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Profile picture for encore917

How do I purchase home with credit score of 0?

I have always paid cash for everything I bought. I own my own business and make great money. I don't claim everything on my taxes.  I now want to buy a house, so I recently got a co-signer for an auto loan and I'm gonna apply for secured credit card to try to help my credit score.  What's the minimum score needed to purchase a home, with maybe 5-10k down. Any estimate of how ow long will it take to qualify?    
  • January 10 2012 - Carroll Township
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Answers (10)

Profile picture for sunnyview
Holy moley. I totally missed that post, but that FHA overlay program sounds great. In that case, I would call a lender first and ask about that program before you do anything else. A good lender may be able to get your on a faster track to being able to buyer.
  • January 12 2012
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If you actually want to buy now, you should not get a credit card or any other form of credit. You should do exactly what Andy said and find a lender that has no overlays to FHA guidelines and will finance you with no score. Acquiring a score will disqualify you from this program unless you can get one above 500 and that's highly unlikely. You are better off having no score, than a low score if you plan on buying any time soon.
  • January 12 2012
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Profile picture for sunnyview
Since you have no credit, you might try looking into some of the cards here that are targeted for people with bad credit. Their requirements may help you get in the door and then as you build credit, you can trade up to cards with no annual fee, lower interest rates and better features.

I have heard that Orchard Bank is good and they will waive your first year fee. Within 6 months of payment history, you can probably add a card like AmexBlue here that has no annual fee. Every quarter, you can call your cards and ask for a credit line increase. Doing that will help your credit ratios and your credit score. Start putting all normal expenses in one category on your card like just groceries or gas and then pay off the balance at the end of the month to buuild your score and credit line.

You can do it. It will take a little time, but you are shooting for 3 credit cards in good standing with no late payments.
  • January 12 2012
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Go to www.annualcreditreport.com and see what is really on there, assuming you have an SS number.

Then go to www.myfico.com and read, read, read the forums for information about building credit. Then if you have questions ask them. It is one of the friendliest forums on the internet.

Some things you can do are to get a couple of secured credit cards. You can also borrow against a CD, or cash deposit, at many banks and those loans report to the credit bureaus.

The lower your credit scores are, the faster they climb. Regardless, you are still going to have to deal with showing limited income, so the mortgage you qualify for will be smaller because it will look like you make less, since you are apparently not paying taxes on everything you make.
  • January 12 2012
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Profile picture for shapiroamg
Since you are self employeed your income will need to be averaged for the past two years. Sit down with a loan officer and figure out what sort of income will be needed to purchase a home that fit your needs. Then figure out with your tax person, what you should be declaring on your taxes for your AGI or net income on a Sch C.  Depreciation can be added back into your income. Sounds like with a little work and some good planning (tax wise) you could be a homeowner in 2013. Good Luck and call
http://www.zillow.com/profile/Ken-Kopper/
  • January 12 2012
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Profile picture for katrenia l.
Can you give me the name of the free credit card? Thank you.
  • January 12 2012
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Start building your credit history. It's soooo useful in this country. You can get a free credit card and just spend $20 per month, pay on time and you start building credit history. Also, I think if you have a co-borrower with a good cretit score, you can qualify for a loan.
  • January 10 2012
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FHA guidelines do allow borrowers to purchase with 0 credit score.  However you will need to use non-traditional tradelines like 12 months tier 1 account records like rent and 2 tier 2 accounts like utilities, cable or cell phone.  

If you have that proof available, then you will need to find a lender that can utilize that program.  It's an overlay that not all lenders utilize though.

  • January 10 2012
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Profile picture for DebJacobs
If you figure it out, let me know! I think these days the banks are really tight on their restrictions.  Good luck.
  • January 10 2012
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Profile picture for therealtorguy
You might want to talk with a loan officer at a local credit union. Credit unions are owned by their members and often have more flexibility in their lending proceedures. They will probably want to see your tax returns to verify your income and how long you have been in business.
  • January 10 2012
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