Is there other ways to own a home with no credit? (1 Viewer)

[wendy32693]

Probably not possible but I want to find out for sure. Is there any way to buy a house when we dont have a credit score? were young (im 19 and husbands 20) and we dont have a credit score yet, been using a credit card and paying it off but still dont have a score. cant get accepted for a home loan only because no score. They told us to wait a few years but living in a tiny place thats connected to his parents house is driving me crazy im ready to pull my hair out!

Dont like apartments
He refuses to rent a house cause he says its a waste of money...even though were renting this tiny place that feels like a box, from his parents
Cant buy a house through bank loan because of no score.
Not trying to buy any huge expensive house just something decent!

Is there any other options out there or am i just hoping for a dream come true???

Someone help me with advice that knows what theyre talking about

Sorry if this is a dumb question, but I just needed to know. I tried looking online but can only find these no credit check home buying scams

 

[soymilk]

Hey Wendy,

I'm no expert so take this with a grain of salt. The short answer is no, especially after the last mortage fiasco that sunk the whole economy.

First thing first, if you have a credit card then you have credit. Register for a service like myfico.com and find out your fico score. The fico is typically the one most mortage companies look at when determining worthiness for a mortage. Myfico is free for the first month I think, so you can start it, check your score, then cancel the service.

Don't be rash, while you're living at your folk's house. Use this time to save money for downpayment, and also take measures to raise both you and your husband's credit score. This could save you literally thousands of dollars in the long run. Try to figure out a budget of how much you want to spend on a house and then try to save 20% of that as downpayment. The worst decision you can make is to buy a house and not be ready for it.

 

[wendy32693]

I figured so im just at the point where I cannot stand living here next to his parents anymore, I am unhappy here as they try to control everything we do, they are rude to me...and I could continue on for the next several hours about them. And the husband just wants to stay here for the next several years. Which I dont want to even be here in the next 6 months when I will be having my second baby. Imagine having 4 people cramped into a place that is like 600 sq ft if even that. Run out of room veryyy quick. Sorry for the rant only if I could win the lottery.....if only dreams could come true...lol

 

[below radar]

Like Soy, I am no expert. You have a credit card but are you paying the entire balance off every month. If so, I don't THINK that you are really establishing your "revolving" credit. It's definitely going to take a little while. You you get an unsecured loan from a bank or credit union and pay it back in 6-8 months. I also believe it will take more than revolving credit ie car or other larger credit lines. It might sound cliche but until then SAVE your money and when you do buy a home, make sure you can AFFORD it. By afford I don't mean make your house note and having to eat Spam until you get paid.

 

[below radar]

Yikes, 4 people in 600sqft. I'm cramped with 3 in my own darn rent house. (1100sqft). IMO, if you can afford to while still saving, rent/lease something.

 

[soymilk]

both you and your husband need to be on the same page as far as housing goes. I'm not saying you need to agree with him or he needs to agree with you, but yall need to figure what your plans are. How long he plans on staying there, and etc etc.

Right now is a good time to set goals, and make sure both of you guys are on the same page and working towards them. Its not going to happen overnight, its going to take hard work and dedication of both you guys.

 

[wendy32693]

Its not at 4 people yet, but will be as its him and me and our 16 month old then second baby in november. But yes you can see why im miserable here, there is other houses and even apartments larger then what we are living in that are about as much as we are paying monthly for this box but he just doesn't want to pay rent to someone else. Ive been saving my money but him..hes saving so he can buy expsensive junk. Ive been with him since I was 14, and after this long he doesnt just sit down and talk about serious things with me. unless you want to talk to him about freshwater shrimps he really doesnt pay attention to what I have to say about things, told him plenty of times to look at houses for rent because we just do not have enough room here. Im sure you can see why im ready to just pull my hair out!

So paying monthly on a credit card wont raise a credit score? Havnt been paying it all off at once but whatever he spends on the card he pays the minimum amount I think every month. he told me I cannot get a card as I dont have a job, I do make crafts and sell them at stores and stuff but not an actual job.

Can renting a house give a credit score?

 

[soymilk]

Usually you rent a house from a person not a company. Home owners usually don't report to credit bureaus, so.... no. Google "ways to improve credit", there are several different ways to do so. Such as getting a credit card on your own, etc etc.

1. Go to the bank and ask for a secured credit card. Usually this requires you to deposit around $500 dollars. They open a credit card under your name, and your credit line is 500 or a little more. As you use the credit card and make payments on it, the credit line and go up. Its a good way to start building credit.

2. Ask your parents to put your name on the credit card. They don't have to give you the card. As they spend money and pay off the card, it actually help build your credit in the mean time.

Paying monthly on a credit card is good, but generally it'll only rise if you use 35% or less of the credit line. If you go over 35%, but your credit score could actually go down. But like I said before, you two need to get on the same page as far as financials are concerned. Yall need to have some sorta plan and work together to achieve those goals. If you can set aside $200 a month for the next 2 years, that could very well be the down payment on a house. But it takes two to tango....

 

[gabe_j]

man that's a tough one. you most definitely need to establish very clear lines of two way communication. add this will help you set any goals, him nodding away isn't going to cut it. like others have said you both need to break down you're budget, see what reasonable goals can be set and achieved monthly, quarterly, annually and then follow your plan to get what you want.

if you have a credit cards that are holding a balance you most certainly have a credit score. note how long and on time you've pays it will give you a credit score. granted it may not be enough purchase a home but imo if you are paying rent and a bigger place is available for what you're paying now I don't understand the reasoning for not moving... other than safety. I've lived in some less than ideal apts before I could afford where I'm at now. but you do what you gotta do.

I really wish I could help you out more but seems like everything that comes to mind has been covered. I don't understand why you can get a small credit card if.you are selling your crafts and making money to pay them off. but that's not really my business. another thing people don't know when it comes to credit you need to be using about 10-15% of your available credit consistently and keep it revolving. yes I know paying interest is stupid but you need to always keep some money on a card so it shows you can manage cash. when you start getting closer to you limit you actually hurt your score because you appear to be loosing control of your finances. so if you know you're going to be getting a balance up there you should ask for a bump in your line of available credit that can keep you in your "ideal" range. I just recently discovered this tidbit. and have since started using all my cards just a little bit instead of using primarily 1 card and paying it all off.


EDIT: autocorrect-corrections

 

[NarnyTheGreat]

No offense to any one here. Its really early for me as I was up late and didnt read all the responses. So if I contradict someone I am sorry.

I have been rebuilding my credit and I monitor it every month.

The answer to your question is yes there is a way to buy a home with out credit. Its called owner financing. The first problem with that is that most owners arent going to trust a 19 year old with their home. When I was in my 20's they called it creative financing. The other problem with owner financing is the cost. You need a deposit of like 15% to 20% for most owners to even consider it.

What you need to do is get credit but this is going to take years so that you are established. A secure credit card will help you get credit but you dont want to make mistakes. Read here http://www.quizzle.com/blog/2010/04/how-to-build-credit-from-no-credit-in-6-easy-steps/ and here http://money.msn.com/credit-rating/raise-your-credit-score-to-740-weston.aspx and find as many credit building sites with advice as possible.

Its best to not have more than half of any credit card with a balance. I pay mine off every 2 weeks, so every pay day. The amount I spend is still reported to my credit but anything over 50% on a card looks bad. Another thing you can do is both you and your husband get a secured card. Then once you get them add each other to the card account. When you do this it will get reported to the credit card company as though you have been given 2 cards WITH OUT them putting a hard credit inquiry on your credit. To many hard inquiries is bad for your credit so its best to only apply once every 6 months to a year for credit.

The last thing I can suggest is either get a student loan or a secured loan. You can get a secured loan (its rated higher than credit cards) and then pay it back and then you get your secured deposit back. Dont get to much debt to fast. This will only look bad for you and there are no short cuts to establishing good credit. Oh also read this http://www.credit.com/blog/2012/03/...your-credit-just-by-paying-your-normal-bills/ This one will help get your cell phone, rent, car insurance etc reported as credit but this would be a only for you to decide if you want places like owner finance people to consider your other payment history. They dont report this to the major bureaus though.

HTH

 

[Houston_Reefer]

I am currently in the process of closing on a home, and it is a frustrating process even with good credit and finances. The mortgage bubble has simply made it tougher for anyone to get a home. Now, with that being said nothing is ever impossible. Like most I think you and your husband should first sit down and have a heart-to-heart and get on the same page. If you aren't both dedicated to a single process, whichever you choose, it won't work. Next, start building your credit like everyone has said. Even if you get creative financing now, you may have to suffer a crappy rate to get it and you will want to refinance down the road. Start building now.

You can look into owner financing, getting a cosigner if possible, rent-to-own, etc. I am just like your husband in that I HATE paying rent because you gain no equity. Since I wasn't ready for home ownership a few years ago I have had to pay rent ever since and you guys may need to for a while too. It sucks, but it is what it is. Overall, just keep pushing and things will work out.

 

[reeftopia]

Never Never get a loan just to build credit, Save save and save again will get you into a house. Your age will work against you lenders will want to see you have the ability and stability to save money. Im afraid if you cant get your husband on the same page your doomed. Ya might consider looking up Dave Ramsey and getting his book, he will teach you how to get to z from a.

 

[NarnyTheGreat]

Never Never get a loan just to build credit.

I am wondering if this is from personal experience or personal opinion?

The only reason I ask is because I do have personal experience with this and it actually helped to build my credit. You dont SPEND the loan money. It sits in a bank account. You use that money to pay off the loan every month (you can even put it on auto payments out of that account) plus whatever the interest on the loan is so make sure you add this money either right up front or as time goes on. Its really an easy no fuss way to improve your credit by 20 points if its low or non existent. Now there is such a thing as TO MANY loan accounts so if you already have some dont get any more. I would say 2 or 3 tops is a good amount. 4 or more is to much.

Most banks offer secured loans for people with CD accounts. I wish I had known about this when I was in college because I had to close my cd to help pay for it. Anyway, the bank uses the CD money as collateral on the loan. This way they are insured payment with makes it easier for them to give you the loan.

Dave Ramsey is about getting out of debt not building credit. I used his practices too so that I got my bad debt paid off before I started fixing my credit. If the OP had to much debt they would have a credit score whether good or bad. At this point though they dont seem to have much of any so debt and spending problems dont seem to be a problem.

 

[Houston_Reefer]

I agree completely with Narny here, if you do not have credit an installment loan is the best way to start that. Just for background info, a FICO score is made up of the following.

35% Payment History
30% Amounts Owed -- They want to see that you don't max out lines of credit and/or carry high balances
10% Types of Credit Used
10% New Credit
15% Length of Credit History - Start now!

There is a huge difference in starting a credit history and getting out of debt or rebuilding credit. Since you are starting fresh, keep those stats in mind and try to mold yourself to them in order to achieve the highest score as quickly as possible.

 

[inigomontoya]

+1 on owner finance as an option. It is a tough one but sounds like the only practical immediate choice. I just re-financed my home I bought new 13 years ago for the third time and the process was a nightmare compared to past refi's and I have very good credit, etcetera. Just obnoxious nowadays.
I don't see how you have stood the living environment this long. I would sit down and have a serious conversation about getting some space- I get claustrophobic when relatives visit, can't imagine living all cramped in a small house. I lived by myself when in college and loved it. Renting is always an option, not just for building credit but making the marriage last. It's worth it for what you get.

 

[NarnyTheGreat]

Just for background info, a FICO score is made up of the following.

35% Payment History
30% Amounts Owed -- They want to see that you don't max out lines of credit and/or carry high balances
10% Types of Credit Used
10% New Credit
15% Length of Credit History - Start now!

I had no idea how it was broken up. That helps a lot.

 

[BigRick]

Yup never make a late payment, worse thing you can do for your credit score!!

 

[BigRick]

A short term loan, less then 6 months is all you'd want to do. Anything longer and you are carrying negative debt that will hurt you till its paid off or under 40% of the loan value. Or unless your income increases a bunch. Most peoples biggest problem is debt to income ratio. People are carrying to much debt for creditors these days.

 

[adahm]

Other than owner financing some mortgage companies will look at your rental history, payment history with utilities such as electricity, cell phone bill etc to build your credit profile in order to get you a loan. Dave Ramsey also promotes churchillmortgage.com as one such company.

You said you have a credit card that you pay in full. This is a very good practice. Keep doing this. Use the CC to pay for expenses you would otherwise pay for with cash and pay it off monthly. A good thing is to call the CC company and find out when the closing date is. Pay the balance off before this date so it always reports zero. Learn to use credit responsibly and you will be rewarded. Inerestingly enough you get a FICO score boost if you have 1%-10% of your credit limit as a balance on reported on your Trade Line. SO ona $1000 credit line you can let it report a balance of $11 and you should be golden.

You will not have a credit score unless you have at least 6 months of payment history with your CC. Some FICO scoring models require more than one Trade Line reporting with history. If you want to know what your score is go to myfico.com and buy the score. You can get it for Equifax and Transunion. No other score really matters other than FICO.

As for qualifying for a mortgage FHA has a requirement to see 24 months for at least one reporting Trade Line of payment history and a FICO score of 620 or 650 (can't remember which) or above. One of the easiest mortgages to get is a 15yr mortgage with 20% down i.e. Finance 80% of appraised value of home over 15 yrs, given the Debt to Income ratio and monthly payment is within certain ranges. Your mortgage broker can tell you what the maximum amount is that you can qualify for based on income.

Just for background info, a FICO score is made up of the following.

35% Payment History
30% Amounts Owed -- They want to see that you don't max out lines of credit and/or carry high balances
10% Types of Credit Used
10% New Credit
15% Length of Credit History - Start now!

+1 on this

30% of the FICO score is based on Amount Owed. Your score will be higest if your total balances are between 1%-10% of your total credit limit on revolving credit AND no one CC is reporting a balance of more than 20% of its limit

10% Types of Credit. This refers to amix of credit. Major CCs (such as VISA/MC/AMEX/DISC), store cards, installment loans, auto loans, mortgage loans, Personal Lines of Credit (Overdraft Protection). This can be close to maximized with major CC, store cards, and installment loan (since you dont have a mortgage loan)

10% New credit, this is the number of inquiries and new accounts reporting, the ding due to new account starts to wear off after 3 months of having the account open. The ding due to inquiries starts to wear off after 6 months and monimized after 1 yr.

If you already have an unsecured CC, there is no need to get a secured CC. To start off credit limits do not matter, but it is always best to get the most.

JSFCU in Clear Lake / Galveston area will give good credit lines for a FICO of 650 or above.
Navy Federal Credit Union is great if you have a military connection (even if through a relative) They will help you eatablish credit. e.g. secured installment loans as someone has mentioned earlier.

 

[wendy32693]

Alright, thanks everyone. I will try and see what we can do.