Do I really need a credit score?

[Mtowncyclone13]

I was denied my first time too, so my dad put me on one of his cards until my name was thrown around enough to qualify for my own. I think it was $300 from Target or something similar but it was a start

I too graduated with no student loan debt and 20% down and bought a house 6 months after graduating (sometime in 2007 - I got my 20% by saving much of my earnings in college.). I see now it was a BAD BAD BAD decision. I am now trapped in a house I will lose money on if I sell it, I can not move for promotions or new jobs because of this, etc., and I pay close to $300 month in property taxes which is basically rent on top of a mortgage. For me the excitement was a place of my own but the reality was I let my emotions overpower financial sense.

As someone who just went though this exact situation, please rent for a year and save that money.

edit - I just checked and my credit score is 766 and my credit card rate is 12.05%. Rate doesn't matter if you pay it off, though.

 

[CtownCyclone]

This is not necessarily true. Unless you were working full time in the same profession while in school (unusual), most lenders are going to want 1 year of history in the same field.

1 year is kind of a magical timeframe in lending. Credit references are considered new for the first year, and even if handled perfectly can drag your FICO down. Until you've shown employment stability, lenders aren't sure you can handle a job.



I wasn't talking about 1 year of credit, which you do need, I was talking about 1 year of job time. Which you 100% do not need if you are graduating from college and enter a job in the same field as your mortgage. I'm a lender and I just closed a loan last week for someone that didn't have a job and no W2s at all for the last two years but just graduated form college and had a job lined up.

For some reason, I'm having a hard time understanding the bolded section above. Getting a job in the same field as your mortgage? I'm confused...

 

[dmclone]

Im curious why people are saying not to buy right now? Rental rates seems quite high in compared to value from everything I have seen.

It's the age issue for me.

I look at where I was when I was 23 and there is no way I'd buy a house.

Just in 5 years the following happened to me:

I went from single to having a live in that made as much or more than I did.

At 23, I really had no clue about housing. What I wanted, what was smart to buy, etc.

If I would have bought at 23 I would have under-bought to be safe and then 5 years later I was making double of what I was making at 23 so I would have wanted something new. I waited until I was in my late 20's and even then this happened to me. I didn't lose any money on the deal but keeping a house for 5 years usually doesn't pay.

Mobility. I didn't realize it at the time but you're probably in the best position to make changes in your life in your 20's. If you don't have a wife with a big income, a house, kids, a lot of debt, etc than your possibilities are endless. If I had a job offer in a different state/country right now it would be a serious pain in the ***. If I got the same job offer in my 20's it would be a lot easier. A house just adds to the complexity.

A lot of people think they make more money on their house than what they actually do. I'll use myself as an example:

I bought a new townhouse for $125,000 and five years later sold it for $135,000. So profited $10K right? Lets say I got a 100K mortgage with no PMI at 5%.

Well during these 5 years I paid the following. This is being VERY conservative.

Association fees of $7,500 ($125x60 months)
P&I $36,000 ($600x60 months)
Upkeep/paint/etc $6,000 ($100x60 months)
Closing costs and other realtor fees at least $5,000
Taxes $7,500 ($2,500x3 years)

So $62,000 in costs
I profited $10K
My loan amount went down by $8k

So it costs me $44,000 to live in this house for 5 years.
So about $730/month


I would have been better off by renting and investing my money.

 

[JP4CY]

Regarding the cash back feature, I ditched the Discover Card after many years when they increased the Cash Back Minimum required to claim the money from $20 up to $50. Discover also keeps the cash back increments in an even $50, leaving dollars and cents on the table.

Similar rewards cards from Chase and B of A return the cash, in the form of a check or an account credit, to the exact penny and without the $50 minimum.

I receive account credits every month.

I love my Discover Card. The 5% quarterly cash back is met by me most of the time. I usually also turn my cash back into gift cards that can be bought for less than the face value. For example, I needed a mower and turned $240 in cash back for a $300 Lands End card that can be used at Sears.

 

[ISUAgronomist]

For some reason, I'm having a hard time understanding the bolded section above. Getting a job in the same field as your mortgage? I'm confused...

I think he probably meant "job in the same field as your degree"

 

[Naughtius]

This is not necessarily true. Unless you were working full time in the same profession while in school (unusual), most lenders are going to want 1 year of history in the same field.

1 year is kind of a magical timeframe in lending. Credit references are considered new for the first year, and even if handled perfectly can drag your FICO down. Until you've shown employment stability, lenders aren't sure you can handle a job.



I wasn't talking about 1 year of credit, which you do need, I was talking about 1 year of job time. Which you 100% do not need if you are graduating from college and enter a job in the same field as your mortgage. I'm a lender and I just closed a loan last week for someone that didn't have a job and no W2s at all for the last two years but just graduated form college and had a job lined up.

Then that's 1 lender. Are you portfolio lending? That's the exception, not the rule.

 

[Cycl1]

From the link:


Specifically, you must:

•Put at least 20% down on your home.
•Choose a 15-year, fixed-rate conventional mortgage.
•Have a strong employment history and personal income to support the loan.
•Demonstrate 4–6 trade lines that span 18–24 months. These are just regularly recurring expenses such as rent, electric bills, water bills, cell phones, etc.

Not sure that specifically applies to OP...

How doesnt it? He will have 20% down, never saw in orignal post where he talks about the number of years, Dave just always reccomends the 15 year. He has the income, as long as if he loses his job he can make the house payment for a while he should be ok (he has obviously been workign while in school so employment history shouldnt be a big issue. If he is getting ready to graduate, and hasnt had any recurring bills, then that is amazing.

 

[Wesley]

All these people saying get credit cards with rewards/cash back are making me want to pull out my hair. Don't you guys know that by using those cards you are making everything you buy more expensive? The credit card companies don't pay for those rewards, the places you use your card at do.

Cost for me to process a $100 debit card payment with no rewards = .25
Cost for me to process a $100 Credit Card payment with rewards = upto $4.00 with american express

Which is why I don't accept american express cards.

GMN Card
Discover
Venture
Citibank

All nice choices.
Best credit cards to build credit

https://www.google.com/advisor/uscr...odsX0A0w&q=best+credit+cards+for+students&b=E

https://www.google.com/advisor/uscr...MCFS-RPAodWwEAew&q=best+credit+cards+2012&b=E

All people going to college should try to build a credit history for use later.

 

[NickTheGreat]

You could get a credit card and just make like one purchase a month on it and pay that in full. I've been doing that for about 4 years now.

That didn't do jack **** for me. I graduated college with zero debt, bought my first vehicle with cash, had a credit card which I paid in full every month for 5 or 6 years. Still had a tough time getting a vehicle loan.

But that vehicle loan helped immensely when it came time for house loan. :yes:

 

[IowaRealEstate]

Anyone questioning whether they can buy a home can easily find out by talking to a lender. I suggest Tyler Osby, as he is my go-to lender and loves educating home buyers, especially first time buyers. Tyler can be reached at 257-6729 and his website is wealthwithmortgage.com
As far as if buying is a good plan for someone right out of college, that depends on many factors, but I will say this. Anybody who is thinking about buying for the short term is probably better off renting. It is tough to gain enough equity in a short period of time to pay someone like me to sell your home when the time comes. One clear exception to this is that you get a fantastic deal on the home you are buying.
Whenever you are thinking about buying a home, talk to an agent you can trust to walk through the entire scenario with you. I have talked many people out of buying because it was not the right time for them.