One Life Stand

This is somewhat in response to the post S23 made yesterday - click here.

If you think you want to buy a house there are several steps you need to take so this will be a series of posts.  Step one is GET YOUR CREDIT RIGHT.  Get your FICO score as well as copies of all three credit reports (Experian, Transunion and Equifax).  You are entitled to at least one free credit report per year.  Some states, like Georgia, give you two free reports per year.

If you have a FICO score of 700+, you’re doing great.  If your score is 600-700, I’m not going to say don’t buy a house but you need to evaluate why your score is that low as well as realize you won’t be able to get the best mortgage rates.  If your score is below 600, you don’t need to buy a house right now.  Get your credit right and revisit the issue in a year or so.  However, DO NOT pay anyone who says they can "fix" your credit for you.  Either they’re charging you to do something you can do yourself for free (disputing genuinely inaccurate info) or doing something dishonest and/or illegal.

Checking your credit reports is important because you never know what’s on there.  I have excellent credit and always have but recently a collection showed up on my credit report.  It was a bill from a city I hadn’t lived in for over three years and they attached a collection without ever contacting me.  It took a few phone calls and faxing proof of when I moved out of the city but I got the collection removed.

The first thing you want to do is get any incorrect info removed (accounts that aren’t yours, are paid off but don’t say that, etc.).  If you do have negative information that IS accurate, you need to resolve those issues as well.  If you have accounts in collections, get those paid.  If you have late pays on accounts, call up the companies and ask if they’ll remove the negative notations once you have X months of on-time payments.  However, DO NOT open or close any accounts.  Both will (generally) hurt your credit score and you don’t want that to happen.

You don’t want to have credit card debt if you want to buy a home.  However, if you do have debt, pay attention to your balance ratios.  It looks bad if you are using more than 30% of available credit on any one card and more than 50% of your total available credit.  For example, if you have a credit card with a $1000 limit, try to get your balance below 30% or that or $300.  In a later post I will go into details about paying off debt vs saving for a downpayment.  However, this should get your started.  If you guys have any questions, leave them in the comments and I promise to answer all of them.  The next step (and next post) is GETTING YOUR MONEY RIGHT.