WVDreamer

SO I have recently received my 10 year green card after going through a very long and boring process of adjusting my status having overstayed my visa waver and eventually removing the conditions from my two year card.

Anyway, my American wife and I are finally in a position where we are looking to buy our first house together. We don't earn great money, but we both work full time and the state we will live in (West Virginia) has pretty cheap housing.

We have around $25/30k saved due to some inheritance, and figure we can buy a house for around $60-80k that will be more than ample for our needs.

Here's the problem though, my wifes credit rating is poor. She had some medical bills years ago which she let go which have now dropped off her credit rating. Beyond that though she never used credit, we have a no debts and a second hand car all paid for.

As for my credit score, last year I got a secured credit card from Capital one with a limit of $200. I have religiously used this to pay our cable bill each month and then pay it off completely. According to 'credit karma' my transunion credit score is 720, however I am pretty skeptical about these kind of scores knowing I have only had credit for less than a year and I only have a credit card with a $200 value.

So I am asking for some advice, ideally we want to buy a house sometime this year, is that even possible with my situation or would I need more time to work on my credit and if so what are some things I can do.

Pulaski

720 is a perfectly acceptable credit score to get a good, nay very good mortgage rate, and if you, and your wife, don't have other liabilities, you're in a fairly strong position to get a mortgage. I would recommend an initial consultation with a bank, in person, or by phone to discuss possibilities. I'd avoid brokers because you may end up inadvertently diverted into a program for higher risk borrowers, and if you apply directly to a bank you will avoid that risk.

I have a mortgage with Wells Fargo, and I was delighted with the rate. The service at closing, and subsequently, has been excellent. Another BE'er set up a phone consultation about a mortgage even though there are no Wells Fargo branches in his state, so the lack of branches is no bar to getting a mortgage from them.

WVDreamer

Would the length of time I have had a 'credit score' effect anything. I just find it hard to believe I could have gotten a credit score of 720 after a year of paying off a simple credit card with the value of $200.

Granted I have been super anal about paying on time and keeping credit utilization less than 20% each month but I presumed I would have to spend years working on my credit to get a 700+ score.I used the website creditkarma.com btw.

I know very little about mortgages in general and I am mindful of rushing into something. I was tempted to apply for another 'non secured' credit card or getting a small loan from our local bank so so my credit history doesn't consist of a year paying on a $200 credit card.

Guindalf

You should be fine - especially if you're putting 30-50% in the pot as a down payment!

Some mortgage brokers MAY balk at the length of time, but most will not. Try searching on Lendingtree.com or for a specific lender, call quicken mortgages. They'll very quickly fill you in on your position.

Despite the tightening of requirements, the lenders still want to do business and you're in a good position to benefit - especially in WV, where the average income is not very high!

Bob

The score is meaningless if the history is less than a year old though and there's not much to be done around that for the history.

Amount of deposit is key in this situation and that sounds like it'll be fine.

As for what to do about history, the numerous hundreds of other threads and the whack of into in the wiki up top should make a good starting point.

Michael

Go to a bank and see if they will preapprove you for a mortgage. Once you are preapproved, then you know how much you can spend on a home and are 99% certain that you will get the mortgage if you find a home within the maximum amount of the preapproval.

Prequalified is not the same as preapproved so make sure you are preapproved.

GeoffM

Interesting about banks vs brokers - we're about the stage of buying a house.

Regarding score, last month (after a rough couple of months) my score on creditkarma was 640. This week it's 719. That was just from a high credit utilisation which is now paid off. I think your score will bounce around a lot in the early years while there isn't much reference data in there, so just one maxed out credit card could stuff up your score. A year ago (after just 11 months in the US) our Experian score was 725 - that's the only proper credit report we've ordered.

Watch out for hard credit enquiries like applying for a credit card. If you need to apply for multiple, I think the advice is to squeeze all the applications in within a day or three to reduce the impact. According to creditkarma, a few credit lines is better than only one, or lots.

Michael

The issue with credit cards is that when a credit score is taken, it looks at the ratio of current revolving debt to maximum revolving credit available. Even if you pay off your credit cards monthly, your score will normally be lower if there is any debt on your credit cards. Therefore when applying for a mortgage, it is best to stop using the credit cards for the month prior to applying for a mortgage and pay off the balances fully before you apply.

RICH

I look at mortgages all day. Almost all borrowers I see have scores from 675 to 750 . I Once tried to correlate scores to interest rates, but it is not that straightforward.

If you are looking at $80k purchase, $60k loan, you are in strong position. Your concern should be what monthly repayments can you afford.

The length of time you have been on the credit agencies radar affects your score, not the length of time you had a score.