How does credit work on buying a house?

2016-10-26 9:36 pm
I am in the process of buying a house, I'm at the point now where I am paying off my collections... I have spoken with 2 realtors ,

1 who says "pay off your collections, call the credit bureaus to have them knocked off your credit and when you're at a 640/680 then we can reach it to lenders"

The 2nd one said, even if I pay off my collections I need to get credit cards to build my credit then I can speak to a lender when my credit is at least a 580 (he ran my credit and did not see that I have a car note)

I paid off 1 collection and my score spiked 69 points on one and 20 points on another and I have been paying my car note early since I got it 6 months ago. , can someone break this down for me?? I'm just excited about buying and I hate to prolong the process after paying off all collections

回答 (3)

2016-10-26 11:03 pm
Getting one or two credit cards can help you build your credit score, BUT they MUST be paid off completely each month on TIME. Paying them early doesn't help your credit score. You really don't want to go get a mortgage until you credit score is above 700. The interest rate you get charged on a mortgage goes UP the lower your credit score and on a 15 or 30 year mortgage that is ALOT of extra money
2016-10-27 3:30 am
Paying off your collections reduces your debt load, which helps your credit but the negative effect of those collections will stay on your credit history for 7 years. You can't simply call the credit bureaus and ask them to remove it.

Making car payments early has no effect on your credit.

Getting a couple of credit cards and using them frequently AND never missing a payment or being late, AND paying off the balance each month, will improve your credit SLOWLY. There is no way to make significant fast improvements to your score. It simply takes time to build credit, but even a single negative incident can impact it almost immediately.
2016-10-27 1:56 am
If you have debt currently in collection, then it will be impossible for you to get a mortgage. If you have a debt not collected and written off in the last 7 years, it will be almost impossible. Having two accounts in collection, even if they are paid off, will result in such a low credit score that even if you get a mortgage, it will be at a very high interest rate and the lender will require a substantial down payment. Your credit history is everything.
2016-10-26 9:42 pm
If you have a higher credit score, you may be able to get a better loan rate. However, you should look at what you want to buy, what mortgage, and taxes will cost you and compare them to your income. Banks want to know you can make the monthly payments.
My advice to first time owners is to buy the cheapest house you are willing to live in. Don't take out a loan for longer than 15 years. Your equity will build four times as fast. After about five years, you can consider buying something better.
I was able to pay off my mortgage in four years. Not having that monthly payment is great.


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