credit score question

Yes, lack of debt is her issue. A credit score is an "I love debt" score.

35% payment history, 30% amount owed, 15% length of history, 10% new credit, 10% types of credit used

The idea behind a credit score is not to reward those who are responsible...it is to let companies know if you are a good risk to loan money to so that they can a MAKE MONEY OFF OF YOU.

The absolute best credit score ultimately is a score of ZERO -- assuming you then own a home outright by then and don't plan to ever borrow any more money.

720 is a perfectly okay score. Dip below 680 and you start to encounter issues

Credit scores are massively biased towards timely payment of debt. Since your wife has none, the credit bureaus have very little data to work with, and that will suppress her score

Lenders look at more than credit scores. Debt to income is one, and since your wife has no debt that works in her favor

When you apply for the mortgage, you can always provide the bank with the details on your wife's debt situation (or lack thereof)

Thank you both for the info. I agree on the 0 credit score, I won't care much about credit score at all after we get the mortgage lined up.

We have a joint checking account, which is set up under my ssn. Would adding a CC on that account effect her score, mine, or both? and how? or should we open another CC up in her name to give her data to report on?

One thing I did notice, her amex has no preset limit, so I know that's negatively effecting her score as well.

My goal is to get to the table when purchasing a mortgage and get the absolute lowest rate possible with no hassle. You mentioned debt to income, what would be a ratio to shoot for? Any other areas I should work on improving over the next 2-3 years?

thanks again.

Following up on this.

We recently decided to build a home, and are now running into issues getting the financing lined up. Apparently, my wife's score is 690, not the 720 that credit karma had been reporting. Because of this, we are essentially not eligible for a conventional (jumbo) loan, and are forced into a non-conforming portfolio loan, at a significantly higher rate.

Here's what I've done over the past two months (since discovering the lower credit score). We took out an additional credit card in her name, and have been paying it off regularly, with hopes that it will get her an extra 30-40 points on her score.

A few options that I think are still available to us

-I have a card that I've had open for over ten years, would adding her as a joint owner add that history to her credit report? I've already added her as an authorized user, but apparently they don't report that to the credit bureaus.

-She doesn't have any installment loans on her report, which I understand is not a good thing. Would taking out a credit-builder type loan work for this? To be honest, I hate the idea of this on principle.

Are there any credit experts/loan officers/underwriters that can offer any advice? I feel like I'm running out of options at this point. We have about 6-7 months before we settle though, so there's still time.

For the record, I have gone through this with my loan officer, and am just looking for a second opinion(s).

Lenders use FICO score, which are different from what Equifax and Transunion have. Those scores are called "educational credit scores" because they are for the general public to be able to understand their credit scores and not so much for industry. FICO score are generally lower than what you see on Equifax and Transunion.

At this point, it is very difficult to do anything to pump up a credit score in such a short amount of time. Your best bet may be to just make the payments for a few years and refinance. The problem with trying to do anything to pump your credit score is that there is always an equal and opposite reaction. If you buy a car, your credit score will go down at first as you add more debt and have hard credit inquiries. It may not get back up in six months which might leave you worse off than when you started.

If your income is sufficient, you might try to just put the loan in your name. You can still title the home in both your names even though the note only has you. If your income is not sufficient, you might still be able to get there if you put more cash into closing. So, that might be something to walk through with your lender.

Another option might be to get your builder to slow walk the project to give you more time to build credit. In a strong market, most builders are stretched thin and would love nothing more than to let a project sit so they can get more irons in the fire. Your builder might want a price concession or some cash to make up for the cost of carry.

Appreciate the response. That's my fallback plan, I'm proceeding with the high rate loan regardless, but I sure would like to not use it if I had the option. Either way, I won't be in that loan for long. Unfortunately, I don't have the income alone to be approved. The builder is also in the last few houses of the project, so he's anxious to get it done. I'm also anxious to get in there. Been renting way too long now.

The whole thing aggravates me to no end. Its a bullsh*t score that could end up costing me a lot of money, and the part that really drives me up a wall is that its being responsible financially that put us in this position. Now, i'm in the position of trying to game the system, taking on debt I don't want or need, in order to get any underwriter to even consider it, despite meeting all the other criteria with room to spare. Sorry for the rant, the whole system pisses me off.

I give it an hour before Dave Ramsey trashes this thread and says everyone here sucks because they didn’t buy their house with cash and don’t save 97% of the gross income...

?

Talk to these people about manual underwriting -

Flagpole is loaded with facts and reason in this thread. Well done brother!

Are the current rates listed anywhere? I'd prefer to know that before I start the process.

I had a very similar situation. Bank didn't approve my loan. The amount i asked for wasn't big so i checked other financial institutions. From the few of them i checked maybeloan seemed the most reliable one https://maybeloan.com . Hope i don't need to take a loan again but if i do, i know where to go now)