How's Your Credit Rating? (On A Scale Of One-to-Five...)

... with 5 being the worst and 1 being the absolute best.

...and I'm quite a character.

we pay our bills , own our home, and live within our means. It seems you get a better rating if you charge a lot, and pay interest.

The best ratings ARE reserved for people who have a history of paying back money they borrow. It just makes sense... you want to borrow money... they want to see a history of you paying people back.

The misunderstanding is often that your credit report "should be" an indication of how well you manage your finances... that if you NEVER borrow anything...you should have a great report. The problem is that there are plenty of people who can AFFORD to make payments... they just often DON'T (perhaps just due to poor habits). The lender is (ideally) looking for a history of borrowing and paying back... but not "too much".

How much interest you pay shouldn't enter the equation, and you SHOULD be just fine if "pay our bills" includes some credit.

The main reason we charge so much is to rack up the frequent flyer miles... but it's all within the monthly budget and we pay it off in full every month.

If you're not careful, it could become a situation where you're paying a lot of interest. Don't do that!

..that stores ask me for a photo ID before they take my cash.

(I know, it's an old one)

I think. I could be off by negative fifty or so. ;-)

I don't carry debt. I hate debt. I don't owe a dime to anyone. My car is paid for. I rent. No credit cards nor student loans.

So, I'm thinking of buying a house. I have to carry a loan, but I have a sweet down payment (25% or so, give or take). My mortgage broker buddy runs me through. He says, "jeez, dude, you have no credit." And I'm like, "yeah, that's right. loan me something." He says that my credit rating is the worst as I have no history. I couldn't borrow a library book right now, according to him.

That's fucked up.

Your rental history can be verified and taken in to account.

Plus "no credit" is not as bad as "bad credit". At least you haven't entered into an agreement to make payments where you ended up NOT making the agreed payments.

But there's no question you're going to pay a somewhat higher rate and have fewer products to choose from... but with a LTV of 75% you should be able to get a loan.

But rather than a good rate with a top lender, I'm looking at B and C paper. And for Grimace's sake, I work in the mortgage business (legal end).

As an aside, I'm not as bitter as I could be. The RE market where I am is about to go into the crapper, I think.

I moved out of the DC suburbs thinking real estate had really started to peak. Our property value had almost doubled in a little over three years and we wanted to cash out.

A little over a year later, houses in the neighborhood are selling for about 15% more than they were at the time. You just never know.



As for your situation with "B & C paper"... check around. See if there isn't a "portfolio lender" in the area (maybe one you've worked with) that retains some portion of the non-conforming loans they make. You may find one that doesn't go by the straight credit score.

As I said before... credit is a numerical assesment of your "character" (the likelihood that you will repay if you possibly can - your "ability to pay" is a seperate measurement). "Back in the day" I granted credit to a guy who had declared bankruptcy just 2-3 years previously because he could documnet that even after the debts were absolved, he worked two full-time jobs and paid every one of them back ever penny - even though he had no legal obligation to do so. His credit "score" was lousy... but his "character" was pristine. I knew he WOULD pay me back unless he died in the interim.

Not every lender has that kind of authority any more... but they are out there. You just need to find someone with the flexibility to use a little human judgement.

depends how bad it is, but generally I heard more than once that bad credit beats no credit.

Now... I come from one of the more "conservative" lenders out there... but here's how we've always seen it.

Your credit (as I've said) is an assessment of your character (often an unfair one... but it's what we have). The likelihood that you will repay the loan if you are financially able (and we measure the "able" part separately).

Good credit means you have a history of repaying your debts.
No credit means you have no history one way or the other.
Bad credit means you have a demonstrated history of NOT paying back your loans.

Now... we were pretty stiff on "no credit" as well... but evidence that you will NOT pay me back is always going to trump that.

I remember running the grand opening of one of our "in-store" branches when we first tried that failed experiment. We gave out free stuffed animals and other gifts for completed credit card application... and took in more applications in an afternoon than I had processed in any given week prior to that point. I remember stretching to approve an employee there at the WalMart who had no credit history because 1) I wanted to foster good relationships with the employees who would share the building with my people and 2)everyone of the other applications was "bad" credit and I wanted to approve SOMEONE.

All of this needs to be taken with the grain of salt that there are degrees of "good" and "bad". If by "bad" you mean that the guy missed his mortgage once and has been a month or two late on a credit card four or five times in the last couple years.... then yes, that can be better than "no credit".... but that's not really so "bad".

after running bad credit after long illness and I repaid the debt. VP approved the loan. You have to make some effort, but if you have a good job with a good down payment i have to belive you can get a loan...It would take a little effort

I know, I was in the same boat.

I got caught up in the college-aged trap of getting credit cards with no real means of paying them. Imagine a nuclear weapon detonating on your credit rating. Yep, pretty bad. For years, I was afraid of credit, and payed everything in cash. Years passed, and my credit report was virtually blank. I moved and opened up a new bank account. The banker told me I was pre-approved for a VISA. I decided it was time to re-enter adulthood and said, 'OK'.

Later, I figured it was time to grow up, and looked into buying a house. My loan guy took one look at my credit report and wondered if I even existed. I had nothing on there except for my VISA and some old collection I never knew about (I called the collection agency, made a deal to pay half, and have it wiped off - it was from an old apartment that claimed I owed them money). He couldn't believe he was actually standing in front of a guy who owned his car outright (it was about eight years old). He was willing to work with me, but told me I should rebuild my credit (I try to carry a balance on my credit card so the bank can get some interest money off me and be happy while paying every month).

Yes, having no credit can be as bad sometimes (or even worse) than having bad credit. At least with bad credit, they know what you're all about.

When we bought our first house, my husband had NO credit history at all - no credit card, no car loan, no nothing. Although I had good credit, my income alone wasn't enough to get the mortgage we wanted.

What we did was bring in 12 months' worth of utility bills (gas, electric, cable, phone) with my husband's name on them, showing that we paid promptly and in full every month. That was all it took.

With your down payment, you shouldn't have any trouble at all. I'd talk to someone else.

In other words, they look at you as a human being and not a Beacon score. If the OP gets manual underwriting, he/she will be fine.

If you have 25% down payment you can certainly get a home loan at a great interest rate. Sh*t they are giving loans with BAD credit an no down payment. Don't do business with friends

tends to put your credit rating in the crapper.

then I managed to pay it all off and keep the balances low and paid on time. Then, like clockwork, the old bad-history but paid-off accounts started to disappear from my credit report. It really does take seven years! That's a long wait...

Now it seems like every four months my credit level gets raised again. It's almost frightening.

I do get copies of my credit report mailed to me every quarter... just to verify and keep an eye on things. Which is good, because I discovered and Shell gas card on there that was a "write-off" status, and I've never EVER had an Shell card in my life! --- I filled in the challenge/denial form and returned it to the credit bureau... it was removed right away.

Had I not complained right away, who knows HOW long it might have taken to get removed once it has been there enough to become "established" as mine and had taken root (so to speak).

I remember being in my early 30's I was declined a car loan and declined an apartment lease because of my previous poor payment history. It's a real weight to carry around if you're not careful with it.

Mike is the same way... we guard our credit rating jealously.

I had a gas card with them, missed a payment on my $60.00 balance, and they stalked me for a week, starting the day after the payment was due. It was a little out of proportion to the debt, if you ask me. They even called me at work. :scared:

this was before caller ID and caller reject and PIN-code calling. They would bug-bug-bug me... they would sell and resell the debt to other collectors. A true nightmare.

Back in the old days (the eighties), I had one collector use a reverse directory to call my neighbor across the street. Those directories were restricted back then to realtors, etc., so it was totally illegal for him to have one and use it.

He told her that he was a friend and that he was trying to get in touch with me, that he was "worried" about me. This guy worked for a small department store chain in Michigan called Jacobson's. I owed about $75.00.

I have hated bill collectors ever since. I am prejudiced and I freely admit it. Anyone who can do that for a living is fucked.

And, yeah, we have what is suppose to be very good insurance -- the deductibles are insane!

mine would really be around 15 in this case.

they keep sending me pre-approved shit and I just send it through the shredder.

I have almost no consumer debt anymore. Been paying it off big time. Just a bit more to go.

A lot of DUers seem to have good credit!

Am I a bad person?


Hey, if they wanna give me 0% or 3.9% credit... I'm gonna take it!

I was drinking with a dude from one of the big credit card companies. Couple of years ago. I ask him, so, what do you do with your bad accounts -- y'know, the ones that are a few months behind and look like losers? He said, hey, no problem, we sell those debts to companies that specialize in collecting from tough cases.

Coo-zan, me, I d'wanna be sold. Think about it.

It was perfect before I got divorced and shacked up with a hobo.

banks are one group of people who are sending all those programming jobs overseas to keep me unemployed. Guess what the banks can do with my loans!

I remember being told to fill out a loan application a couple times a year say for only a few thousand, from your bank or lender. You do not have to take the money, your just looking to get approvals. This helps build a history of good credit. If you have some cash hidden away, you can fore-go using it and try for a loan that once approved can be paid off say in 6 mons with the money you saved anyway. Today it does not matter many business will check your credit rating. Mostly to see if your a good risk or not. I have several credit cards which I use, I never ever maintain a balance I pay them off completely when due. I got my first loan w/o a co-signer when I was 18 and have never had a problem, although I did have a couple of screwed up lending sources. Credit cards should in my opinion be used for emergencies or only for short term use. I've seen family members addicted to them go down the slippery slope to bankruptcy. Today I maintain a home equity loan for buying some things or just doing work on my house. I rather not take money out of my savings since the loan rate is cheap and I get to write of the interest at tax time. I think it was the best thing I ever did. I have money taken out of my check each week and sent to the credit union to service the payment. I actually send a little more than what is needed. It adds up in the end and I was able to pay for a vehicle, buy a collector car, build a new garage and some other assorted things.

I'm sure there are other people here which have lending experience that can give up a few more tips to improve your ratings. Oh and for those who believe 0% financing on vehicles is great, they end up getting you in the end. I'd advise taking the cash offering and use it to lower the payment.

The credit report doesn't show "approvals". It shows applications and active/historical loans. If you apply for occasional credit and then never actually open a loan... it actually looks like you've been constantly declined. This is obviously not what you are looking to portray.

Taking out a loan and then paying it off in a short period of time does help... but if you don't need the money and don't have "bad" credit that need rebuilding, it probably isn't worth the hassle/expense.

1982. I should check my credit rating some time, but I pay cash for everything, so I suppose it is pretty bad.

And then I realize I'm still awake!

I didn't know how big of a deal credit was for a long time. And now it's just so bad...I screwed it up, it's all my fault....and I'm not even 30.

I'll never own a house, carry a loan on a car, and I'm lucky to have somewhere to live.