This Article On My Re-Establishing Credit For Home Purchase And Qualifying For Mortgage Was PUBLISHED On May 7th, 2020
Getting My Credit Back In Order: Re-Establishing Credit For Home Purchase
If you have read my previous articles with regards to my financial situations and credit, you will see that I have definitely had my ups and downs with regards to finances and my credit. I am far from the “perfect” or even the “above average” credit score, but I have grown to expect this given what has happened in my life.
In a nutshell, here is how it goes:
Purchased home in September 2007 :
- Credit Score 730 FICO
Declared Bankruptcy / Foreclosure 2010:
- Credit Score 570 FICO
Current: Credit Score 683 FICO
Now it isn’t all doom and gloom with regards to my credit.
- Things happen for a reason, and after it did, I had to move on with my life and make smart decisions going forward in order to build my credit score back up
- Credit scores in today’s society are everything and extremely valuable
- This score will ensure that you get the best borrowing rate possible so obviously the higher you can get it, the better
In this article, we will discuss and cover Re-Establishing Credit For Home Purchase And Qualifying For Mortgage.
Re-Establishing Credit For Home Purchase With Low Credit Scores
As I expressed in the points above, at my lowest I was at a 570 score.
- This was the low of the low as I had a bankruptcy and foreclosure on my record (which can stay on record for up to 10 years), as well as credit card and vehicle loans removed as well
- I paid the ultimate price for what I did and now I had a large hole to dig myself out of
- I was asking myself, how am I ever going to get my score back to something respectable?
- The answer didn’t take too long to show up at my door
I received a credit card application in the mail and I bet you are wondering how I got this after just getting credit card debt remove via bankruptcy?
Re-Establishing Credit For Home Purchase And Using Credit Cards
Well, the answer is simple:
- Credit card companies know you can’t declare Chapter 7 Bankruptcy again for another 8 years so by hook or crook, customers will be stuck with the debt they choose to take on during the time frame
- Well after applying for the card, it was mine and soon I was back to using credit cards again
- This time around I only spent what I knew I could pay off and made sure I paid it off monthly so I can start building up some positive payment history again
- The next thing that I did was in 2012 I leased a new car with a cosigner so once again I was making timely payments on a monthly basis and getting that positive credit history built up
- The big step came in 2014 when I purchased my home through the FHA Back to Work program
- I had 650 credit score at the time and I had no issues securing this loan all by myself
After I made all 36 payments on my lease, I returned the vehicle and went to a different dealer where I purchased our family a minivan and financed it without a cosigner and obtained a used car loan at 3.24%.
Home Purchase With Credit After Bankruptcy
I came a long way from damaged credit to where I am today so I can speak from experience when I say that it is a tough uphill battle to climb.
- Be warned that you will get rejected along the way, as few people will want to extend you credit shortly after a bankruptcy/foreclosure
- However, if you take baby steps, you will build that credit back up again
- It isn’t the end of the world to have damaged credit, in fact it is way more normal than you think
- Some people just run into circumstances where hitting the reset button so to speak is the best path for them
- This isn’t a “Get out of Jail Free” card as you need to change your habits once receiving this break in your life
- Use these lessons to make smarter financial decisions in the future
- There is no doubt in my mind that in the coming years I will be back up over 700 yet again
But to this day I am still thinking about every choice and decision I make on a daily basis.
About The Author
Alexander Thomas Carlucci is a senior loan officer for Gustan Cho Associates and contributing editor for Gustan Cho Associates Commercial And Residential Mortgage Information Center. Alex is Gustan Cho’s partner and the Chief Branch Development Officer. Alex’s expertise in all areas of accounting and his natural leadership talents is an asset to our team of licensed mortgage loan originators and mortgage professionals. Alex is in charge of training income tax analysis for self employed borrowers to all of our mortgage loan officers and new mortgage loan officer recruits. We are blessed and extremely grateful in having Mr. Carlucci as our leader for our team and look forward to seeing his upcoming great articles in days and weeks to come. Alex Carlucci’s blogs are one of the most popular blogs on the internet and all of his articles go viral. Stay Tuned!!!