on legit borrowers because the subseqent decline in value across the board made it difficult for legit borrowers to refi due to the lowering LTV.

You have to look at tends and the financial state of the country and use common sense on what you think is going to happen. Its highly probable that rates will be lower or at least be the same, it is also highly probable that you will refi out of an absurd rate which 6.4% is (so paying any points would be foolish) and it is also probable that having a mortgage will improve your score dramatically over a 6 month period which will put you in a different tier of interest rates.

Its funny though, most brokers will try and put you in the loan with the highest fees.
 
And 1% on a huge loan is actually significant. Hardly slightly lower :)

Turbolap is correct in saying an ARM makes sense also in the case of a short event horizon.

We will have to disagree on the rest though. Just remeber all mortgages are front load, so for the first 10 years you'll be paying interest mostly anyway. So if you think you won't refi within 10 years go fixed and pay points ;)
 
paul, if all you need is 10 pts has your lender done a rapid rescore for you? If your the broker or loan officer you're working with doesn't even know what that is, find another one who does.

basically a rapid rescore works like this - you add something positive to your credit and you notify the credit bureaus, which take a look at it and credit you for it raising your credit score. Thing is, if you were to do this on your own they'd tell you to go take a hike - it would take months before they got around to it. lender's have a special relationship with the bureaus and can call the credit bureaus, have them take a look at your file and update your score WITHIN A WEEK. There is a fee for this though, but it's more than worth it to save youself hundreds in interest during the life of your loan. So, the only thing you can do is try for a rapid rescore and any decent loan officer should be able to take a look at your credit file and tell you what to do to add 10 points

or

Start repairing it yourself and try again in 6 months to a year. Don't fuck with repair companies, they can do more harm than good if you don't know how to use them right.
 
Yeah it's fucking getting out of hand. I called Lender A today (a bank) to find out what was happening with rates, and he told me the 15 year fixed is up to 6.75%...it was 5.5% a month ago what the fuck.

Lender B (another bank) put in a special request to get me approved but the investors take forever to respond to him so I'm still waiting on that.

I already signed contracts for the house and put the deposit in, and I have to close it by April 15th.
 
another thing, something you can do RIGHT NOW which should add more than 10 points to your credit score is to call up your existing credit card companies, i'm sure you have a couple and ask for a credit increase. Get as much on as many cards as you can.

Now here's the rub, don't use the credit you just got. It's ideal to keep your credit utilization under 30% (yes i know it's unrealistic - but that's the catch 22 of credit. they want you to have it but don't want you to max it out, EVEN IF YOU PAY IT IN FULL EVERY MONTH!). But anyway now your credit to debt ratio should go up - you've just added a positive to your credit report. Tell your lender to get you a rapid rescore asap, and watch your score go up at least 20 points in 1 week

There is a lot of good intentioned but incorrect advice on here, and if you're not careful and follow some of the advice on here your score will drop even further. Your major problem is that you might be working with some mediocre people. Any loan officer or lender who can't raise a client's credit score by 10 points is trying to stick it to you - they want you to pay that higher interest. Take matters in your own hands if they won't.
 
stonelove said:
Any loan officer or lender who can't raise a client's credit score by 10 points is trying to stick it to you - they want you to pay that higher interest. Take matters in your own hands if they won't.
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Totally agree. If your loan officer doesn't immediately know what to do to raise your score to make you qualify, then get another broker.
 
check out CreditBoards (Powered by Invision Power Board)

Getting the boost you need should be pretty easy. Get a free credit report, freecreditreport.com works well. If you cancel the membership by phone before 30 days it won't charge you. It also has a credit estimator, where you can adjust certain attributes (amount owed on things, # of inquires, etc) and it'll give you an estimate. It has a lot of good tips to improve your score too :)
 
turbolapp said:
Nah you can get a 30 year fixed for 5.25 (my parents just got that rate)with good credit and if you go with a broker. The rates are dropping again.
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Your parents must have got that rate last month during the latest dip because I'm seeing 30 yr fixed rates averaging around 6% now (no points) ... Rates have spiked A LOT since Jan/Feb. They were in the high 4s / low 5s.
 
RuDeDoGg said:
check out CreditBoards (Powered by Invision Power Board)

Getting the boost you need should be pretty easy. Get a free credit report, freecreditreport.com works well. If you cancel the membership by phone before 30 days it won't charge you. It also has a credit estimator, where you can adjust certain attributes (amount owed on things, # of inquires, etc) and it'll give you an estimate. It has a lot of good tips to improve your score too :)
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annualcreditreport.com is the legally mandated one, no sign up for anything. Fuck that !

If you want your score free, credit.com. And again, you don't need to sign up or give your credit card out !!

Tip: if they require a credit card, its never a free anything !
 
Dispute the inquiries with each reporting agency. You can do this online, I have done it in the past. They will generally drop off in a few days or so when you dispute online. No company is going to expend the resources to pull and file all the paperwork to validate an inquiry.

Next time you have them run a credit check, ask the lender if they can do a "soft" pull. I think this will not show as a credit inquiry and will not ding your score.
 
Priority_Mail90 said:
annualcreditreport.com is the legally mandated one, no sign up for anything. Fuck that !

If you want your score free, credit.com. And again, you don't need to sign up or give your credit card out !!

Tip: if they require a credit card, its never a free anything !
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The annual one doesn't give you your score, just the "report" with lists of where you get credit from and inquiries
 
tempest said:
Dispute the inquiries with each reporting agency. You can do this online, I have done it in the past. They will generally drop off in a few days or so when you dispute online. No company is going to expend the resources to pull and file all the paperwork to validate an inquiry.

Next time you have them run a credit check, ask the lender if they can do a "soft" pull. I think this will not show as a credit inquiry and will not ding your score.
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Good advice :) ( I think anyway )
 
RuDeDoGg said:
The annual one doesn't give you your score, just the "report" with lists of where you get credit from and inquiries
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Yes, but the two links I gave don't require you to sign up for *anything* and cancel later, which freecreditreport.com does.

Best by far is Credit Reports - Credit Cards - Car Loans - Home Loans - Credit.com gives you your score with an analysis and www.annualcreditreport.com gives you your 3 yearly credit reports completely free in a nice easy to digest online format from each agency.

And neither site dings your credit, since it's you that's pulling the info.
 
This is interesting. Experian & Equifax are the 2 big ones here too (with Callcredit instead of transunion).

The bumping thing sounds dodgy - I'm fairly certain that an excessive number of queries will adversely affect your credit score.
 
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