How do I buy a house with bad credit?

Question

I was really stupid when I was 18. I moved out of my mom's house (not by choice) and lived with my boyfriend while I was still in high school. I had trouble paying my bills and getting the things that I deemed "Necessities" at the time (cloths, food, whatever) so I used as many credit cards as I could get my hands on to help get me by. The trouble was I couldn't keep up with all of the payments so I stopped paying quite a few of them. Eventually I paid most of them off which was a big rip off to me considering all of the interst and finance charges and late payment fees that I acrued, but I still have a couple to go. I am 26 now, I have a family and I'm paying a ridiculous amount of money to rent an apartment. My goal is to finish up paying my existing debt in the next 2 years. I'm too afaid to check my credit score but I'm afraid that it'll stop me from getting a home. I've become really good at paying my bills however, their all in my boyfriend's name to increase his credit.

Answer 1

Ann, if you have not done this before please visit www.annualcreditreport.com. This web site provides a free credit report which you are allowed to pull every 12 months. Once you do this look it over see if everything is correct. From personal experience I've had clients with bad credit say it was good and ones with excellent say it was bad.

First step would be to try to get it to go up as much as you can without getting a third party such as a credit repair agency involved because that can cost you about $1500+.

I can give you a few tips on what you can do to increase your credit score, but if you're looking to get into the house right away chances are you CAN get a loan. Only problem with this loan would most likely be the high rate and high down payment required, but if you can last for a year on such a program you can get your credit back up by just having a mortgage and making your payments on time.


Basic tips on how to increase you credit score:

-Ask for your credit limits to be increased.

-Keep you balance to limit ratio at 50% and not more

-Do not close any credit cards(even if you don't use them)

-Opt out of prescreening by credit and insurance companys. You can do this by going to www.optoutprescreen.com

-If you have a collection less than 6 months old pay it off and if it's more than 6 months do not touch it. Do not try to pay it off, as all it will do is in a sense awaken the account and drop your score.

-Also if you have a buddy who's got a credit card with a "huge" limit it would benefit you tremendously for them to add you as an authorized user.

Hope this helps and good luck!

Answer 2

I hope it's not possible anymore! It's because banks have been giving people with bad credit these loans to buy houses that we're in so much hot water. This needs to stop! You have bad credit becase Fair Issac believes you are irresponsible with money, and are unlikely to pay off your financial responsibilities. Get your credit score up, prove that you will repay your debts, and THEN get the house. Mortgage brokers - STOP!

Answer 3

You have basically two options. Save up and buy the entire thing in cash or a really large downpayment to lower your mortgage interest rate. Or fix up your credit. It normally takes about 7 years to fix up your credit score if you've gone bankrupt but seeing that it's been a while since you were 18, your credit may not be so bad.

Go check your credit score. There are 3 main companies that check your FICO score. I forgot all their names but you can usually check it for a pretty cheap fee and sometimes for free. Or just pretend you're shopping for a house and ask your mortgage broker. Check www.bankrate.com for up to date mortgage rates.

Answer 4

Bad credit is one of the worst problems to have... however there exists a solution.

I will hereby talk from my personal experience.

I did debt consolidation a couple of years ago, however If I had to do it again I would pay to some minor details,
if someone wants to get out of debt today it is pretty easy with a debt consolidation plan, however it may get a bit tricky at times, I suggest you get as much information as possible online on this first,

a good place to start in my humble opinion is a straight to the point ebook with question and answer I found :

http://umgarticles.atspace.com/debt-consolidation.htm

if it helps kindly remember me in your voting!.. cheers!

Answer 5

You need to correct your credit score and the only way to do that is by knowing your FICO score and by taking a look at all your credit scores. Dont be afraid. You need to reign in your finances and the more in control you are of them the easier it gets. I had a similar problem 4 years ago but I got things under control and I have to say that Suze Orman's books helped me immensely. Check out some of her books and read about how to get your FICO score up and work yourself out of debt and into good credit. I have read them all and her latest is especially for women in situations like yours. Suze is great with debt, she isn't the best at investing though(stocks). Good Luck!

Answer 6

I was searching the Internet and discovered a website that provides free advice on mortgages, loans, debt consolidation, refinancing, new home purchases, home equity loans etc. They have an article about building your credit after bankruptcy. They also have a directory of rated best lenders accros the United States. Their loan experts can shop for the best rates and lower payments for you. Maybe you should try them. http://mortgage.yeyeyup.com

Answer 7

Either improve your credit score, save up a very large down payment, or find someone to cosign. And if your credit needs improvement, why are you letting your current good record go toward your boyfriend's credit instead of your own?

Answer 8

Ok, You sound scared and that's understandable. Why don't you go to Lending Tree (I am not affiliated with them). Enter your info on line. My understanding is that 3 lenders will work up an estimate and call you back.

You are not obligated and then you will know.

You may be surprised.

Good Luck.

Answer 9

phone baycorp or your credit union. You may not have a bad credit rating at all.