@*$#@! Loan!!! - Posted by SassyCat

Posted by Drew on July 16, 2004 at 11:59:35:

Yep, I also understand that next year credit reports will, by law, be free of charge for consumers. So you don’t have to pay to get your score, anymore. This rolls out across the country starting in December. Think I read about it on the CNN webpage.


@*$#@! Loan!!! - Posted by SassyCat

Posted by SassyCat on July 15, 2004 at 15:54:16:

Hi everyone! My husband and I have our credit cards consolidated which, to banks, looks like we cannot afford them. (Which is not the case! We just wanted to pay them off faster and to have one payment!) So, we can’t get pre-approved for a loan, or get a loan, period. Now, I know about hard money lenders, which is great, but the house we are looking at investing in is a forclosure, and it requires proof of funds. The home is 23k, which is not a big loan, but I don’t know what to do now! Anyone have any ideas or suggestions?

Thanks for the read!

Sassy…question… - Posted by Chad

Posted by Chad on July 16, 2004 at 10:48:47:

How much did you take out a loan for? Are you over the 50% of the credit limit? In other words, did you consolidate your cards into 15k, and leaving only 1-3k available credit on the consolidated loan?

This makes no sense. - Posted by Drew

Posted by Drew on July 15, 2004 at 23:48:21:

I would check my credit reports. A consolidated loan should not create these kinds of problems for you. I am about to rail on the credit agencies in a post above, if you are interested.

Check your credit if you are being turned down for loans and truly do not understand why. The reason is not a consolidated loan under normal circumstances.


Re: @*$#@! Loan!!! - Posted by Chris

Posted by Chris on July 15, 2004 at 17:22:44:


The HML should be able to give you a letter. I have had no problem using that in the past. I don’t want to get into the intricacies of credit, but I really can’t imagine that a couple of cosolidated cards are keeping you from getting a loan?!? Have you spoken with a mortgage broker?

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It makes perfect sense? - Posted by LeasePurchase

Posted by LeasePurchase on July 16, 2004 at 01:27:05:

As a Lender what we want to see is that you have several cards all at or about 50% of your credit limit available and that you make consistant payments on all of them. We like it when you have “room” for error if you will. In other words if you get behind we want to know you have a resourse to make the payment not just a big savings account. Credit cards are a great resourse.

Many times we have people make application for a mortgage but before they do they go out and payoff all their debt like credit cards. That’s not a good thing to do. In fact it may help to get a few more and divide all the balances amoung 4 or 5 cards as I said above. Also if you have 4 or 5 that are all at say 50% you can also quailfy to get even more credit and credit cards if you get behind on your mortgage payments.

Re: It makes perfect sense? - Posted by Bobby Hackward

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Re: It makes perfect sense? - Posted by Drew

Posted by Drew on July 16, 2004 at 10:13:37:

It sounds like you are concerned with three considerations here:

  1. Is the customer creditworthy, which can be determined by whether they have a history of making regular debt payments
  2. How much available consumer credit does the customer have
  3. Is the customer carrying a balance

Your observation on Point 1 makes sense for obvious reasons.

Point 2: You are telling me that you like to see customers use credit cards (or, presumably, other consumer debt) to pay their mortgages? Or that you want a customer to be able to rely on them for morgage payments? I would like to hear from other lenders on this, because I think that would probably be the minority opinion. Lenders I talk to also advise keeping total available consumer credit below 20% of income or they get scared knowing how quickly you can get yourself deeply in debt, thus increasing your credit risk.

Point 3: When I paid off my CC balances (taking them from 56% of limit to 0) my FICO jumped about 80 points. I understand that we are not really talking about FICO here, but I can’t imagine why you want your customers carrying consumer debt when all indications are that carrying such debt represents increased credit risk. (Unless they lack credit history, in which case Point 1 applies).

Equifax noted the following prior to my payoff: “The proportion of balances to credit limits on your revolving/charge accounts is too high. [Your proportion] is 56%. The average proportion of balances to credit limits on revolving/charge accounts carried by U.S. consumers is around 34%.”

According to MyFico, had I consolidated my CC balances onto a new card instead of paying them off, my FICO would have INCREASED 35 points. The original poster seems to be saying the opposite happened to them. Of course, maybe the sim took the increase in total available credit into account, thus lowering my debt/available credit proportion…not sure about that one.

I still think there must be something other than a single credit card consolidation going on here if the poster is having the degree of difficulty they describe.

Re: It makes perfect sense? - Posted by Dave T

Posted by Dave T on July 16, 2004 at 09:20:06:

So, are you implying that paying off my credit cards each month so I don’t carry a balance is not a good thing? Am I a better credit risk with $25000 in available credit on my cards, or with a total balance of $12000 with each card having a balance that is less than 50% of the credit line?

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Re: It makes perfect sense? - Posted by LeasePurchase

Posted by LeasePurchase on July 16, 2004 at 11:28:59:

Go figure. There is apparently legislation pending or may have passed that is going to require credit reporting agencies to let consumers know how they score credit. That would go a long way toward helping consumers.

Re: It makes perfect sense? - Posted by LeasePurchase

Posted by LeasePurchase on July 16, 2004 at 11:31:09:

Just my experience tells me otherwise. Yes you are better off carring a balance. It’s not just that you have room for error it also shows you can make your payments on time.