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Wow! Your situation was exactly like me last year. Last year, October 2013 I had a low score of 586. I focused on paying off all cc debt (which I have!) and over time it gradually increased and I received 2 cc credit limit increases. I kept a record of it actually (I'm a nerd I know!).
For me, it took 1 year, but for you it could be sooner as YMMV. Here's my advice:
1) Focus on paying down your debt of $700 as soon as possible (for me, it meant getting a second job so you may want to consider it. Plus, the second job will come in handy with the down payment )
2) Sign up for myFico.com and Experian.com and stay on top of your scores like it's nobody's business. If anything is off you want to be alerted immediately.
I plan to buy a home in about 4 months so I am looking to have it in the mid 700s ideally. Anyway, I hope that was helpful to you. It's good that you are starting out a year in advance. That is plenty of time to get your score above 700.
GOOD LUCK!
And good luck on the process of buying you new house...you deserved it
keep in mind not all lenders report back to credit karma. in fact we had a stolen identy issue and it never showed on kredit karma . we only learned about it when we pulled our equifax report.
one had a great score and the other a no payment issue we were not even aware of. thankfully it has all been resolved but if kredit karma was all we were using we would never have known until we went to buy something on credit..
problem is that can effect everything from your insurance to getting selected for a job.
Yes I dont want to rent anymore because im losing money every year by renting. I have been paying off my bills for the past two years and I got everything paid of except one collection for 700 wish I will pay it off when I get my tax. After I have no debt whatsoever. I told my kids that we are not gonna sign another leases after our current lease expire in July of next year.
I went and get a secured credit card to built my credits and its really helping right now. It was 420 when I first got the credit card six months ago. Now it 590.
If you can afford a mortgage of $900/mo. and $300/mo. of other costs (e.g. insurance, taxes, repairs), then you can afford $600/mo. rent and $600/mo. savings.
If you can afford a mortgage of $900/mo. and $300/mo. of other costs (e.g. insurance, taxes, repairs), then you can afford $600/mo. rent and $600/mo. savings.
After 50 months, or a little past four years, you have $5300 + 50*($600) = $35300:
$24,000 down payment
$3,000 closing cost
$8,300 emergency fund
Also save all your tax refunds between now and then, and use that as your moving cost fund.
I like everything about your plan except for the last sentence. My advice is to fix your W4 so you're bringing home the money instead of paying more in than needed.
Best of luck with the future home purchase. Don't automatically view renting as throwing your money away. Your time is valuable, especially with you having kids. Fixing things around the house and keeping up with the maintenance takes up a lot of evenings and weekends. From a kid's point of view, quality time with their parents is much more fun than shopping for a new dishwasher or walking around Lowe's.
Definitely involve your kids in the savings process and show them the progress you're making. You'll be much more of a hero once they see you make it to the goal.
keep in mind not all lenders report back to credit karma. in fact we had a stolen identy issue and it never showed on kredit karma . we only learned about it when we pulled our equifax report.
one had a great score and the other a no payment issue we were not even aware of. thankfully it has all been resolved but if kredit karma was all we were using we would never have known until we went to buy something on credit..
problem is that can effect everything from your insurance to getting selected for a job.
Thanks for the tip its true not all credit company receives the same report. Good point
Because there is 0% chance it will help and a decent chance it will hurt. Paying off old collections requires the account to be updated which can drop your score sometimes as FICO will interpret the updated account as a more recent account.
I would recommend to anyone who doesnt have credits to get a secured credit card from any Bank to help built your credits. Also make sure you only spent 70% of your credit limits. It very important.
Because there is 0% chance it will help and a decent chance it will hurt. Paying off old collections requires the account to be updated which can drop your score sometimes as FICO will interpret the updated account as a more recent account.
For a 120K house, 24K would be a decent down payment. PLUS having 8 months' worth of additional living expenses saved in the bank. This is what financial "experts" like Suze Orman say. I don't always agree with her, but she is absolutely right about this.
I have a far superior education to Suzie Orman, though I don't have her level of expertise at marketing mediocre talent. If everyone tried to use her method our economy would grind to a halt. Even if only a few people did it, they would have better served by getting a real financial education, getting a kick in the pants when they needed it, and learning how to manage their money and choices intelligently.
However, for the financially illiterate, she does provide solid advice on having absurdly large safety nets to catch them when their stupidity is getting the better of them.
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