Tuesday, August 31, 2010

Credit Scores

Child has an excellent credit score, but no income.

I have an income...but as we found out today, no credit score. Not a bad credit score, just no credit score. Apparently credit cards don't build your credit if you're responsible and pay them on time, and (car) loans over seven years old don't count.

That leaves us with basically four options as far as obtaining a house goes.

1. Wait a year to buy a house while I build credit by taking out loans I don't need and paying interest I don't want to. Note that credit scores are a black box, so this isn't actually guaranteed to give me a credit score.

2. Wait a year to buy a house while we save enough money to put down 20% on a home, jump through all sorts of crazy hoops to prove to our mortgage lender that I'm a responsible buyer despite the lack of a credit score, then almost double the amount of interest we pay on our mortgage.

3. Save money until we can pay cash for a house. Note that this would actually be our daughter's house, since given California prices, Child and I will be kicking the bucket about the time we finished saving. Since the plan is for Ash to be supporting us in our old age, not vice versa, this option is out.

4. Steal one under cover of darkness and move it somewhere convenient like the beach, or perhaps my work's parking lot. I'd have to look into how much it costs to hire someone to move a house though. And they'd probably run a credit check.

3 comments:

Andy Lemmon said...

"Apparently credit cards don't build your credit if you're responsible and pay them on time" No no no, that's a myth. Now, here's what may be going on. We have one credit card account. It has issued a card to both me and Daniel. However, it only shows up on my credit history because the account is only in my name. I have NEVER carried a balance, but it is contributing to my credit score.

"For your three FICO scores to be calculated, each of your three credit reports must contain at least one account which has been open for at least six months. In addition, each report must contain at least one account that has been updated in the past six months." (http://www.myfico.com/CreditEducation/CreditScores.aspx)

also, in my understanding, your rent and utilities should show up in your credit history, as long as it's in your name. However, that's only if the accounts voluntarily supply the information to the credit bureaus. Some credit cards choose not to report this information.(http://www.myfico.com/CreditEducation/Rights/MissingAccount.aspx)

So, in regards to #1 - yes build your history, perhaps by opening another credit card that you know will appear on your credit history. But you should NOT have to pay interest on it. Just make sure to charge something on it each month so that they can report that it is active.

Gamila said...

yeah, I'm with Andy. You have to have a credit score because your utilities and such go on your credit report. When Kindal and I moved to texas we asked the electric company to send us a credit letter just in case we needed it to establish that we pay our bill on time and such.

I don't think we ever had to use it....

The Writer said...

Child's done a little research and we found out something interesting.

Apparently the reason my credit card hasn't counted towards my credit score is because when the bank person filled out our application, she put Child's birthdate where mine should have gone.

Awesome, huh?

Child's been doing more research into whether it's possible to retroactively fix this, and she'll pass her findings on to me tonight.