Buying property, creditscores.

[DancingQueen]

Freecreditreport.com vs real life (fico.com) scores?

Ok so this might be a stretch as far as relevancy goes (and yes, I'm also beeing very stingy and cheap).

Background (skip down to quick query);
(BTW If you are not a fan of long winded and seemingly unrelated explenations I suggest you scroll down rather then pick on me about my literary shortcomings).

I'm in the process of actually buying some property. I'm a virgin buyer and so I'm all over the internet trying to gain useful information.

I knew I needed to establish a credit history (believe it or not I have in the past 8 years been paying cash for everything!), so in preparation for a mortgage application I bought a car on credit last year, I got a CITGO card for gas as well as one department store credit card (which I use solely for presents to others (and only on occations when I would normally get somebody a present).

Also good to know. My credit history is as of yet no more then a year old, but perfect as far as payments go.

I've had my eye on a perfect property for almost a year but was teetering between a big commitment, investing in property for business purposes, as opposed to keep freelancing or simply buying a condo or something for personal use. I have not been cutting myself a big paycheck (think below what is expected to survive in even in the most meager way). I have essentially no income verification (not that it would help theese days).

Either way I decided to go look at some condos just to see what was out there. I had a meeting with a realestate agent in november and talked to their mortgage specialist. She informed me that I would not (unless hell frooze over) get a mortgage for a single residence based on my paycheck and taxreturn. She also told me that (in less then a year, mind you) my credit score had gone from non existant in Feb 2008 to an average of 554 as of Nov 2008.

She also told me to file back taxes to verify income and qualify for a loan(something my freshly accuired (and brilliant by my reccomendations)accountant adviced me against in the spirit of, "If they haven't called you on it by now, they will not" and "It will be much more expensive to go back and fix it so unless you must have it, let it be and o the right thing next year" (yes he is hired and I will file everything from now on... *sulking*))

Then there was the holidays and not much happened. Mid January I snapped out of my gingerbread house and decided I would start a venture of my own. Following the basic guidelines of my internet sources I decided it would be money well spent to make myself aware of my credit score before entering into mortgage negotiations.
I payed (?) freecreditreport.com to get the full story and scores from all three bureaus.
My scores were 639, 635 and 639 again.
Beeing that my scores were ~ 554 in November I thought to myself (oh yeah)! I thought that since my creditrecord is fairly new, I have a decent credit limit and I make payments diligently I must be on the rise. (I was a bit surprised, but I could see how my score would rise fairly fast being that I made all payments in time. I was looking forward to (albeit surely declining in acceleration) my credit score would sky rocket into good within the next few months.

However, today while researching the process of house buying and the type of mortgage I would apply for I came across a (an independant) note that pretty much said, "You can't trust anybody but myfico.com to give you an accurate score at any given time. Any other cmpany will give you a generic score based on the same principles, but it will not be the same."

All of a sudden I was concerned that I had payed the wrong company to give me a creditscore that had very little to bring in a reality check.

I like the guy with the guitar. I don't want to jump to the conclusion that freecedtreport.com is a complete sham (although it's not free if you have to provide a creditcard number). But at the same time I would very much lke to know if anybody here has any experience in comparing scores from myfico.com and freecreditreport .com or if you knew" that your score was a certain number and it changed radically when you got to the point of applying for a mortgage.

Long story short, anybody here buy their credit score from freecreditreport.com only to find their score to be significally different when your lendor checked you out and got your fico score?

Easy solution would of course be to pay the $48 to check my score on myfico.com also but I don't want to be a victim of yet another marketing scheme in case freecreditreport.com is in fact a relieble source.

[equinelaw]

There are 3 companies that make you credit score. Who you pay to read that score should not matter. In the old days you had to pay a fee for your credit score to be checked out--like $150. Now its free to see your report and just a few $$ to see you scores.

However, and this bites a big one, every time your credit score is checked it lowers your credit score. That's insane because it means you can't shop around for credit rates, but it is just the way things are done.

So you have to stop looking at it.

[Dance_To_Oblivion]

I've been through mutliples levels of misery due to credit scores and reports and companies misreporting things so I have done a TON of research on all of this. The score you get online from anywhere will quite likely be different then the one that the mortgage broker gets. I have NO idea why but I pulled my score one day, then the next day a mortgage person did and the score they got for me was like 50 points higher then the one I found :eek: Good but still bizarre. I've been told (differently then equinelaw) that you checking your score does not change it. If you have 13 different mortgage companies look at your report all within a 30 day timeframe it only effects your score a little as opposed to one company checking every month which would affect it more.

Since your history is so short your best bet is to have a HUGE downpayment. Actually everyone right now especially needs one of those from my understanding.

Verification of income is a whole other ballgame and as I type this I am getting a bit twitchy from everything I've been through (none of it fun...trust me) so my best advice is to find a well recommended mortgage person and follow their advice.

Good luck! (Hate to say it but you'll need it!)

[BelladonnaLily]

Your Fair Isaac is a combo of all 3 scores. Equifax, Transunion and Esperian. You will rarely get the same score from each of the companies. Different companies report to different agencies. Some clean up errors faster than others. And your combo score that you can get from www.myfico.com, www.freecreditreport.com and others will vary from day to day and from when they last updated. You shouldn't be looking at a 150 point difference, but I've found variables of 20-30 points is completely normal. They could be reporting before you pay your credit card each month and show a balance, and the other reports when it is a 0 balance.

I doubt you'll get a mortgage with a score of less than 700 these days. But if you keep paying everything on time, it shouldn't take too long to achieve that. Patience is a virtue when it comes to your credit. Your credit score is low right now because they don't KNOW how you'll handle your bills. 1-2 years is way too short to figure out a person's spending and paying habits. The fact that you paid with cash for so long (comparing your age to your credit history, perhaps) might be a red flag in itself.

On the other hand, not paying your back taxes would scare the HELL out of me. The penalties on a small amount can be overwhelming...and remember, you can file bankruptcy for many things (although the laws have become stricter) but you can't get out of the taxes if you get caught. Definitely listen to your accountant, but I might get a second opinion from another reputable accountant before throw caution to the wind on that one. I'd be curious what code of ethics a CPA is required to follow regarding this. If you do get caught, no matter how small the risk, this will seriously mar your credit report and you need to decide how upset you'll be to start all over (7 years is a long time, ask me how I know this! ;) ).

Mortgage companies have had to learn some hard lessons about lending to those they shouldn't. The fact that you haven't paid your taxes in the past honestly tells me that you may just be higher risk. My advice would be to spend the next couple of years cleaning up the back taxes and keeping your credit spotless, and build up a good downpayment. Hopefully the economy will turn around some and buying a home will easier for you! Good luck!

[FillySire]

I am a mortgage broker and you can get into a home with a FHA loan and 3.5% down as long as you have a 580+ credit score and 4 pieces of credit with a 12 mos history (this can be traditional credit or alt-credit sources). However, I am confused as to how you are paid. Are you self-employed or are you a W2 employee? If self-employed, you will need to document your income with your last 2 years Federal Tax Returns and we will use the adjusted gross income off of your Schedule C to qualify you. If you are a W2 employee, all we need is a month's worth of pay stubs to qualify you. Either way, you must be able to document a 2 year work history (preferably in the same field) and, believe me, the lender will check with the IRS to make sure you filed returns for at least the last 2 years. Also, you might be able to qualify for a Rural Housing loan (USDA) if you meet their credit, income and property eligibility guidelines in which case you will be able to get into the home with zero down. Good luck.

[tle]

Each of the companies will have a slightly different score. You can get a couple of them FREE -- creditkarma.com works with the Trans-whatever score.... credit.com is the Experian. Yes they are FREE. Getting the actual FICO score (or the 3rd one) I haven't found any way to do it but to really pay the $$.

As for your credit report, you can get that free, once per company per year, at annualcreditreport.com.

FillySire... is there a way to check what the requirements are for the Rural Housing loan? We're looking at wanting to buy a farm next year and the way things are going, it's going to be purchased on my income (plus "rental" income). We won't be able to use hubby's because of the other house going into foreclosure and it screwing up his credit. :(

[ESG]

FillySire, can you give us an idea of what the USDA requirements would be for a Rural Housing loan? This interests me greatly. :yes:

[gieriscm]

"FreeCreditReport.com" is not free unless you sign up with their credit monitoring service. In the future use AnnualCreditReport.com for a truly free credit report.

[Frank B]

As a word of encouragement, in spite of the doom & gloom being spread by the mass media, people ARE getting loans. This has been stated over and over on Bloomberg, Fox Business News, Kiplingers, WSJ, Barron's, IBD, and the other financial information sources.

It does require a good credit score: some say 600+, others 700+, it varies. A history of fiscal responsibility, sound investments, continuous work record, etc. also increase the probability of getting financing.

Of the 8000 banking institutions in this country, under 4% are taking government welfare. The remaining ones minimized their exposure to "liar's loans", subprimes, and derivatives. They stayed out of trouble by exercising fiscal responsibility and are not about to change their policies.

Most are focusing on housing mortgages, but there's another ticking time bomb: credit cards! You have to wonder how many financed horses that way. Scary! What's in your wallet?

[BelladonnaLily]

Fillysire, maybe you can clarify for me. In 2000, we went through the mortgage process and this is what I understood: FHA loans are only for certain houses. We found there was a strict criteria, and we had a terrible time find a small horse property that we could afford that fit the criteria. Many older homes did not meet the criteria...we found that newer homes were our only choice for an FHA loan. Our credit wasn't terrible then, but not stellar either, and we had to jump through tons of hoops to get anything done.

So, I guess my earlier post was referring to conventional mortgages. I personally would never try to go FHA again.

Is this still the same?

And the other thing we found was that unless you had really good credit, you were paying the loan insurance (PMI? ).

[rabicon]

For warning, the more you check your scores the lower they will get. Also if you pay your credit cards off in full every month then that doesn't help your scores either. You need to leave a balance on there and pay a little bit every month. It doesn't have to be a big balance but just a balance. We had the same problem when we bought this place. It was harder because it wasn't a conventinal loan because the property was to much for that so watch out for that also. Anything over 417,000 is not conventional and will be harder to get and your intrest rates maybe higher. Our credit was good and it still was very hard to get a loan for the amount we did. Also you can skip the pMI if you can't pay the 20% down by doing 2 mortages and you don't have that extra money to pay a month for no reason.

[DancingQueen]

fillysire
I have a job that pays a tiny little bit. For this I get a W2 that I file.
The cash has not been filed the last few years. I have now gotten a new accountant who is supposedly very very good. He has recommended me to start doing the right thing as of 2008 and not seek out the IRS if they are not looking for me.

[BelladonnaLily]

Actually, if you check your own scores, it will not affect your scores in the slightest.

[okggo]

Your scores can also change by the day.

We just purchased last June, my score was good, my husbands...well. We had to qualify on mine OR pay a really nasty interest rate. Anyway, rates weren't great to begin with, so we had to deal with what we got. We barely squeaked by and managed to get this place. In probably...hmm...3 months after we moved rates dropped like crazy (this was during the Freddie buy-out) and I asked about doing a re-fi and in that short time my rate went from good to excellent. Anyway, we were able to get a really great interest rate in a very round about way.

Point being, depending on when you pulled and when they pulled it may have actually changed. Also, of the '3' there will be some deviation anyway.

[rosijet]

Here's the USDA Rural Housing site:

http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do

It looks like the biggest hurdle are the income restrictions. I found them to be very limiting.

As mentioned, people with decent scores, verifiable income and a reasonable debt to income ratio are getting loans. I have clients approved FHA with scores in the mid 600s. Of course, your local market conditions will factor in as well. FHA loans have increased here tremendously. I personally haven't found FHA tough to work with. They do have standards, but IMHO they haven't been unreasonable. It may be tougher with the large acreage properties. I've also seen 5% down conventional loans approved.

[seabreeze]

[QUOTE=gieriscm;3837550In the future use AnnualCreditReport.com for a truly free credit report.[/QUOTE]

I'm surprised only one person has mentioned this. Maybe it is not as well-known as I thought...? This is a site that was created due to federal legislation that requires citizens to be allowed to have a free and full credit history/report from each of the 3 major credit bureaus once each year. It is accurate and is not a scam.

Good luck! To keep this HR, I hope your mortgage endeavors allow you to maintain a "horsey" lifestyle!!

[AilleXWest]

I would look in to getting a really CC and useing it to pay all your bills. Pay most of it off one month than pay it all off the next, pay most for two months, then all, you can see were I am going with this. I got my score up over 800 doing this. I also have a CC that will let me see my score each time I log in. It was Providen card to start with but now I think as of next month it will be Chase they keep changing who owns the compeny.

I would also look at small banks in the town you live in. They are more willing to look at you as a person and what money you bring in not as a set of numbers and IRS forms.

[FillySire]

FillySire, can you give us an idea of what the USDA requirements would be for a Rural Housing loan? This interests me greatly. :yes:

Here is the USDA website. It is best to get with a good mortgage broker who can make sure you meet qualifications in your area. Ask your real estate agent for a good referral. Good luck.

http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do

[FillySire]

fillysire
I have a job that pays a tiny little bit. For this I get a W2 that I file.
The cash has not been filed the last few years. I have now gotten a new accountant who is supposedly very very good. He has recommended me to start doing the right thing as of 2008 and not seek out the IRS if they are not looking for me.

So basically you have very little income and won't be able to qualify for squat on your own. You need a co-signer to go on the loan with you. The co-signer does not need to occupy the property, but they do need to have good credit and enough income to not only carry their debts but also your debts (including new housing payments). Also, I agree with your accountant about not filing back returns (unless your last name is Geithner and you are running for Treasury Secretary).:)

[FillySire]

Fillysire, maybe you can clarify for me. In 2000, we went through the mortgage process and this is what I understood: FHA loans are only for certain houses. We found there was a strict criteria, and we had a terrible time find a small horse property that we could afford that fit the criteria. Many older homes did not meet the criteria...we found that newer homes were our only choice for an FHA loan. Our credit wasn't terrible then, but not stellar either, and we had to jump through tons of hoops to get anything done.

So, I guess my earlier post was referring to conventional mortgages. I personally would never try to go FHA again.

Is this still the same?

And the other thing we found was that unless you had really good credit, you were paying the loan insurance (PMI? ).

Yes and no. FHA loans are mainly for single family residences that are in "livable" condition, but to say that FHA will only lend on newer homes is misleading. The home has to be in decent shape, but not perfect shape. It sounds to me that you were dealing with a loan officer who did not understand FHA guidelines (hence the jumping through hoops analogy). FHA loans are definitely not for fixer-uppers or homes with a lot of acreage or with out-buildings (i.e. barns; chicken coops; commercial type bldgs; etc..). Actually, in order to get a loan on a horse farm or the like, you might have to go commercial or private money because FHA, USDA and conventional won't go over 10 acres and don't like out-buildings or where site/land value exceeds 30% of the total value. As for mortgage insurance (PMI), you typically have to put down 20% these days to avoid it and the loan must be conventional which does require good credit.

[cranky]

Definitely myfico.com for "real" credit scores. I believe there is a special real estate algorithum that is used when shopping for a mortgage, so there may be some elements that weigh slightly more or less than with just your regular credit score.

For mortgage information and help, you might try the creditboards mortgage forum:

I learned quite a lot about credit and how it effects one's ability to get a mortgage and all the ins-and-outs of what a mortgage lender will be looking for, what the laws are and what to expect. Lots of mortgage professionals frequent the board and will freely give insider information. I found my mortgage broker on that board two years ago and he got me a fantastic rate. Anyway, This is the Link. (http://creditboards.com/forums/index.php?showforum=9)

Even if all you do is lurk, you can learn quite a bit. It helps to be a little educated about how credit works with such things.

[cranky]

For warning, the more you check your scores the lower they will get.

This is NOT true. Your score will decrease with hard inquiries, which are the type of inquires issued when you apply for credit. Unfortunately, this very often also occurs when you open a utility account as well (such as a new cable or cell phone account). Checking your OWN score is considered a soft inquiry and will not decrease your score at all. Also, your current creditors will also check your credit from time to time for marketing purposes and also to keep an eye on what you're doing with your credit. These also are considered soft inquiries.

[cranky]

I'm surprised only one person has mentioned this. Maybe it is not as well-known as I thought...? This is a site that was created due to federal legislation that requires citizens to be allowed to have a free and full credit history/report from each of the 3 major credit bureaus once each year. It is accurate and is not a scam.

Good luck! To keep this HR, I hope your mortgage endeavors allow you to maintain a "horsey" lifestyle!!


Yes, but it's a credit report. I don't believe that it includes actual credit scores. So it's great for being able check for inaccuracies, to know what's being reported about you, but it won't give you those actual numbered scores. Those you have to pay for. Unfortunately.

[Gloria]

Freecreditreport.com vs real life (fico.com) scores?

Ok so this might be a stretch as far as relevancy goes (and yes, I'm also beeing very stingy and cheap).

Background (skip down to quick query);
(BTW If you are not a fan of long winded and seemingly unrelated explenations I suggest you scroll down rather then pick on me about my literary shortcomings).

I'm in the process of actually buying some property. I'm a virgin buyer and so I'm all over the internet trying to gain useful information.

I knew I needed to establish a credit history (believe it or not I have in the past 8 years been paying cash for everything!), so in preparation for a mortgage application I bought a car on credit last year, I got a CITGO card for gas as well as one department store credit card (which I use solely for presents to others (and only on occations when I would normally get somebody a present).

Also good to know. My credit history is as of yet no more then a year old, but perfect as far as payments go.

I've had my eye on a perfect property for almost a year but was teetering between a big commitment, investing in property for business purposes, as opposed to keep freelancing or simply buying a condo or something for personal use. I have not been cutting myself a big paycheck (think below what is expected to survive in even in the most meager way). I have essentially no income verification (not that it would help theese days).

Either way I decided to go look at some condos just to see what was out there. I had a meeting with a realestate agent in november and talked to their mortgage specialist. She informed me that I would not (unless hell frooze over) get a mortgage for a single residence based on my paycheck and taxreturn. She also told me that (in less then a year, mind you) my credit score had gone from non existant in Feb 2008 to an average of 554 as of Nov 2008.

She also told me to file back taxes to verify income and qualify for a loan(something my freshly accuired (and brilliant by my reccomendations)accountant adviced me against in the spirit of, "If they haven't called you on it by now, they will not" and "It will be much more expensive to go back and fix it so unless you must have it, let it be and o the right thing next year" (yes he is hired and I will file everything from now on... *sulking*))

Then there was the holidays and not much happened. Mid January I snapped out of my gingerbread house and decided I would start a venture of my own. Following the basic guidelines of my internet sources I decided it would be money well spent to make myself aware of my credit score before entering into mortgage negotiations.
I payed (?) freecreditreport.com to get the full story and scores from all three bureaus.
My scores were 639, 635 and 639 again.
Beeing that my scores were ~ 554 in November I thought to myself (oh yeah)! I thought that since my creditrecord is fairly new, I have a decent credit limit and I make payments diligently I must be on the rise. (I was a bit surprised, but I could see how my score would rise fairly fast being that I made all payments in time. I was looking forward to (albeit surely declining in acceleration) my credit score would sky rocket into good within the next few months.

However, today while researching the process of house buying and the type of mortgage I would apply for I came across a (an independant) note that pretty much said, "You can't trust anybody but myfico.com to give you an accurate score at any given time. Any other cmpany will give you a generic score based on the same principles, but it will not be the same."

All of a sudden I was concerned that I had payed the wrong company to give me a creditscore that had very little to bring in a reality check.

I like the guy with the guitar. I don't want to jump to the conclusion that freecedtreport.com is a complete sham (although it's not free if you have to provide a creditcard number). But at the same time I would very much lke to know if anybody here has any experience in comparing scores from myfico.com and freecreditreport .com or if you knew" that your score was a certain number and it changed radically when you got to the point of applying for a mortgage.

Long story short, anybody here buy their credit score from freecreditreport.com only to find their score to be significally different when your lendor checked you out and got your fico score?

Easy solution would of course be to pay the $48 to check my score on myfico.com also but I don't want to be a victim of yet another marketing scheme in case freecreditreport.com is in fact a relieble source.

If you have dealt with freecreditreport.com, be careful and watch your credit card statement. They started to charge me $20 something a month for some services without my authorization. I did not even get the so called report or score.

[rabicon]

This is NOT true. Your score will decrease with hard inquiries, which are the type of inquires issued when you apply for credit. Unfortunately, this very often also occurs when you open a utility account as well (such as a new cable or cell phone account). Checking your OWN score is considered a soft inquiry and will not decrease your score at all. Also, your current creditors will also check your credit from time to time for marketing purposes and also to keep an eye on what you're doing with your credit. These also are considered soft inquiries.

I typed it confusing I guess. I didn't mean her herself checking them but the other people she has pulling them. ;) sorry for the confusion.

[Gloria]

For warning, the more you check your scores the lower they will get. Also if you pay your credit cards off in full every month then that doesn't help your scores either. You need to leave a balance on there and pay a little bit every month. It doesn't have to be a big balance but just a balance. We had the same problem when we bought this place. It was harder because it wasn't a conventinal loan because the property was to much for that so watch out for that also. Anything over 417,000 is not conventional and will be harder to get and your intrest rates maybe higher. Our credit was good and it still was very hard to get a loan for the amount we did. Also you can skip the pMI if you can't pay the 20% down by doing 2 mortages and you don't have that extra money to pay a month for no reason.

Nonono. Don't ever leave credit card balance if you can help it. You may well end up paying the balance "before" your payment at 20% or higher interest rate. Too many people get into serious trouble this way. And believe it or not, I established my credit history by paying credit card (credit card not debit card) full every month as a student. By the time I graduated from grad school, my credit score went up the roof. Beside, no credit history is better than bad credit history.

[ReSomething]

I use the annual credit report which gives you the three scores, but you have to purchase the FICO separately.

As a self employed you are going to have a hard time getting a loan. Our first house DH had made all the money for a 20% down and I had a decent job but we still got stuck with a buy down (form of an ARM). We also had to write a letter explaining our business and why it made (or didn't make) money - working with your accountant is crucial to get a higher paper income and yes, you do pay more in taxes. Sort of get stuck with that.
We refinanced a couple of years later on my income alone - I'd gotten the second of the "big three" raises that our contract calls for. Much much easier that time. We've had scores in the high 700's and into 800's - we pay off cc's monthly if we can, if we can't, then we stop charging and pay off over time, as fast as we can because paying interest is just throwing money away.

But as a self-employed you are suspect - my dad employed four persons as a professional, every one of his employees had a good job working for him and could easily get cc's and mortgages but as the principal he was out in the cold credit-wise. Real head-shaker that one.
Anyway, increase your income on paper. FICO is a risk-assessment model more than anything. You get rewarded for good payment history and for having lots of available credit but using little of it, and they frown on opening new accounts or racking up charges over a short period - buy your new furniture for the house or the new car AFTER your loan closes.
I can't say that this will be quick. Good luck.