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Scoreless and need good quick credit building options.


sweetcheeks
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I am currently unscorable/ scoreless due to no active open credit on my account in over 6 months. I have less than 5 baddies on my CR ( three of which should be off by the end of the month) but due to junky credit and job loss, I have been dealing on a cash basis for what seems like forever. I am sick of renting, with housing downturn I can buy for cheaper than I can rent but I need my scores up. My Lease is up Aug 31st and I'd like to be in a house by then and not have to renew. I had Fako's in the high 500's, very low 600's. I don't really have a bundle of cash to do anything secured. I have my tax refund (around $800) but was trying to save that for down payment and didn't want it tied up in secured CC account for a year. HELP !!! Any suggestions ????

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I've never heard of someone not having a credit score because of having no open lines of credit. That's interesting but I guess it makes some sense considering that a credit score is supposed to be a current snapshot of your payment habits.

Your best bet is to go with a secured credit card. It should get your score up significantly in a short period of time and if you go to a local credit union you can get a low limit card of $300 or so with minimal fees and a decent interest rate. Your scores needs to be above 620 to be approved for any kind of good mortgage.

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So do you think taking out a secured loan at this point would be helpful or hurtful? FHA doesn't include loan if there's less than 9 payments left. I thought I could do a secured loan for 1k/12 mo have the first three payments made before applying for mortgage, but doesn't it take 6 months of pymts to positivly affect your report ?

what about other secured cards or places where I could get easy or no hassle reportable credit?

thanks !!!

SC

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Secured loans and CCs have little or no effect on your FICO Mortgage score. Put the money in a savings account and build your down payment. Pay your other bills on time.

I disagree. I used to work with first time homebuyers and the ones with the best scores (their FICO scores from their soon to be mortgage lender) were the people with low utilization and various lines of revolving credit. I had dozens of clients without credit scores and it's impossible to get a mortgage using a traditional bank like Bofa, Chase, Key, etc that does electronic underwriting. It is possible to get a mortgage through a bank that does manual underwriting but those banks are few and far between (and most require that the house have equity at purchase so you need a good deal and/or sizeable down payment).

Edited by sassynclassy
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This is a difficult topic. In a sense, there are many correct answers. In her blog, our Admin, explains one...and thanks to the literature that FICO has given out for public consumption...she explains the one most publisized.

On the other hand, I personally got a mortgage 2 years post BK 7, with NO unsecurred loans, little down payment, and only a car payment and rent as active TLs from BofA...at 6.75%. One year later, I refi'd that loan with Chase for 4.5%...with no additional money and one unsecured Orchard card with a $700 credit limit that I owed $600 on.

I'm a software designer. If I could legally claim to have written any of the FICO software, I would point out that its main intent is NOT to predict who will pay the creditor back...its main intent is to predict who the creditor will make money on.

That's why I say "secured" CCs, while they may help you build your sucker score, have little effect on your FICO Mortgage score. The creditor already has your money...in effect, its a reverse savings account...you pay them "fees" to hold your money.

Yes, available credit ($10-15k) with 9% or less utilization will raise your FICO Bank Card score, but, it actually has less of an effect on your FICO mortgage score. And, since secured credit cards ARE reported as such to the CRAs, you're better off to put the money in a savings account and build your down payment. Having "skin in the game" will get you a mortgage faster than having someone else on your reports that you owe money to.

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This is a difficult topic. In a sense, there are many correct answers. In her blog, our Admin, explains one...and thanks to the literature that FICO has given out for public consumption...she explains the one most publisized.

On the other hand, I personally got a mortgage 2 years post BK 7, with NO unsecurred loans, little down payment, and only a car payment and rent as active TLs from BofA...at 6.75%. One year later, I refi'd that loan with Chase for 4.5%...with no additional money and one unsecured Orchard card with a $700 credit limit that I owed $600 on.

I'm a software designer. If I could legally claim to have written any of the FICO software, I would point out that its main intent is NOT to predict who will pay the creditor back...its main intent is to predict who the creditor will make money on.

That's why I say "secured" CCs, while they may help you build your sucker score, have little effect on your FICO Mortgage score. The creditor already has your money...in effect, its a reverse savings account...you pay them "fees" to hold your money.

Yes, available credit ($10-15k) with 9% or less utilization will raise your FICO Bank Card score, but, it actually has less of an effect on your FICO mortgage score. And, since secured credit cards ARE reported as such to the CRAs, you're better off to put the money in a savings account and build your down payment. Having "skin in the game" will get you a mortgage faster than having someone else on your reports that you owe money to.

You're using your own experience as a reference which is great but the OP (if I read correctly) has no active open lines of credit which is why the OP doesn't have a credit score. In your case, you got a mortgage two years ago with an auto loan TL. There's a big difference between having no open lines of credit and having some, even it's it's just a car and a secured CC.

Like I said, in my experience working with first time homebuyers, the clients who were able to get the best rates on their mortgage were the clients with low utilization on various lines of revolving credit. Not to say that you can't get a good loan without revolving credit. I had a client six months ago who got a mortgage at 4.385% 5 years post bankruptcy with a score around 585 and a small $300 limit secured card. She used a bank that does manual underwriting (she also had a 60% down payment which makes a big difference). I had many clients who had no credit score like the OP and even the banks that do manual underwriting don't want to deal with them. I don't know of any banks that deal with people with no credit score (unless that person has a lot of cash).

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