Credit questions

[MountainTown]

I was on the DR plan, got me outta debt, and am now down to 0 credit. I am finding "manual underwriting" to be way more laborious than DR makes it sound on his show. I am not a big fan of debt in general...I like to keep my life simple. The problem is when it comes to getting a mortgage, it is making life -less- simple, substantially so.

I have been in this zone for quite awhile and I'm not sure what to do. Most lenders act pretty clueless about how getting a credit card now would affect my credit. It seems to me that if I want to buy a house tomorrow, it could actually be worse. I have a lender now who is willing to work with me on the manual underwriting and he has said that I shouldn't change anything as it may negatively affect the situation. But it has taken me waaay longer to buy a house than I thought and it's frustrating that this whole time I could have been building credit. My wife has a credit card so I have options like being added on to her's, or we have to get a car soon...I could take out a small loan just to build credit?

Does anyone have anymore knowledge on this? What is the best approach if you are close to buying a house? Should I just stay the course until I do? Or will it not kill me to just get added to her's?

I should mention, I make $80k a year, have $80 for a down payment, about $120k in retirement savings, and we both have stable jobs(she makes $40k). Her credit is around 690-700 and I have been working with her at keeping that ratio good and churning to improve that.

Any thoughts? Again, we are trying to buy a house right now so I don't really have 9-12 months to take a temporary hit on credit with a new app. My understanding is that if I were to take something out now, my credit score could be like 100 which would actually look worse than 0 because it wouldn't be as clear that I am just not borrowing.

[Mgmny]

I was on the DR plan, got me outta debt, and am now down to 0 credit. I am finding "manual underwriting" to be way more laborious than DR makes it sound on his show. I am not a big fan of debt in general...I like to keep my life simple. The problem is when it comes to getting a mortgage, it is making life -less- simple, substantially so.

I have been in this zone for quite awhile and I'm not sure what to do. Most lenders act pretty clueless about how getting a credit card now would affect my credit. It seems to me that if I want to buy a house tomorrow, it could actually be worse. I have a lender now who is willing to work with me on the manual underwriting and he has said that I shouldn't change anything as it may negatively affect the situation. But it has taken me waaay longer to buy a house than I thought and it's frustrating that this whole time I could have been building credit. My wife has a credit card so I have options like being added on to her's, or we have to get a car soon...I could take out a small loan just to build credit?

Does anyone have anymore knowledge on this? What is the best approach if you are close to buying a house? Should I just stay the course until I do? Or will it not kill me to just get added to her's?

I should mention, I make $80k a year, have $80 for a down payment, about $120k in retirement savings, and we both have stable jobs(she makes $40k). Her credit is around 690-700 and I have been working with her at keeping that ratio good and churning to improve that.

Any thoughts? Again, we are trying to buy a house right now so I don't really have 9-12 months to take a temporary hit on credit with a new app. My understanding is that if I were to take something out now, my credit score could be like 100 which would actually look worse than 0 because it wouldn't be as clear that I am just not borrowing.

I haven't been in a situation with 0 lines of credit opened to me (when is your most recent credit history? Over 2 years?), but if you have begun the process of purchasing a house do NOT apply for a credit card, loan, car loan, anything. Do not touch your credit, it will absolutely make the process more challenging for you, and typically speaking will lower your credit score temporarily.

[WildJager]

While I get why Ramsey often advocates no credit for people who can't control themselves, I don't think it's prudent advice for people that are trying to reach the upper echelon of person finance.  As you've found, it makes it very challenging to get a loan when you need one (my opinion is that a mortgage is really the only valuable debt to take on). 

After the mortgage paperwork is complete, your next step should be to get a credit card and use it prudently.  Pay it off every month.  Use your wife's habits as an example.  Increase your credit limit whenever you can (low usage vs high potential debt is how you build your credit score). 

[Proud Foot]

Did you try using Churchill Mortgage? Since you mentioned being on the DR plan I know he claims they do manual underwriting and makes it sound like its a common thing for them to do.

Since you mentioned your wife has a credit score can you use her as the primary borrower? Once you have finished with all the mortgage stuff then get yourself a credit card and use it to build your credit history.

[yachi]

What does 0 credit mean?  I don't think credit scores go below 300, and not having black marks on your past credit report counts for something.  Have you had a bank run your credit report yet?  Credit cards are active for something like 7 years after you pay them off and cancel them, so these should still show up on your report unless it's been more than 7 years. 

[MountainTown]

Thanks for all the replies. 0 credit means "no credit" really. When they look it up...there's just nothing there. I have tried Churchill and they don't do manual in this state. My lender that I work with is confident it will all work out in underwriting...but I am a little biased against lenders...

Thanks for the advice everyone. Sounds like there is a resounding "wait" on the credit building until we would buy a house. That's frustrating because in this market we have been shot down on all the good deals in good areas....so it's taken longer than I expected. I am a little anxious that there will be some last minute hiccup on the credit thing. For the most part the houses we have been looking at could all go under my wife's credit. The only problem is my income is double her's so if we did ever reach too far out of our income, that would be an issue. So far it doesn't seem to be. SHe makes 40k and I make 80k and we do have 80k for down payment.