Building Credit to buy a house

[Joliet Johnny]

I originally bought my 99 and way over payed just to build some credit. I have been able to successfully get a credit card now, which I couldnt do before the XJ. I have made a connection that buying a car and paying it off might help build credit quickly? The next logical step is to purchase another vehicle to build up the credit so I can get a house. The way my brain works I should either drop the XJ and replace with newer 4X4(Toyota), drop the Civic and CL360 and replace with a new Honda motorcycle, or drop them all and buy a newish hybrid or TDi VW. Im getting $10k in August 2014 and a slight raise and the inlaws said they'd match what I put down on a house. Were looking to buy a foreclosure and with prices here I know I'll have the down payment. Im just wanting to improve the interest rate and actually get approved for the loan. Also wonder if I pay off whatever it is quick does that help me(working OT I can get $1k per month so a $4500 Honda done in 4 months)?

[ArmyGuy45]

I originally bought my 99 and way over payed just to build some credit. I have been able to successfully get a credit card now, which I couldnt do before the XJ. I have made a connection that buying a car and paying it off might help build credit quickly? The next logical step is to purchase another vehicle to build up the credit so I can get a house. The way my brain works I should either drop the XJ and replace with newer 4X4(Toyota), drop the Civic and CL360 and replace with a new Honda motorcycle, or drop them all and buy a newish hybrid or TDi VW. Im getting $10k in August 2014 and a slight raise and the inlaws said they'd match what I put down on a house. Were looking to buy a foreclosure and with prices here I know I'll have the down payment. Im just wanting to improve the interest rate and actually get approved for the loan. Also wonder if I pay off whatever it is quick does that help me(working OT I can get $1k per month so a $4500 Honda done in 4 months)?


Cash in the bank helps your credit score. On time payments or paying off early (ask before you do!) will also help. The big thing with mortgage loans now is CREDIT HISTORY. Unless you can put a big down payment on a house your credit history and score will be big factors!

[nickyg]

I'm no expert, but this is what I have done and works for me.
I don't like the idea of Going into debt as a way to build credit. creditors also look at your income to debt ratio. low debt always looks good.

what I have told my daughter to do (and she has done) is go to your bank and get a credit card with a low limit like 500 or so. Then every month buy a tank of gas or something that you can easily pay off. and at the end of the month pay it off. you'll get no or very little interest and it will look good on your credit report.

Have you applied for a mortgage yet? you might want to give it a try and see what happens.

me, personally I don't like a car payment. I drive an old car. and put 200 a month in a savings account. Then when my car dies I have the money to Fix it or put a good chunk down to replace it.

Paying off a loan fast always seems like a good idea to me. and saves money in interest.

Thats just my 2 cents. good luck
Oh yea... make sure you look for one with a big garage or shop.. If you own an XJ you'll need it.

[07Negative]

The credit system is a pho king joke. Everything you mentioned to help you're credit won't do much to your credit. Here's what I did. I found a good loan officer. Hard to come across. But due dilegence. Find one. Tell them your goal. Ask that person "What the hell do I need to do?" That credit card you got. Does it have a credit limit that will allow you to put all your monthly spending on it? If so. Put all your monthly financial needs on it. Pay it off every month in full. That'll build your credit faster. As long as you don't have any negative marks on your credit. You shouldn't have too much of a issue.
I did exactly this 1 year before buying my house. Qualified no issues. Going out & buying stuff can hurt you at the same time.
If you care too. Find someone willing to carry the house note privately. Pay the person that owns the house not the bank. I can put you in contact w someone that knows how to do this kinda stuff. He's doing it with his farm in Indiana. Also look for land for sale online. I do this as well. Build your own house. Cheap as hell this way. Also depends on your wants & needs. Mind you. If you pay $250K for a house. At the end of a 30 ur fix rate. You'll have paid those cronie bankers more like $400K. A way to reduce how much interest you pay is simple. Lets say you end up w a mortgage at $1200 a month. Divide that by months in a year which is 12. That equals $100. Add that to your monthly payment. By the end of the year. You'll have made 13 payments instead of 12. That'll make a 30 ur fix more like 25 years. You save a shit ton. To step that up even more. Using the same numbers. Make $650 payments every 2 weeks. By the end of the year you'll have made 14 payments instead of 12. 2 more payments. Making a 30 year more like 18-20 year loan. You'll save yourself over $100K in interest alone. Also what I did. Pay the bank the least amount of your money. They don't care about you and why should you? You should qualify for a FHA loan. You can have less than perfect credit with "X" % down. I think it's 3-5%. Conventional loans require 20% and rather decent credit.
To save money in the process of spending money. You can do your own homework. And work directly w a seller. Leaving out the over paid ass clown realtors. That's 6% in the cost of the house alone. So again. If a house is $250K. 6% of that $15K. Just to realtors. Also what I did. It's not hard at all. But a good loan officer should be able to pull your credit. Evaluate it. Tell you to correct a few things. And be done with it.

[Joliet Johnny]

I'm no expert, but this is what I have done and works for me.
I don't like the idea of Going into debt as a way to build credit. creditors also look at your income to debt ratio. low debt always looks good.

what I have told my daughter to do (and she has done) is go to your bank and get a credit card with a low limit like 500 or so. Then every month buy a tank of gas or something that you can easily pay off. and at the end of the month pay it off. you'll get no or very little interest and it will look good on your credit report.

Have you applied for a mortgage yet? you might want to give it a try and see what happens.

me, personally I don't like a car payment. I drive an old car. and put 200 a month in a savings account. Then when my car dies I have the money to Fix it or put a good chunk down to replace it.

Paying off a loan fast always seems like a good idea to me. and saves money in interest.

Thats just my 2 cents. good luck
Oh yea... make sure you look for one with a big garage or shop.. If you own an XJ you'll need it.
The credit cards I have are always paid in full cause I F-ING hate debt. I like to keep $1500 in the bank that isnt touched, logic of that is if 1500 cant fix it maybe I run to Canada? I do need to wait till Aug till I even try to get a mortgage cause I should have over $20k (add the money Im now saving) to put down looking at houses that cost between 50-75K and need about 30K work with a goal of paying off in 7-10 years or less. Im most curious if I buy a bike @ $4500 and pay it off by August will that help me? Or should I just keep up the buying stuff on Visa, ebay pay later, and Amazon and paying it at the end of the month?

[Joliet Johnny]

@07Negative
The inlaws are willing to "buy" house if needed then transfer later(know there can be headaches there) Land here isnt cheap personally want 3-10 acres. There are lots of foreclosures here, we look at houses all the time to get a pulse on the market. Im wanting to put as much down as possible just to get the low monthly payment (in case sheet goes wrong payment is easier to make) ideally I dump everything I can a month to bank and Im a home owner in 3-5 years. My wife's salary can keep the lights on and ramen in my belly. Im 100% with you on the damn house costs almost more than double and I think the whole credit system is BS and once I OWN a house I shall never give it a second thought. What Im lost on is the how part. The bike I want is $4500 with my bills and working OT at work I could kill that in 5 mon no problem, would that be better than the $600ish a month in expenses I have after rent? Guess the question is do you build credit when stuff is payed off or is it a amount owed and payed over time off thing?

[ArmyGuy45]

The credit cards I have are always paid in full cause I F-ING hate debt. I like to keep $1500 in the bank that isnt touched, logic of that is if 1500 cant fix it maybe I run to Canada? I do need to wait till Aug till I even try to get a mortgage cause I should have over $20k (add the money Im now saving) to put down looking at houses that cost between 50-75K and need about 30K work with a goal of paying off in 7-10 years or less. Im most curious if I buy a bike @ $4500 and pay it off by August will that help me? Or should I just keep up the buying stuff on Visa, ebay pay later, and Amazon and paying it at the end of the month?

Ask the lender what they think about paying it off early. Some will say 6 months, some will say 2 years (my recent USAA loan for 10k over 4 years said I should take it to 2 years before paying it off). So ask the lender.

[nickyg]

The credit cards I have are always paid in full cause I F-ING hate debt. I like to keep $1500 in the bank that isnt touched, logic of that is if 1500 cant fix it maybe I run to Canada? I do need to wait till Aug till I even try to get a mortgage cause I should have over $20k (add the money Im now saving) to put down looking at houses that cost between 50-75K and need about 30K work with a goal of paying off in 7-10 years or less. Im most curious if I buy a bike @ $4500 and pay it off by August will that help me? Or should I just keep up the buying stuff on Visa, ebay pay later, and Amazon and paying it at the end of the month?

Sounds like your on the right track.
1. credit cards paid off every month... very good
2. 1500 in savings..... Good
3. 20K on hand...... very good
4. Not sure on the bike.

another thing to think about is not to blow all your cash on the down payment. your gonna need some money to "fix up the place" especially if you have a lady.

I like 07Negative's idea of building your own house. you can be your own contractor and hire the workers. you can save a ton and never have to swing a hammer. If your savvy enough to deal with permits and inspectors and stuff.

[nickyg]

I'll share with you what my father told me when I graduated high school.
"work hard and don't buy what you can't afford"

[Brasscatz]

Yeah, credit is silly. You have to have credit to get credit, but you can't get credit if you don't have credit.... stupid.

I won't get into too many stories, but we have great credit... now. Unfortunately, we don't always have ENOUGH credit. A good credit score doesn't always guarantee you'll get approved. My score is a 784 and Bank of America didn't approve my car loan but luckily Chase did and I'll have it paid off in 2 years rather than the 5 year loan.

Keep track of your score by using Credit Karma. They are "soft inquiries" and don't effect your score, but any other credit checks (hard inquiries) can lower your score. Try to avoid having more than 1 credit check in a year by anybody.

We have a British Airways Visa card and use it like our Debit card. We buy everything with it to get air miles and credit, then we pay it off every 2 weeks or so. We never have a balance when the bill is due, so we never accrue interest and that doesn't help build credit much, but at least we don't have debt.

Credit is a very tricky game. Good luck brother

[ArmyGuy45]

Yeah, credit is silly. You have to have credit to get credit, but you can't get credit if you don't have credit.... stupid.

I won't get into too many stories, but we have great credit... now. Unfortunately, we don't always have ENOUGH credit. A good credit score doesn't always guarantee you'll get approved. My score is a 784 and Bank of America didn't approve my car loan but luckily Chase did and I'll have it paid off in 2 years rather than the 5 year loan.

Keep track of your score by using Credit Karma. They are "soft inquiries" and don't effect your score, but any other credit checks (hard inquiries) can lower your score. Try to avoid having more than 1 credit check in a year by anybody.

We have a British Airways Visa card and use it like our Debit card. We buy everything with it to get air miles and credit, then we pay it off every 2 weeks or so. We never have a balance when the bill is due, so we never accrue interest and that doesn't help build credit much, but at least we don't have debt.

Credit is a very tricky game. Good luck brother
I have a Capital One credit card that is 4 percent and I get 1 percent cash back. So they are paying me to use it since its my gas card and I pay it off at the end of the month.

[denverd1]

pull your own credit report, don't wait for the lending institution to surprise you with your score. You can do it once for free each year from all 3 credit bureaus without affecting your score. You also get the report sent to you if you're declined credit. Make sure you dont' have any surprises there.

Paying of a small card each month is a good idea.
If you dont' have some major negative issues on your report and put $$ down, you won't have a problem getting financed.

[EekGirl96]

A good site that im using is creditkarma.com its free and yes it works

I had bad credit due to my mom opening up a credit card when I was younger and then using it and not paying it off....I ended up paying it off a couple months ago which is helping get my credit back to a good state, that and I also have a credit card that I use and pay off instantly as well as financing my Jeep.

Hopefully by the middle of next year my credit score will be in good shape...hopefully

[denverd1]

Amber, thats the one I couldn't think of. good call. That sux about your credit!! glad you got it paid off.

FWIW freecreditreport.com isn't free. But they have catchy songs. :bang: :confused:

[Brasscatz]

Keep track of your score by using Credit Karma. They are "soft inquiries" and don't effect your score, but any other credit checks (hard inquiries) can lower your score. Try to avoid having more than 1 credit check in a year by anybody.




A good site that im using is creditkarma.com its free and yes it works

I had bad credit due to my mom opening up a credit card when I was younger and then using it and not paying it off....I ended up paying it off a couple months ago which is helping get my credit back to a good state, that and I also have a credit card that I use and pay off instantly as well as financing my Jeep.

Hopefully by the middle of next year my credit score will be in good shape...hopefully

Smart people in here ;)

[EekGirl96]

Smart people in here ;)

Do I detect a hint of sarcasm?!

[Brasscatz]

Do I detect a hint of sarcasm?!

Nay, just pride that great minds think alike ;)

[Firemanray]

When I first established credit I had a local banker help me by making a new loan every 6 months to pay my car insurance. I would pay 6 payments and renew the loan. My credit report had a long list of loans marked "paid as agreed". I don't know what the magic number is for credit card accounts vs. income ( not to be confused with debt to income) but I have about 8 credit cards (3 store cards and 5 MC / Visa cards) all with very high limits on them. My credit score stays on the high end of the 700's if I carry a small balance on most of the cards all the time. If I let the balance climb to high my score goes down a few points.

Some things you shouldn't do, (several already mentioned here).
* Don't let your credit get hit with to many "hard" inquiries.
* Don't open to many accounts in a short period of time.
* NEVER be late or miss a payment.
* IF you're going to be late call the creditor in advance and work something out so it won't show on your report.
* Don't run high balances on any card even if your debt to income ratio is low. Part of your credit rating is measured by how much of your available credit you are using.
* Don't use pre-paid credit cards to build your credit, complete waste of time even if advertised otherwise.
* Don't use "pay day" loans or "quick cash" loans or "cash for you title" loans EVER!!!

Some things you can do to help.
* Do open several lines of credit over time and use them sparingly.
* Do use a credit card to pay for EVERYTHING then pay it off ( twice a month if need be). I will make very large purchases on my c/c and go home, log on, and pay it off the next day.
* DO SAVE, SAVE, SAVE, the "3 to 6 month living expenses" rule is not an UN-attainable goal and once you've reached it you will have a true peace of mind.
*DO establish a credit line, loan, whatever with a local bank.
* DO learn to control your "wanter", you'll never get ahead trying to buy things you want and can't afford. (Meaning spending before saving).


Ok, I've rambled long enough. Next???

( To the OP, don't buy a motorcycle on credit!!!)

[Brasscatz]

Very well said, Ray

Sent from my Samsung Galaxy S4 because my microwave couldn't do it

[Joliet Johnny]

Figured I'd give an update mainly cause of the good advice I read and I hate reading old posts that don't have endings. That credit karma said my credit was much better that I expected. I have started keeping track of every penny I spend or find and making adjustments as needed. I'm already at a 1 month cushion of pay. I'm currently exploring the grant system to see what I can get. Credit cards will be 100% clear next month and I think I will just use them to pay car insurance, storage unit and other recurring bills. We tried to get financed yesterday and I just got the approval notice.

Sent from my Nexus 7 using Tapatalk

[4.3LXJ]

Good news :thumbsup:

[Firemanray]

Good job!! Keep saving on that "cushion" and keep the credit cards cleaned off, you're on the way to your first million already!

[Brasscatz]

Nice job, John! It feels GREAT to get rid of debt!

[saar]

Is it that hard to get a loan/credit there on your place?
Here, when you are 16, the banks start "running" after you to open an account and get a credit card...
In order to get a loan, you have to show that you work someplace and your salary...

On the other hand, building/buying a home here is very very expensive (apartment prices start at ~300K USD...)

[Joliet Johnny]

Is it that hard to get a loan/credit there on your place?
Here, when you are 16, the banks start "running" after you to open an account and get a credit card...
In order to get a loan, you have to show that you work someplace and your salary...

On the other hand, building/buying a home here is very very expensive (apartment prices start at ~300K USD...)

It used to be way easier than it is now. Here banks love to give you credit cards with high interest and about a $300 limit when you turn 18. When I was younger I made some dumb decisions which took years to fix. It wasn't until I bought my 99 XJ @ 20% interest that my credit improved enough to even do this.

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[sbspence]

Congrats you should be proud! Good time to finance too.


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