Purchasing a home in 6 months: Have NO credit

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Topic Author
Gardener
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Purchasing a home in 6 months: Have NO credit

Post by Gardener »

Hello,

I am applying for a mortgage and purchasing a town home in 6 months.

I had my credit pulled and have NO credit score. Nothing appears. I had two homes that I paid faithfully on, with the most recent one selling in December 2019. I was surprised to learn that this no longer appears on the credit report.

Anyhow, given I have 6 months or so to get some type of credit history, what would be the quickest, best way to do this, and achieve the best tier credit scores and taking out the least amount of credit?

Thank you.
59Gibson
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Re: Purchasing a home in 6 months: Have NO credit

Post by 59Gibson »

Something is not right if your previous mortgages are not reporting from just a yr ago. I would have all 3 bureaus pulled to confirm.
megabad
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Re: Purchasing a home in 6 months: Have NO credit

Post by megabad »

Agree with the above. Not a likely situation unless there is major problem. On the plus side, you may just need to pull another bureau to figure this out. In short, you would have had to pull credit to get the other mortgages...they would have reported to associated bureau and you would have this on at least one major report in almost all cases.
LittleMaggieMae
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Re: Purchasing a home in 6 months: Have NO credit

Post by LittleMaggieMae »

What do you mean by "no credit score"? Did your lender indicate that your credit history or FICO score is lacking?

Did who ever pulled the credit report have/use the correct information about you (name, SS#) if literally nothing about your credit history appeared and you have a 0 FICO score?
Topic Author
Gardener
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Re: Purchasing a home in 6 months: Have NO credit

Post by Gardener »

Yeah, nothing appears at all regarding a credit history on my report. My name and previous addresses or whatever show up, but no credit history.

I wanted to keep my initial post short.

But, a few more details:

1. Last payment made on my previous mortgage was 12/2019 before it sold. Me and my now ex-wife were the co-borrowers. I am now renting an apartment.
2. I divorced in 07/2020. (not sure if this is relevant as to why I don't have a credit score)
3. My ex wife apparently had her credit report pulled and she also had NO credit score. Not zero. Just not existing.
4. I applied through NFCU (Navy Federal Credit Union).
5. The lender at NFCU recommended I take out two credit cards and only use one of them. On the one that I use, use 50% of the credit made available and then just pay it off to avoid the interest.
5. The only credit I have ever had in the last 10 years or so has been home mortgages. (I don't have credit cards or LOC).
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Watty
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Re: Purchasing a home in 6 months: Have NO credit

Post by Watty »

Is there any chance that NFCU has an incorrect Social Security number?

Do you still have your paper Social Security card? If so is there any chance that you have been using an incorrect Social Security number?

You may also want to check your Social Security earnings history to make sure that is right.

https://faq.ssa.gov/en-us/Topic/article/KA-01741
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cchrissyy
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Re: Purchasing a home in 6 months: Have NO credit

Post by cchrissyy »

was there ever a time your report was not blank?

i agree you should order reports from every credit agency. perhaps the error is at only one of them.

if you have a copy of an older report, maybe from when you got the old mortgage, that could be a helpful clue for when you write to the agency for help.
megabad
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Re: Purchasing a home in 6 months: Have NO credit

Post by megabad »

Once again, odds are low that you have no credit. I would pull Equifax, Transunion, and Experian and review. From your use of the singular “report” you have only pulled one. It seems likely to me that your bank has only pulled one report as well and your mortgages were not reported to that bureau. If you pull all three reports online yourself you could easily verify this. A simple solution after you confirm this might be to find a different bank that pulls from a different bureau. A riskier solution would be to apply for a credit card (which would hurt your credit temporarily). If you are approved, you know what I have said is true and you do indeed have credit. You should likely work toward acquiring a credit card or two for a variety of reasons if you are responsible with debt and are seeking the best mortgage rate. However if you truly have no credit, you will not be approved for any normal card.
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Gardener
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Re: Purchasing a home in 6 months: Have NO credit

Post by Gardener »

Thanks again.

I just pulled a credit report from Experian and it says there are no open accounts. Went on to transunion, but did not get a report, because the site was asking me for my debit card.

And I think its very possible that I actually have no credit score. I definitely do not at this time have any open credit. That I am certain of.

I never take out any credit, except for mortgages. I have probably been a little extreme about it, which is the reason for no credit score. I had a credit card, but closed it probably 7+ years ago.

And yes, when I did have two mortgages, both of them appeared on my credit report. I think its plausible that when I made the last payment in 12/2019, after a year, that history just vanished.
retiredjg
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Re: Purchasing a home in 6 months: Have NO credit

Post by retiredjg »

Gardener wrote: Mon Jan 04, 2021 4:34 pm And yes, when I did have two mortgages, both of them appeared on my credit report. I think its plausible that when I made the last payment in 12/2019, after a year, that history just vanished.
It makes sense that there are no open accounts. It does not make sense there is no history. Those things go back for at least 7 years.

Have you looked at KreditKarma (not sure I spelled that right). They should have all the credit bureaus listed and I don't think you have to give them a debit card or anything.
Topic Author
Gardener
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Re: Purchasing a home in 6 months: Have NO credit

Post by Gardener »

Okay, just went to creditkarma.

Their breakdown was this.

They showed that I did have past payment history, had no derogatory marks, and no open credit.

It accurately showed the credit pull from NFCU a few days ago.

Showed two credit scores 653, 636 or something like that. I don't know why a third didn't appear.

At this point, I'm pretty convinced that lenders want to see more recent credit.

I think I am going to just sign up for two NFCU credit cards and call it a day. Use the one at 50% utilization and keep paying it off. The other one, I'll just keep open and not do anything with it.
59Gibson
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Re: Purchasing a home in 6 months: Have NO credit

Post by 59Gibson »

Gardener wrote: Mon Jan 04, 2021 4:02 pm Yeah, nothing appears at all regarding a credit history on my report. My name and previous addresses or whatever show up, but no credit history.

I wanted to keep my initial post short.

But, a few more details:

1. Last payment made on my previous mortgage was 12/2019 before it sold. Me and my now ex-wife were the co-borrowers. I am now renting an apartment.
2. I divorced in 07/2020. (not sure if this is relevant as to why I don't have a credit score)
3. My ex wife apparently had her credit report pulled and she also had NO credit score. Not zero. Just not existing.
4. I applied through NFCU (Navy Federal Credit Union).
5. The lender at NFCU recommended I take out two credit cards and only use one of them. On the one that I use, use 50% of the credit made available and then just pay it off to avoid the interest.
5. The only credit I have ever had in the last 10 years or so has been home mortgages. (I don't have credit cards or LOC).
Are you 100% certain you were a co-borrower on the mortg w/ ex wife and not just listed on the deed?
Topic Author
Gardener
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Re: Purchasing a home in 6 months: Have NO credit

Post by Gardener »

100% certain that I was borrower on the mortgage.

I appeared first on the loan and now ex wife appeared second.

We had the loan for almost 10 years.

I handled the finances so I am certain of that.
Topic Author
Gardener
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Re: Purchasing a home in 6 months: Have NO credit

Post by Gardener »

I paid cash for everything. Cars, motorcycles. Everything except mortgage.

My guess now is that you are just heavily dinged on scores when you don't have any open credit.
alex_686
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Re: Purchasing a home in 6 months: Have NO credit

Post by alex_686 »

Gardener wrote: Mon Jan 04, 2021 5:17 pm At this point, I'm pretty convinced that lenders want to see more recent credit.
There is a difference between no credit and bad credit.

If you go through a big institution then it is pretty likely that they will see you loan on to Freddie Mac or Fannie Mae. They required that all loans have credit scores. Your low score will work against you.

A smaller institution may be different, like a local bank or credit union. They are more likely to keep the loan on the books. If so, a human underwriter may have more discretion that a computer based model.
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
TropikThunder
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Re: Purchasing a home in 6 months: Have NO credit

Post by TropikThunder »

retiredjg wrote: Mon Jan 04, 2021 4:39 pm
Gardener wrote: Mon Jan 04, 2021 4:34 pm And yes, when I did have two mortgages, both of them appeared on my credit report. I think its plausible that when I made the last payment in 12/2019, after a year, that history just vanished.
It makes sense that there are no open accounts. It does not make sense there is no history. Those things go back for at least 7 years.

Have you looked at KreditKarma (not sure I spelled that right). They should have all the credit bureaus listed and I don't think you have to give them a debit card or anything.
Not all lenders report mortgages to the credit bureaus. I remember a recent thread where that OP was asking why their refinance wasn’t showing and it turns out their lender doesn’t report it.
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galawdawg
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Re: Purchasing a home in 6 months: Have NO credit

Post by galawdawg »

Gardener wrote: Mon Jan 04, 2021 5:17 pm Okay, just went to creditkarma.

Their breakdown was this.

They showed that I did have past payment history, had no derogatory marks, and no open credit.

It accurately showed the credit pull from NFCU a few days ago.

Showed two credit scores 653, 636 or something like that. I don't know why a third didn't appear.

At this point, I'm pretty convinced that lenders want to see more recent credit.

I think I am going to just sign up for two NFCU credit cards and call it a day. Use the one at 50% utilization and keep paying it off. The other one, I'll just keep open and not do anything with it.
CreditKarma only uses Equifax and TransUnion. It doesn't pull scores or reports from Experian.

There should be a link for you to look at the actual full credit report from Equifax and TransUnion which will show any closed accounts that were reported (within the past seven years, I believe). CreditKarma will also list the credit factors for each of the two credit bureaus, showing what your data is for each factor and what impact it has (such as Payment History, Credit Card Utilization, Derogatory Marks, Age of Credit History, Total Accounts and Hard Inquiries). That information should help you see what steps you can take to improve your credit scores.
ballons
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Re: Purchasing a home in 6 months: Have NO credit

Post by ballons »

https://www.experian.com/blogs/ask-expe ... -boost/#s1

Normally, utility and phone payments do not factor into your credit scores. When you use Experian Boost, however, Experian uses your bank records to find on-time qualifying payments for these monthly bills. Experian Boost also now factors in on-time Netflix® payments, giving consumers even more opportunity to improve their credit scores.
There is this to help, but the catch may be a huge invasion of privacy.
veindoc
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Re: Purchasing a home in 6 months: Have NO credit

Post by veindoc »

Is there someone you trust who can put you as an authorized user on their account? At the end of six months, cancel the card.

My dad gave me a credit card when I was applying for medical school/ residency. Shortly after I was “launched”, he revoked the card. It showed up on my credit report about six years later when I was looking to buy a home. It was noted to be a closed account but the history still remained. He used the card actively as he had only one credit card so I don’t know if this made a difference or not as to why it remained on the report.
tashnewbie
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Re: Purchasing a home in 6 months: Have NO credit

Post by tashnewbie »

The credit bureaus do not provide free credit reports with a credit score. You have to pay to receive a report with a score. You can, however, check your credit report free of charge 1x/year with each of the 3 bureaus.

[FYI, for others: some credit cards, such as Capital One, provide free credit reports with scores as a card benefit; Capital One provides a FICO score.]

I've found the CreditKarma score to be fairly consistent with the FICO score I can get through my Capital One credit card (I've never compared to the score from a credit bureau). I know there are different types of scores (e.g., Vantage, FICO), and different lenders use different types and subtypes of scores to make financing decisions.

As @galawdog mentioned, you can review the full report on CreditKarma, and it will show closed and active accounts, the credit factors, your score on each factor, and how each factor affects your score. It will also provide tips to improve your score across those factors.

After you've done that, it might be worth paying to get a credit report from Equifax or TransUnion and comparing that to the CreditKarma score and report.

Closed accounts should stay on your report for up to 10 years and will impact the credit history component of your score.

I don't have any experience with this, but based on a quick Google search, it sounds like it may be realistic to raise your score by 100 points in 6 months. A 700-something score should be good enough to get good mortgage rates.

Do you have any flexibility on your purchase time? If your score isn't where you want it to be/where it needs to be to get a mortgage (at a decent rate), then could you just delay the purchase?
mhalley
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Re: Purchasing a home in 6 months: Have NO credit

Post by mhalley »

The 50% utilization is all right if you only use one of the credit cards and they both have the same limit, as that would give you a utilization of 25%. But if one of them had a larger limit, you might exceed the 30% overall utilization and cause the score to be impacted. You don’t have to go that high to get your credit score up. Your score may not improve greatly in just 6 months. It will drop initially due to the new cc so will have to recover. I would go ahead and use both credit cards and try to stay below 15% utilization.
megabad
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Re: Purchasing a home in 6 months: Have NO credit

Post by megabad »

Ok, it sounds like you do indeed have credit, it is just not quite up to what the mortgage lender would like to see. I think you might be able to squeeze into the minimum credit score for a low end Capital one card so I might look into that. Otherwise, if you have someone with excellent credit that can add you as authorized user as suggested above, that may help you as well (no need for them to even give you the card). Another option for a credit card might be a local credit union that might underwrite you differently or possibly a card that uses nonstandard credit measures like the petal card. I would stay under 10% utilized at billing date on all cards (might as well make it 0% and pay it off before due date). Also, be aware that your credit limit and account age is going to be working against your score in the short run (in addition to the hard credit pull for the mortgage). In time though, with no defaults and gradually increased limits, it should come up.
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Nate79
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Re: Purchasing a home in 6 months: Have NO credit

Post by Nate79 »

If you have no open lines of credit, everything is closed down within 6 months to 1 year you will have a no credit score. No credit score is better than a low credit score. With a no credit score you can find lenders that will do manual underwriting to get a mortgage. It is less popular than what most people do with a credit score but it is possible, happens all the time.
neverpanic
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Re: Purchasing a home in 6 months: Have NO credit

Post by neverpanic »

Gardener wrote: Mon Jan 04, 2021 5:25 pm I paid cash for everything. Cars, motorcycles.
It's great to have no debt, but this is why you have no credit score.

It's not a big deal. With a clean debt history, any number of banks will be happy to give you a credit card right away. Apply for a card or 2 and start using them. Capital One and Citibank are simple and fast and within a couple months of ordinary use you will boost your score.
I am not a financial professional or guru. I'm a schmuck who got lucky 10 times. Such is the life of the trader.
TravelGeek
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Re: Purchasing a home in 6 months: Have NO credit

Post by TravelGeek »

tashnewbie wrote: Mon Jan 04, 2021 6:09 pm
As @galawdog mentioned, you can review the full report on CreditKarma, and it will show closed and active accounts, the credit factors, your score on each factor, and how each factor affects your score. It will also provide tips to improve your score across those factors.

After you've done that, it might be worth paying to get a credit report from Equifax or TransUnion and comparing that to the CreditKarma score and report.
“During these times of COVID-19, accessing your credit is important. That's why Equifax, Experian, and TransUnion are now offering free weekly online reports through April 2021.”

https://www.annualcreditreport.com/index.action
tashnewbie
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Re: Purchasing a home in 6 months: Have NO credit

Post by tashnewbie »

TravelGeek wrote: Mon Jan 04, 2021 10:26 pm
tashnewbie wrote: Mon Jan 04, 2021 6:09 pm
As @galawdog mentioned, you can review the full report on CreditKarma, and it will show closed and active accounts, the credit factors, your score on each factor, and how each factor affects your score. It will also provide tips to improve your score across those factors.

After you've done that, it might be worth paying to get a credit report from Equifax or TransUnion and comparing that to the CreditKarma score and report.
“During these times of COVID-19, accessing your credit is important. That's why Equifax, Experian, and TransUnion are now offering free weekly online reports through April 2021.”

https://www.annualcreditreport.com/index.action
Good for OP to know. These reports still don’t include the credit score. My understanding is that one would have to pay a credit bureau to get a report with a score (OP should confirm that if he thinks he should get an “official” report and score or if he feels comfortable with a score and report from a place like CreditKarma).
TropikThunder
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Re: Purchasing a home in 6 months: Have NO credit

Post by TropikThunder »

veindoc wrote: Mon Jan 04, 2021 5:55 pm Is there someone you trust who can put you as an authorized user on their account? At the end of six months, cancel the card.
AU's work for most purposes but not for mortgages. Fannie Mae specifically excludes them when generating a credit score for mortgages.
TravelGeek
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Re: Purchasing a home in 6 months: Have NO credit

Post by TravelGeek »

tashnewbie wrote: Mon Jan 04, 2021 10:32 pm
TravelGeek wrote: Mon Jan 04, 2021 10:26 pm
tashnewbie wrote: Mon Jan 04, 2021 6:09 pm
As @galawdog mentioned, you can review the full report on CreditKarma, and it will show closed and active accounts, the credit factors, your score on each factor, and how each factor affects your score. It will also provide tips to improve your score across those factors.

After you've done that, it might be worth paying to get a credit report from Equifax or TransUnion and comparing that to the CreditKarma score and report.
“During these times of COVID-19, accessing your credit is important. That's why Equifax, Experian, and TransUnion are now offering free weekly online reports through April 2021.”

https://www.annualcreditreport.com/index.action
Good for OP to know. These reports still don’t include the credit score. My understanding is that one would have to pay a credit bureau to get a report with a score (OP should confirm that if he thinks he should get an “official” report and score or if he feels comfortable with a score and report from a place like CreditKarma).
Correct, they don’t give you a free credit score (not expensive, though, I think) but there is no need to buy a credit report from anyone (if you just search for credit reports, there are probably several sites that try to sell you one). And I would really start with the reports. They should have a record of the loan. My mortgage that I paid off six years ago is still showing up on all three reports.
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Gardener
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Re: (UPDATED) Purchasing a home in 6 months: Have NO credit

Post by Gardener »

OP Here, thank you for all of the replies. I am very appreciative. My apologies about being insistent that I have no credit score. The lender from NFCU said I have no credit score! It's evident to me that what is hurting me most is that I simply don't have any current open accounts. I think the credit score gods would just like to see more current open accounts.

Anyway, Here is the updated information that I have:

Credit Karma shows credit scores of 636 and 653 for Transunion and Equifax. It does show a past credit history all the way back 10-12 years and I never missed a payment. I had credit cards, and very short auto loans (just one month to take advantage of rebate and then I'd pay it in cash).

I pulled my free annual credit report from Experian which does not give a score. However, everything on it was reported accurately. I have no derogatory marks on any of my credit scores, just 0 open accounts. The reports do, however, show the mortgages I paid off/sold in 2017 and 2019.

Quick followup questions if I may:

1. Should I go ahead and sign up for two credit cards and request the highest credit limit as possible? And then just utilize about 20-25% total of that extended credit and pay it off each month?

2. Really turns my stomach to even type this. Should I ask my father if he can put me on one of his long standing credit cards to try and piggyback off that credit history? (My dad has excellent credit).

3. Anything else I should be doing now to prepare myself to get the most favorable interest rate in about 6-9 months?


Thank you!
veindoc
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Re: Purchasing a home in 6 months: Have NO credit

Post by veindoc »

I would do both. Wont’t hurt and your credit score right now is too low to secure a good rate. To get the biggest bang for your buck ask your father to add you to the card with the longest history first followed by highest credit limit. Make sure he keeps utilization low on that card.
veindoc
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Re: Purchasing a home in 6 months: Have NO credit

Post by veindoc »

The other issue is that I know that credit reporting agencies like a combo of revolving credit (credit card)and installment credit like car loans and mortgages. I have no installment loans and as such my credit score is always high 700s and I have not broken 800 in a decade despite a credit limit of 200,000 and a utilization that is roughly 5-7,000 a month with a long credit history and timely payments.

If an installment loan might help, lending club would be a possibility. Don’t know if they are still around as a company.

Don’t do too much as credit inquiries remain on your account for two years. I believe they have less impact after six months. So whatever you do, make it so that you limit your credit inquiries to as few as possible and as close to each other as possible.
Last edited by veindoc on Fri Jan 08, 2021 7:43 pm, edited 1 time in total.
Topic Author
Gardener
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Re: Purchasing a home in 6 months: Have NO credit

Post by Gardener »

veindoc wrote: Fri Jan 08, 2021 7:37 pm I would do both. Wont’t hurt and your credit score right now is too low to secure a good rate. To get the biggest bang for your buck ask your father to add you to the card with the longest history first followed by highest credit limit. Make sure he keeps utilization low on that card.
I appreciate the advice. I went online and researched what you said and confirmed what you were saying was 100% accurate- thanks. My dad may not be up for it. He is very protective of his credit. I think he might be suspicious of the process (not that I would do anything irresponsible, as he knows I'm pretty anti non mortgage debt). I'm going to sleep on this. A bit embarrassed to even ask.
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Gardener
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Re: Purchasing a home in 6 months: Have NO credit

Post by Gardener »

veindoc wrote: Fri Jan 08, 2021 7:41 pm The other issue is that I know that credit reporting agencies like a combo of revolving credit (credit card)and installment credit like car loans and mortgages. I have no installment loans and as such my credit score is always high 700s and I have not broken 800 in a decade despite a credit limit of 200,000 and a utilization that is roughly 5-7,000 a month with a long credit history and timely payments.

If an installment loan might help, lending club would be a possibility. Don’t know if they are still around as a company.

Don’t do too much as credit inquiries remain on your account for two years. I believe they have less impact after six months. So whatever you do, make it so that you limit your credit inquiries to as few as possible and as close to each other as possible.
It just boggles my mind. I paid off a mortgage (home sold) in 12/2019. And I paid off another mortgage in 2017 as a co-borrower with a mortgage we paid off in 15 years. Surprised they don't seem to factor that in too much.

From talking with NFCU, it wasn't a problem getting a mortgage because my income to liability ratio or whatever is fine and have a decent amount of assets. But, my rate will obviously be impacted if I can't elevate it in the next 6 months or so.
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galawdawg
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Re: (UPDATED) Purchasing a home in 6 months: Have NO credit

Post by galawdawg »

Gardener wrote: Fri Jan 08, 2021 7:33 pm Quick followup questions if I may:

1. Should I go ahead and sign up for two credit cards and request the highest credit limit as possible? And then just utilize about 20-25% total of that extended credit and pay it off each month?

2. Really turns my stomach to even type this. Should I ask my father if he can put me on one of his long standing credit cards to try and piggyback off that credit history? (My dad has excellent credit).

3. Anything else I should be doing now to prepare myself to get the most favorable interest rate in about 6-9 months?


Thank you!
How old are you?? If you are old as your previous home ownership and your credit history suggests, then no, don't go on Dad's account.

Just open a couple of no-annual fee credit cards, spend and pay responsibly, and your credit score will be back up in no time.
clip651
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Re: Purchasing a home in 6 months: Have NO credit

Post by clip651 »

Also, if you want to keep an eye on your credit score, pick a credit card that offers free credit scores to its members. For example, my discover card lets me see my score anytime I log in. I'm not sure it is up to the minute current, you'd have to look at the website for details on the program with discover or other cards, but it should be recent at least.

Once you have a credit card or two open, put a small automatic payment or two on each one - e.g. a netflix subscription, or a small utility bill, or whatever. And put the cards on automatic payments for full statement balance. This will insure that you regularly have a small balance on your account, and regularly pay it off. Obviously, be sure your linked checking account always will have enough to pay those balances each month. And then just keep those cards going for the long term, as they will help your credit.

You can also use the cards for other purchases if you want, as long as you keep your utilization low, and keep paying the balance in full each month so you're not wasting money on interest. There are various situations where it is advantageous to use a credit card, though obviously you've successfully gone a long time without doing that. I find it more secure than paying by check or debit card. And I don't have to carry cash.
clip651
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Re: Purchasing a home in 6 months: Have NO credit

Post by clip651 »

veindoc wrote: Fri Jan 08, 2021 7:41 pm So whatever you do, make it so that you limit your credit inquiries to as few as possible and as close to each other as possible.
OP - one way to do this may be to open a credit card at your current bank or credit union. You can ask them if they can give you a credit card without a hard pull on your credit as a existing customer. Not sure if they'll do it or not, but worth asking.
Freetime76
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Re: Purchasing a home in 6 months: Have NO credit

Post by Freetime76 »

Hi Gardener,
You could call Churchill Mortgage (TN based but serve many states, I think?) they do manual underwriting, which means you don’t need a credit score. No debt is a positive sometimes.

Cheers.
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Gardener
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Joined: Sun Nov 18, 2012 3:03 pm

Re: Purchasing a home in 6 months: Have NO credit

Post by Gardener »

Thanks for all of the replies.

I just got approved for a credit card with a credit limit of $7,300. What would be the ideal amount to charge each month to improve credit score?

Thanks
Mike Scott
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Joined: Fri Jul 19, 2013 2:45 pm

Re: Purchasing a home in 6 months: Have NO credit

Post by Mike Scott »

You probably want to keep the reported utilization on all of your credit cards under 10% but you do want to have a balance reported at the end of the statement and you want your subsequent payment to show the record of payment. More specifically, don't pay it off weekly or whatever like some people do. I would try to have 500-700 ish dollars on the statement at the end of each cycle followed by a timely payment in full within the grace period. You may be able to pay your utilities, buy food or whatever regular spending you do with the card.

Have you talked more specifically with the mortgage lender about what they want to see to give you a mortgage? If so, you can target your efforts to get the best effect. Something like a small auto loan or a refinance on a car you already own would broaden your credit history. If you are thinking of making any purchases like furniture, appliances or something, you could do the 0% store financing for a few months.

On the other hand, don't go after too much credit too fast relative to your income and resources. A credit card with regular use might be enough for you. Adding a second type of revolving charge account would increase the score more than a second credit card.
MishkaWorries
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Re: Purchasing a home in 6 months: Have NO credit

Post by MishkaWorries »

Gardener wrote: Mon Jan 04, 2021 5:17 pm Okay, just went to creditkarma.

Their breakdown was this.

They showed that I did have past payment history, had no derogatory marks, and no open credit.

It accurately showed the credit pull from NFCU a few days ago.

Showed two credit scores 653, 636 or something like that. I don't know why a third didn't appear.

At this point, I'm pretty convinced that lenders want to see more recent credit.

I think I am going to just sign up for two NFCU credit cards and call it a day. Use the one at 50% utilization and keep paying it off. The other one, I'll just keep open and not do anything with it.
Are these cards with no annual fees? Maybe open one at NFCU and a no fee 2% cash back credit card. Put you expenses, recurring bills, grocery, cash etc, on the cashback card and pay in full every month.

Free money and high credit score!
We plan. G-d laughs.
Topic Author
Gardener
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Joined: Sun Nov 18, 2012 3:03 pm

Re: Purchasing a home in 6 months: Have NO credit

Post by Gardener »

Yes, there are no annual fee through my bank, Navy Federal Credit Union.

I think what I'm going to do is just get one more credit card, which hopefully gets me about 10-12k in total credit extended to me.

Then, use just one credit card to pay my rent of ~2k. Which would put me at utilization rate of 20%.
retiredjg
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Re: Purchasing a home in 6 months: Have NO credit

Post by retiredjg »

Things may have changed since I last researched this, but I think 5% to10% would be better than 20% and I think using both cards might be better than using 1 card. Also, don't pay it off daily. Be sure there is something there for them to report on the day your statement closes.

There was a time when KreditCarma had a lot of information about how these things are scored - if you look past the advertisements :annoyed you might find something helpful.
Topic Author
Gardener
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Joined: Sun Nov 18, 2012 3:03 pm

Re: Purchasing a home in 6 months: Have NO credit

Post by Gardener »

Yeah, I am confused as to when I need to pay this thing. Obviously, I want it to report to the credit agencies, but don't want to accrue any interest and of course not miss a payment.

Really hate this BS game that I have to play.
cw35
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Re: Purchasing a home in 6 months: Have NO credit

Post by cw35 »

Agree with keeping your utilization on each card below 10%. Use them both but keep the balances low on each.

Pay the full statement balance after the statement generates (the statement balance is what will be reported to the credit bureaus), but before the due date. Interest will accrue on any balance not paid by the due date. As long as you pay before then you will never pay any interest.
retiredjg
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Re: Purchasing a home in 6 months: Have NO credit

Post by retiredjg »

Gardener wrote: Sun Jan 10, 2021 12:09 pm Yeah, I am confused as to when I need to pay this thing. Obviously, I want it to report to the credit agencies, but don't want to accrue any interest and of course not miss a payment.

Really hate this BS game that I have to play.
Any time after the statement closes. That's the day they report your balance.

There is usually a good long time (like 30 days) before the payment is due or could possibly become overdue. There is no interest if you pay by due date.
clip651
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Re: Purchasing a home in 6 months: Have NO credit

Post by clip651 »

Gardener wrote: Sun Jan 10, 2021 12:09 pm Yeah, I am confused as to when I need to pay this thing. Obviously, I want it to report to the credit agencies, but don't want to accrue any interest and of course not miss a payment.

Really hate this BS game that I have to play.
Read your credit card information on their policies. There should be a brief summary on the website, or on the documents you agreed to when you signed up. Or you should be able to get a copy of that from the bank/credit card company.

Most normal credit cards don't charge you interest in the following normal scenario:

You make charges. You wait for the statement to come. You pay the statement balance in full by the due date. They normally call this a "grace period" or similar.

Where you get into interest charges typically is when you only pay partial balance by the due date. At that point, it can be challenging to get the interest charges to stop. If you want to avoid interest payments, always pay in full, every single month. Don't pay the minimum or some other amount less than the full statement balance.

For the credit card to help your credit, you do in general want to make charges every month. You want to have a statement balance every month at the time that the statement comes out. And then you want to pay (at least the minimum payment noted on the statement) on time every month before the due date. If you also want to avoid interest charges (which you do), you want to pay the full statement balance each month, not the minimum. This will still help your credit.

As others have mentioned, if you charge something and pay it off before the monthly statement is generated, it may not help your credit at all. No harm otherwise, but since you are getting the credit cards to help your credit, wait for the charges to appear on your statement, then pay in full.

This is why I suggested putting automatic things onto your card. Put a recurring payment, like netflix or a utility bill, or a monthly charitable donation, onto each card. And go to the credit card website and sign up to have your full statement balance paid automatically each month. (And make sure your checking account, where they are automatically pulling the payment from, will always have enough funds for that automatic payment.) This checks all the boxes, you have a regular small balance each month, you pay it off each month, and you should never see an interest charge (if the credit card has normal, common policies). You can do all this manually instead, but then you have to pay attention to the timing of the statement and due date each month.

It is not hard. It's not a lot of hoops. It just takes a few minutes to understand it, and then to set it up. You can do this.
Goal33
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Re: Purchasing a home in 6 months: Have NO credit

Post by Goal33 »

Gardener wrote: Sun Jan 10, 2021 12:09 pm Really hate this BS game that I have to play.
Don’t play it ... pay cash :moneybag

Seriously though, my Brother in law is a loan officer. He tells me that people object when they ask for certain specific information, citing that the information is too personal. He reminds them that loaning out 1.5 million dollars is also personal.
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ResearchMed
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Re: Purchasing a home in 6 months: Have NO credit

Post by ResearchMed »

Gardener wrote: Sun Jan 10, 2021 12:09 pm Yeah, I am confused as to when I need to pay this thing. Obviously, I want it to report to the credit agencies, but don't want to accrue any interest and of course not miss a payment.

Really hate this BS game that I have to play.
How about trying not to think of this as BS?

Consider it, at least a bit, from the lender's perspective.
They don't know you, I suppose.
They are a business with owners, employees, and possibly shareholders.
Point is, if they lend money, they not only want to make at least some profit, but they want to get the loaned amount back.

So how are they going to judge whether you are loan-worthy, and if so, at what rate?
(Higher risk typically gets charged a higher rate, if they can get the loan at all.)

Try not to make this unpleasant for yourself. And get that credit score up nice and high for the future. :happy
In some states, it can affect insurance rates or other things, or in some circumstances, even getting a job.

RM
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TropikThunder
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Re: (UPDATED) Purchasing a home in 6 months: Have NO credit

Post by TropikThunder »

Gardener wrote: Fri Jan 08, 2021 7:33 pm 2. Really turns my stomach to even type this. Should I ask my father if he can put me on one of his long standing credit cards to try and piggyback off that credit history? (My dad has excellent credit).
Authorized user trade lines don’t count for mortgage scores unless it’s clear that the borrower actually uses the account and makes payments. If you’re just added as an AU but have no real association with the account, the lender has to evaluate your credit without it. AU accounts help your credit score in other scenarios but not for mortgages.
If the lender believes the authorized user tradelines are not an accurate reflection of the borrower's credit history, the lender should evaluate the borrower's credit history without the benefit of these tradelines and use prudent underwriting judgment when making its final underwriting decision.
https://selling-guide.fanniemae.com/Sel ... Tradelines
Topic Author
Gardener
Posts: 448
Joined: Sun Nov 18, 2012 3:03 pm

Re: Purchasing a home in 6 months: Have NO credit

Post by Gardener »

Did one credit card through NFCU for $7,900 credit limit.

When I went to sign up for another credit card, I got denied.

NFCU said that I could sign up for another one, but I would need to sign up for one in which I put down $200 deposit. And use that as a secured credit card.

Should I do this or sign up for another company credit card with another company?

Would credit cards help credit scores or does it not really matter?
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