Financing need help finding financing with damage credit

[Bird]

A good credit rating comes in handy when you get ready to refinance your mortgage. Built a new home in 07 with a 6% mortgage, now in the process of refinancing at 3.875%. A high credit score allows an streamlined qualification process - no appraisal, quick application by phone etc. This is with my current lender. Course I haven't closed yet, but hopefully it will happen soon.

That will be a little better than I just did, but when I bought this place 5 years ago, I took out a 30 year mortgage at 5.75% interest. Of course, I've been paying a little extra on the principle each month. And I think I could have gotten the lower interest rate that you're getting if I'd wanted to get an appraisal, possibly pay points or loan origination fee, etc. However, in August my lender offered the deal you're talking about; no appraisal, application by phone, home closing, no costs; they even paid the shipping back and forth via UPS next day air. And since I was going in the hospital on August 30, I went with their deal, on which it officially closed the last day of September, so I now have a 15 year mortgage at 4.125%.

Instead of getting the free annual credit report from all 3 companies at the same time, I get one, then a few months later another, and another few months, the 3rd one. And of course they've changed the scoring method and they didn't all 3 change at the same time. In July '09, Equifax showed my "FICO score" as 806 (300 to 850 range). In Dec. '09, Experian showed my "Vantage Score" as 933 (501 to 990 range). In May '10, Transunion showed my "FICO score" as 810. I just now ran a new credit report from Equifax and they've changed something else now. The credit reports are free, but I've been paying $7.95 online for the credit score. This time I got the credit report online, but had to call on the phone and they'll mail me the score (still costs $7.95).

 

[kenmac]

I do check my report . Once a year you can obtain a free report from all 3 agencies. I have never checked score. I have no idea what my score is. Since I haven't borrowed in about 5 yrs. It may be low

 

[Bird]

Another thing about the credit reporting companies is that they do not show anything different if you pay off a loan early, pay more than the minimum periodic payment, etc. Everything, on mine at least, simply shows "Pays as agreed".

 

[smstonypoint]

I do check my report . Once a year you can obtain a free report from all 3 agencies. I have never checked score. I have no idea what my score is. Since I haven't borrowed in about 5 yrs. It may be low

Ken,

I'm in the same boat --debt free with no plans to change my status. Per Bird's recent post, I may pony up the $s just to see what my score is.

Steve

 

[timswi]

I would suggest knowing what your score is so you know what part of the game that your playing in.

That being said, don't turn it into an obsession. If you are higher than 720 your in good shape. 750 + and you're golden. Your score can move 10 to 15 points in these upper ranges for no obvious reason. Sometimes it has to do with re-scaling or a new score release. The lenders know about these changes, consumers don't always hear about them. It's all relative and nothing to worry about as long as you stay in this upper level.

Per Moss...Suggestion to the OP: Save up and put a huge downpayment, I'm talking 50% on the machine if you want to finance it to rebuild your standing. Go with the captive finance company if you can and use their insurance, this minimizes the lender's risk. The captives generally don't have anywhere near the regulatory hurdles to worry about that commercial banks do in terms of origination credit quality. This will also put a ton of your skin in the game. If you were to default, you lose big time. Creditors take notice of this.

I would try to eliminate other debts first though, especially any that are in default. Not preaching, just stating the facts.

Good luck to you. We appreciate your service and we all realize that bad things happen to good people.

 

[timswi]

Another thing about the credit reporting companies is that they do not show anything different if you pay off a loan early, pay more than the minimum periodic payment, etc. Everything, on mine at least, simply shows "Pays as agreed".

Bird, Paying ahead only benfits your bottom line. You're right, as long as you are paying as agreed there is little score benefit to over paying.

 

[gilbertmsg]

I've kept up with the post for the past few days. There has been lots of great information posted. In my opinion, 80% of most families who purchase anything over 10 grand will have to finance most if not all of their purchase. While saving and paying cash is great, for most that is not reasonable. They would spend a great amount of time trying to save. Been in the military 32 years, put two daughters thru college, have one to go, it has been almost impossible to pay cash for most any high dollar items we purchase. Just call me the average joe.

Eddie

 

[timswi]

I've kept up with the post for the past few days. There has been lots of great information posted. In my opinion, 80% of most families who purchase anything over 10 grand will have to finance most if not all of their purchase. While saving and paying cash is great, for most that is not reasonable. They would spend a great amount of time trying to save. Been in the military 32 years, put two daughters thru college, have one to go, it has been almost impossible to pay cash for most any high dollar items we purchase. Just call me the average joe.

Eddie

I don't disagree with you there at all. If you keep everything financially realistic, it's all good.

 

[ITHINKICAN]

In an earlier post a person talked about a study done of 780 vs 520. Information is 100% true - no guarantee on one vs the other - but studies have shown likelihoods and they are extremely high.

Also said normal shopping inquiries won't really harm your score vs 50 of them in a month will have some impact. Again 100% true. A while back many people believed every inquiry had impact - that has now been proven to be incorrect.

Also said Closing cards can lower your score. This is partially true. Closing a card is a good thing. But if you can't afford to pay the entire balance - you'll get the most bang for your buck if you pay it down to 50% or less of the credit available.

Also said keep them open and throw them in a drawer with a zero balance. I disagree - don't keep any credit cards in your drawer. A babysitter, maid and or friend of your children can borrow them... this plan is much too risky. If they are paid off I'd say shred them and close them if you don't intend to use them...

In any case, I'd recommend you and your significant other get together, discuss in great detail and then work towards the goal. Everyone has their own personal situation - the one for my household might differ from someone else. There are many ways to manage your credit - opinions will often differ.

 

[Bird]

Also said Closing cards can lower your score. This is partially true. Closing a card is a good thing.

I think (not sure) that a card I closed may have lowered my score temporarily at least 2 or 3 years ago. I don't know how others have done it, but it was quite an experience. I'd had that CitiBank card for about 20 years. It was originally a Visa that for reasons unknown they had changed to MasterCard at one of the renewal times. There was about 10 years that we used it for nearly everything, paying in full every month. However, we had changed to another card with cash back bonuses and hadn't used the CitiBank card in at least 3 or 4 years. So I called to close the account. The first person I talked to transferred me to a lady I think he called the "customer retention" person. Anyway, she just was not going to let me close the account; just kept insisting that I should keep the card and the account whether I was using them or not. After so long a time, I finally had to get mad and request a supervisor before she'd agree to close the account.