What are some ways or resources to build your credit score without getting taken for a ride?
My husband recently cleaned up his credit to where it was like new baby credit. His score is in the mid 500s which isn't horrible but it isn't good.
We are currently trying to purchase a house and would like to get a decent interest rate. His solution was to purchase a car at a horrendous interest rate and an already jacked up car price rather than to ask a relative for a co-sign. Are there programs or resources out there for people like us who have credit like an 18 year old?
And wouldn't it be better to purchase a house at a higher APR and then later refinance than to purchase a car at double what it's worth?
ooh sweetie both of you got it all wrong
you want a LOWER APR….not higher
and though you feel and think a credit score of mid 500s isn't horrible…..IT IS
these lenders wont bother financing you with a score that low….you are considered subprime (something predators look for); as bad as you all are wanting to buy a home you shouldn't because your score is too weak
it needs to be in low 700s at MINIMUM to even be considered for a decent loan
clean up your credit and apply for a secured credit card (dont go crazy applying for all kinds of cards) and give it about a year of on time payments; paying more than mininum and the score will improve
November 27th, 2008 at 9:23 pm
If you're going to pay a high interest rate on the house, I suggest that you NOT buy the house. You are going to throw away a horrendous amount of money on interest. If you find that you can't make the payments, you will lose your house. Rent an apartment while you work on your credit score and then buy the house.
Don't count on being able to refinance with a low credit score. If you follow the news at all, you must have heard about the high number of people losing their homes to foreclosures. The reason is that lenders have raised their requirements. People with low credit scores don't qualify to refinance, so they're stuck with their old loans. And with housing prices declining, you may not have enough equity to refinance. In fact, you may go to refinance and find that you owe more on the house than the house is worth. If you do that, you will have to write a check to the mortgage company in order to refinance!
The only way to legitimately build your credit score is to borrow modestly or put small amounts of your expenses on credit cards. Then, pay in full every month without exception. If you run up expenses with high APRs, and find that you can't keep up with your payments, then you will ruin your credit score even further. You may even risk bankruptcy.
P.S. You may want to take a class on personal finance or pick up a good book on personal finance for beginners. Check with your local adult ed program or community college. Any good bookstore has some good books on the subject. A little knowledge will help you make good decisions on these types of issues.
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