Filed under: Bad Credit Loan
Question: My husband and I are starting to look at buying a home.
However, our credit is very bad. It is improving, what with paying off the Visas (less than 10k to go!) the cars (one paid for!) and getting a start on the student loans.
Is there any way to get a mortgage with absolutely lousy credit? Short of going to Shylock’s Usurer and Meat market?
Answer: Yes, there is, although you shouldn’t expect a bottom-dollar interest rate if you have a bad credit history. Read up on land contracts. I’m holding two of them at the moment so I speak from experience (as a seller, that is). I won’t try to go into all the details here, but under this arrangement when the owner of the property sells it to the buyer s/he provides the buyer with financing just like a conventional mortgage (i.e., the buyer makes a down payment and monthly payments to the seller) but the seller retains the right to take the property back (without paying anything whatsoever back to the buyer) should the buyer default.
These arrangements are usually thought to be more advantageous to the seller than to the buyer because of the strict repossession provision, but if you as a buyer know you will make your payments then they can be not only a good way to make your first purchase of real property but also a means to improve your credit rating in the process.
January 1, 1970
Question: Sometimes the credit line is somewhat lower than the deposit, but it’s >: usually at least 90%. Also, Bank of America and Citibank won’t even give >: secured cards to people who have filed bankruptcy. Pretty stupid if you >: ask me – what’s the point of having a secured card if you don’t have shitty >: credit.
>Signet’s secured card offers 150% of your deposit as a credit line. For >the mathematically challenged (let me get my calculator!), you’d get a >$750 credit line if you were to deposit $500, for example.
Answer: Actually, the easiest way for someone with bad credit to get credit is to file for bankruptcy!
I filed for Chapter 7 recently. About a month later, my mailbox started filling-up with offers for credit cards. Some of the secured cards are pretty slimey (NO grace period and outrageous interest rates) so don’t jump at the first one you get.
I received an offer from Signet Bank for a secured card “pre-approved”. I was skeptical, as I received a similar offer before the bankruptcy, and was turned down – they sent my check back! However, Signet *did* issue the card, despite the fact that the bankruptcy is not yet discharged. (They did not give me 150% of the balance, however – Signet is apparently a big bank, I suspect they have various programs.)
A couple of weeks later, I received another “pre-approved” offer, this one from First American Bank in Irvine, CA. This was for a $2500 NON-secured card. I have sent this in and will report back what happens.
Both of these specified a limited time period for acceptance – Signet was a month, First American was 2 weeks. Any idea if there’s a real reason for this other than as a marketing ploy? My guess is that they know you will receive other offers, and want to get in quickly before you get other credit – perhaps if you already had X number of cards, you would not meet their criteria. If that’s the case, it pays to choose wisely, and not get the wrong card, as it might be a while before you can get another one.
I also received an application from a Gold Master Card ($5000-$10,000) from First U.S.A. Bank. This one did not specifically mention “bad credit”, “pre-approved” etc. and, in fact, was aimed at people who already have credit cards. (“transfer your balance”). It appears to be a pretty decent gold card, with interest rates lower than many of the popular gold cards (currently 11.9% – 6.9% for a limited period if you transfer your balance from another card), plus a bit more than the usual set of amenities. However, I suspect this might also have been triggered by the bankruptcy, as I never spell my name in full – I can pretty-much tell what mail I am getting as a result of the bankruptcy filing. (Most offensive: Fingerhut, offering to sell me crappy merchandise at a 30%/year finance charge…)
I should point-out that my bankruptcy was the result of federal taxes that were not paid several years ago, and that I have no recent bad credit history. The only thing on my credit report is the Federal tax lien. (In fact, I have no recent credit history at all.! 
) I have a fairly high income (~$70K/yr) also. I suspect this is somewhat of a credit-card issuers dream come true – high income and can’t bail on them for the next 7 years.
My attorney said that it is routine to receive offers for credit cards, car loans, etc. after filing. Many issuers consider this a very good risk, because these are people who’ve just had the bejeebers scared out of them, and, like I said, can’t re-file for 7 years.
I am just grateful for now being able to rent a car, make a hotel reservation, etc. and no longer having to make excuses for not going on business trips, having to COD anything I buy through the mail (many employers just expect you to have a credit card and be able to order incidental items and expense them) etc.
Signet Bank’s address is:
Secured Card Department 11013 West Broad Street Road P.O. Box 85547 Richmond, VA 23285-5547
You may also be able to get an application by calling their customer service department at 1-800-285-5573.
Note that Signet’s interest rates are high (currently about 20%) but they do have a 25-day grace period unlike many of the secured cards. Their fees for late payments, bounced checks, etc. are also high – high enough that they have to chop them to comply with the laws in several states. Of course, this is probably not a really bad idea for people needing to develop the discipline to re-build their credit…
January 1, 1970
Question: Can anyone please help me out? I have bad credit. Depts from 5 years ago. >I am slowly paying them off. BUT because they look so bad, each and every >place I have been to to try and rent a place, once they check my credit, >they turn me down!
>How can I get around this? How can I find places to rent where they do not >check credit? Someday, probably 5 years from now, I will have my bills paid >off, but not now.
Answer: First, the fact that the debts are all from 5 years ago and there’s nothing current that’s bad, is something you should point out to the landlord. It’d help if you had no chargeoffs since then and at least a couple of R1’s…
You’re low on cash, but if I were in your position, I’d try to scrounge up double the deposit they’re asking for. Then, I’d bring up the credit issue before they did, acknowledge that you got out of control some years ago but have been clean since. I’d address their concerns by saying I understand completely how without knowing me, the bad credit might give them pause. To prove how responsible I am, I’d offer double the deposit/additional month’s rent security, with an agreement that once they saw I paid on the 1st of every month, that they’d refund the extra deposit within a year.
The landlord’s concern is simple: that the property be taken care of, and that s/he get the rent and on time. If you can alleviate the financial concerns by taking the initiative to address them and offer a solution, you might have some luck.
I’m a landlord, and that’s the only thing I can think of that might work for me — if my other impressions of you were that you’d be a good tenant.
Also, I don’t know where you live or what kind of properties you’re looking at, but doubt the above approach would work with larger apartment complexes where the process is more objective and less personalized. A landlord who owns just one or two properties would be more amenable, I’m sure.
Oh…and I’d point out (hopefully this is true) that your debts were consumer debts and that you never flaked on your rent, i.e. that there are no judgements against you. Often, people with poor credit but who are still basically responsible otherwise, will always pay their rent first and let the other expenses slide. If that’s your case, then I’d stress it, saying even years ago when you lost control, you still never defaulted on your rent.
January 1, 1970
Question: You have to tie up a minimum deposit, pay an activation charge and high yearly fee to use your own money.Pay late and there is an interest charge for using your money.
Even with bad credit you can open a bank account and get a Visa check card where you are in control and there are no bills or fees.
The only instance I can think of is someone who bounced so many checks that they can not even get a checking account.
Answer: Way back in the day, you had to actually be credit-worthy in order to get a credit card. Now, they’ll issue a credit card to my beagle, now that they used their crooked congressmen to pass a bankruptcy law that can trap the un-credit-worthy recipients of their credit cards. The credit banks have it both ways. They take no responsibility for giving credit cards to people who shouldn’t have them, and they repossess your grandma if you miss a payment. Ain’t corruption grand?
Anyway, back to the question. I don’t know why anyone would use a secured credit card now, but it used to be necessary to build or rebuild your credit. You can get a real credit card to do that these days. It will probably have a usurious interest rate, but pretty much anybody can get one.
January 1, 1970
Question: Without thinking to resell the house for profit. Is buying a house then
>>rent
>>>each rooms out a good investment idea?
>>>Anyone gives some calculation here?
>>figure out what the mortgage including property tax, etc will be. could
you
>>charge enough per room to make it worthwhile?
Also, find out if it’s legal. In many (most?) towns, there’s a limit to the number of unrelated people living in one house.
Answer: I have looked into this too. I have noticed that one apparent upside to renting rooms from a house as opposed to renting apartment, is that often the is less rent control law attached. Owners often have more liberty to get rid of people with a mere 30 day notice. And in some places there is no rent control law protecting tenants renting rooms from haveing there rent increased beyond what rent control limits are for rent controlled apartments.
On the other hand, the type of renter can be a bit different. They could be people going to school, people who have had to vacate there normal dwelling on a temporary basis, people who have bad credit. So there may be higher turn over of renters of rooms in a house than apartments. The costs involved with marketing available rooms, cost of emty rooms (no rent), more people that may not pay rent.
I suppose with a good background check of potential renters, renters that have been referred by good sources, and substantial deposits can mitigate some costs.
January 1, 1970
Question: Due to a divorce and then severe depression I have let my not to awfully bad credit rating fall into the to terrible to mention catagory. Im barely surviving paycheck to paycheck and am about to get my car repoed. Im totally upside down on the loan owing twice what it is worth..My question is since I my credit is already shot should I let them reposess the car?? And if I do will I be able to get another? Any help on this matter would be greatly appreciated.
Answer: Well, Kelley it looks like it’s time to pick yourseslf up, dust yourself off, and start all over again.
You don’t mention what your work status is, but most people can get a second job doing something (anything). I suggest that you look in the paper and find a second job that will provide the money to start paying off your debts.
Do you have anything that you can sell (or pawn) to come up with the money to pay your car payment? Oh, look! a computer!!!! Chances are you have a tv and a stereo and a microwave and probably a lot of other junk lying around that could make your car payment for you. At least it will keep you from losing the car until your paycheck comes in from your second job.
Now, call your loal chapeter of CCCS (non-profit credit agency), and make an appointment to come in and get a budget figured out so you can pay everybody back what you owe them and get your credit back on line.
Work at it, my boy. Apply yourself and you will succeed.
January 1, 1970
Question: A friend of mine ordered a subscription, received the first magazine and decided he didn’t like it. He disregarded the invoice, did not send any money in, and several months later received a collection notice from the National Credit Audit Corporation.
http://zima.net/docz/collect.pdf Are they seriously going to pursue the matter (for a single copy of a magazine, because the publisher never sent more), or it is simply some sort of name/address validation scam for spammer lists?
Vadim
Please don9t reply to the address above ? it9s a spam trap. If you want to send me a message you can do it via any of my sites below.
I truly doubt a magazine company is going to bother hiring someone to sue for collection. The collection notices are a ruse. As a former business owner, every week I would get catalogs from printing companies that contained different styles of collection notices that you could purchase to give the impression that deadbeats should pay up or else. Besides, the magazine company does not have a SSN, so the odds of it appearing on a credit report are very slim to none.
Cheers,
Answer: They don’t hire someone to collect. They sell the debt to someone else, and that someone else then attempts to collect the debt. Debt collection firms might pay the magazine co 25 cents on the dollar for the debt, and if they can get more than 25% of the debtors to pay up then they’re making a profit. The magazine co wins because they get some cash and lose the hassle of going after a deadbeat, and the collection agency takes all the heat for the tactics they use, legal and otherwise.
Yes, any business in this country needs a tax ID number to file a tax return, and as such they are perfectly capable of reporting bad credit to the credit data agencies.
January 1, 1970
Question: Another data point: our house, in an urban area, was appraised at about $375K. We pay about $300/year.
So clearly the price of insurance is not always proportional to the value of the house — there are a ton of other factors.
WOWWWWWWWW! How lucky. Our home is valued about $150K and we pay close to $800 a yr. Oh and the fire dept is at the end of street-about 3/10ths of a mile. Guess it depends on where you live.
We have Amica. We pay almost $2,000 a year (but we get a 15% dividend each year) for $180,000 with a 1% deducible. Texas homeowner’s is the highest in the US and it’s difficult to get. Hopefully some reform is on the way!!!!
Chris in Pearland, TX
Answer: By ‘appraised’, do you mean ‘market value’ or ‘cost to replace’? There is a big difference. ‘Market value’ most often includes the land & what other houses in your area with the same features are selling or have sold for. ‘Cost to replace’ is the actual cost of construction in today’s dollars. Let’s say you have a home that was built in the 1940’s, back then the construction of a home was different that homes that are built today. They may have used 2×6’s instead of 2×4’s, so on and so forth.
Rates differ all over, they differ by county, by city, sometimes even by street (in the larger metro areas like Detroit & Chicago).Other factors to consider may be:
* Age of homeowner (may get a ‘mature’ or ’senior’ discount) * Deductible (many companies give discounts for higher deductibles) *Credit record (credit scoring is a real hot-button issue right now. Insurance companies are increasing rates- oops – I mean decreasing discounts for those with bad credit records. They supposedly have proof that those with bad credit records are more likely to turn in claims and have higher claim values than those with better credit. I’m sure you can find evidence the other way also – just another reason to make more money) *Claims (some companies now give discounts if you have been claim free or surcharge you for having 2 or more claims that you could have prevented from happening – ’stupid claims’ like leaving the bathtub running or backing into your house with a backhoe/actually had this one happen) *’Attractive nuisances (swimming pools, hot tubs, trampolines – things that attract possible liability lawsuits – doesn’t matter if their fenced in or not, a tresspasser can sue and probably would end up with policy limit) *Animals (dogs mostly. Keeping a known agressive breed could jack up insurance, elminate coverage for actions of the animal, or could cause termination of the policy) *Riders (jewelry floaters, water overflow, watercraft, etc. Coverage that you purchase in addition to the standard home policy) *Other discounts (multi-policy, longevity/being with an insurance carrier for a period of time, security/fire discounts, non-smoker, group discounts for belonging to a credit union or other group)
I sympathize with Texas, my mom bought a house near Houston about a year ago and was lucky enough to get insurance because she had renters insurance previously.
January 1, 1970
Question: After moving from NY(high cost, low wages), to OH(good wages, and fairly low cost), after 4 years, we are finally in a position to buy a house. Bad credit reports repaired, old debts paid, no current high cost expenses, except for our vehicles, and one is almost paid off, and the other we make extra payments to lower the actual payment.We have no savings to speak of, but could come up with a small down payment. We want to find something that requires no money down. We have not a clue where to start. Should we just try to get prequalified from realtors and our banks? The rents for a family of 5 plus pets is as much if not more than a house payment. Any ideas or actual experiences would help.
Answer: If you qualify for FHA, go for it. If not:
Your best bet for almost no money down is probably some type of lease-to-purchase arrangement, or what’s commonly called a land contract. In your circumstance I would look at rental houses and ask the landlords if they are interested in selling. You might be surprised at how many of them are, especially to someone with decent credit. Under a standard land contract you’d make a small down payment and you’d usually pay higher than market rate interest. Also if you default at any time on the payments you’d lose everything you’d paid–the landlord would get the property back. I realize this sounds like a less than great deal, but with a tiny or no down payment it may be the best you can expect.
January 1, 1970
Question: :I use a credit card for everything ! :I never have to worry about “filling my wallet with cash” :I never have to worry about “who will take a check” :I never have to worry about having enough $$ for a purchase. : :In fact, I have my phone, newspaper, internet service, :”auto-billed” against my credit card. : :I have the peace of mind in knowing that :I could leave on a 2 month trip with little more than a credit card in :my wallet….. It would cover airline fare, car rental, motel, meals, :and even a trip to KMART for spare underwear. : :I mail ONE check too my credit card company at the end of the month. : :Convenient ??? YES : :I don’t use my card as “a loan”; I use it instead of checks.
Answer: It took me years before they would issue me a credit card and I’d never give it up. Well, I can’t think of one GOOD reason to. I have never had bad credit. They wouldn’t give me a card because I had no real credit history. Isn’t that nuts? I had money, I had a job. Just no history of being in debt! I finally managed to convince one company to give me one. Ever since I’ve gotten about 3 or 4 offers for CCs in the mail every week. Having a card that I get a 1% rebate on, I simply toss them all out. I never carry a balance month to month.
January 1, 1970
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