SWD Writer K

What is the Average FICO Score by Age?

When it comes to money, millennials are different from previous generations in several ways, one of which is that they always want to increase their credit ratings.

In 2020, the average FICO score for all the age groups in the United States increased to a new high of 710. However, the average score increased 11 points among Americans aged 24 to 39, the most of my group. Gen Xers, who are between the ages of 40 and 55, were just one point short of a ten-point increase in the average score.

Average FICO Score by Age

In some ways, FICO considers your age when calculating your average credit score but not in the way you may anticipate. It is not always a good predictor for your credit score, therefore, it is possible for a younger person to have a higher credit score while an elderly one has a poor one

Nonetheless, typical scores rise with age. When the national average credit score was 703 in 2020,  people around twenty years old had a credit score of 662 while the ones in the age of 60 and older, had a credit score of 749. Why is there an upward tendency in credit scores of age if it is not taken into account? For starters, we must earn our credit ratings over time. The reason is, the starters have a shorter credit history than the older ones.

Consider how age affects the five criteria that go into calculating a FICO score, as well as their respective weighting in the FICO scoring model:

  • Credit Utilization ratio

As we get older, our income continues to rise. Our income has an impact on how much credit we are granted. When your credit usage ratio is low, you are more likely to have an impact on your credit score.

  • 35% Payment History

Older accounts have more payments which might boost their scores if they are always on time or lower them if they are always late. The older you get, the more account history you will be able to accumulate.

  • 10% Credit Mix

You will probably have more options to open different types of accounts as you get older. An eighteen-year-old may have merely a credit card account while a forty-year-old person can have a car loan, a personal loan, or a mortgage and many credit cards.

The above-mentioned factors add up to a higher credit score over time that is if you pay your bills on time. This explains why typical credit scores rise with age. Many bad credit issues will no longer affect your credit scores after seven years if you keep up solid credit habits.

FICO Score For Americans of Each Generation

Millennials Who are Between the Ages of 24 and 39

The points increased by 11 points. The average credit scores in the year 2020 were 679 while the average credit score of the previous year was 668

Silent Generation Who are Between the Ages of 75 and older

The points increased by one point. The average credit score for the year 2020 was 758 while the average credit score of the previous year was 757

Gen Z Who are Between the Ages of 18 to 23

The points increased with 7points. The average credit score in 2020 was 674 while that of the previous year was 688

Baby Boomers Who are Between the Ages of 56 to 74

The points increased by 5 points. The average credit score for 2020 was 736 while that of the previous year w 731

Gen X Who are Between the Ages of 40 to 55

The points increased by 10 points. The average score for the year 2020 was 698 while the average score of the previous year was 688

What Does FICO Score Mean For Your Credit?

Your credit score indicates to lenders how trustworthy you are. This means that if you have a higher credit score, you will acquire a favorable mortgage rate or favorable vehicle loan compared to when you have a lower credit score

For the creditors to be able to integrate financial data from the three major credit agencies which are TransUnion, Equifax, and Experian, they use the FICO score system. On the FICO scale, scores of 800 and above are considered excellent while scores of 580 and lower are considered as bad. FICO score ranges are depicted in a graph.

A high score can assist you to save money and so you do not have to aim for perfection. When you have a credit score in that area which is between 760 to 860 you can qualify for prime rates or in other words the lender’s lowest rate available. 

At every age, there are strategies to raise your credit score. This means that you can start working on your credit at any age. 

There are techniques that experts propose for raising your score and they include:

Make a Full and Timely Payment on Your Account

It is a recommendation to pay off your credit card debt in full before it becomes past due, as well as any other payments that may affect your credit score. Missed payments might linger on your credit report for up to 30% of your FICO score.

Maintain a Low Utilization Rate

The utilization rate is the measurement of how much credit you have utilized compared to the credit limit on the card. Less than 30% of your available credit is the ideal rate. You can request a higher limit to bring the balance down before the statement is released.

Try Different Scoring Systems

Except for certain financial assistance during the epidemic, lenders are now willing to consider alternative payments that do not rely on your credit. eCredable and Experian Boost are two programs worth looking into

Bottom Line

Some factors do not affect the credit score which are state, age, and income level but there is a correlation between them and the credit score. An example is as the age increases, the average credit score increases, and vice versa. As the income levels increase, the credit score average also increases.

How to Buy a Car with Poor or no Credit History

You might be worried that you may not be able to buy a car if you have a poor or no credit history. Fortunately for you, that’s not the case. Poor or lack of credit does not have to get in the way of you acquiring a new set of wheels.

No matter your reason for having poor or no credit, you are far from alone. Matt Joiner, an automotive product manager for Experian U.S credit bureau, says up to 100 million people in the US have no credit or so little that they don’t have a score.

Buying a car with poor or no credit may seem complicated, but it is not impossible. Below are some ways you can consider to help you buy a car with poor or no credit.

Get a Co-signer

When you walk into a car dealer with no credit, at some point, you will be asked for a co-signer. Well, a co-signer lets you “borrow” their good credit history.

If you successfully “borrow” a good credit history from a trusted co-signer, you can be sure of buying a good car from the car dealer without any issue.

Co-signers also pledge to pick up payments if you can’t make them.

Consider Dealer Financing

If you are a car buyer with bad or barely any credit history, you can still get a loan from a car dealer, depending on the dealer you approach.

If you get dealer financing with a good brand and a good reputation with many links to prominent car marketers, you should contact the financing manager and ask for a loan.

Considering you do not have a credit history, you should show the financial manager your job history or get a co-signer, and you will be able to strike a good deal with the type of car you want.

Consider Community Banks and Credit Unions

Banks aside,  Credit unions are more charitable in giving you a loan. The big secret here is searching for lenders with programs for first-time buyers.

Programs for first-time buyers were designed for people with little or no credit. Since the lenders will be looking past your credit score, they will look at other factors like job stability, monthly utility payments, and why you have no credit.

When the lenders find a good reason, they will give you a loan based on the type of car you want.

Marketplace Loans

Loans nowadays can be found in marketplaces. In this case, you will be working with a broker.

The broker will take your financial data together with the size and term of the loan you want and present them to a different host of investors. After that, if an investor decides to grant you a loan, you will get the type of car you want.

However, you should know that not all brokers work with no-credit borrowers. While looking for a broker, you should conduct your research carefully.

You will be sharing personal data, so ensure you stick with name-brand brokers with an excellent proven track record. Ask the brokers how they share your profile and what happens after the loan process is concluded.

Also, enquire how much they can lend a no-credit borrower and the range of loan rates.

Tap your Retirement Account

If you don’t have credit and have been saving money in a retirement account, the good news is that you might be able to borrow from it to get a car of your choice. In doing this, you should read the fine print carefully because some types of retirement accounts make it easy to borrow while others can come with penalties and hefty fees.

Some companies’ plans may limit how much you can borrow from the retirement account and why. Then it will also set the interest rate.

But if you quit or are to let go, you could have as little as two to three months to repay the loan (depending on the company) or face a 10 percent penalty.

Make a Big Down Payment

Making a sizeable down payment will allow you to avoid high-interest rates on a car loan; therefore, you will not repay more money than the car is worth.

A large down payment also attracts serious lenders who mean business and will be more than willing to help you get the car of your choice based on your budget.

Analyse Current Interest Rates before Buying a Car

To understand the loan rate you should expect, you may check online for the average auto loan rates. You will have a high-interest rate with bad credit. 

Also, be doubtful of any loan rate that is double the average. The rate of your loan affects the monthly payment and price tag of the car you want to purchase.

Avoid Additional Bad Credit Items

Pay every bill on time. Some months before you apply for your loan, ensure you are on your best behavior. Avoid taking other significant credit obligations such as opening new credit cards.

Red flags such as bankruptcy, late rent payments, and tax liens can be significant turn-offs for potential lenders. Being on your best behavior financially will attract lenders who will be willing to help you get the car you want even though you have had a poor credit history.

Get Pre-approved

Once you have a pre-approved loan, you will shop more sensibly. 

To get to know the pre-approval process, you can talk to your credit union and know more about getting a car loan. 

If you have poor credit, you should look for a lender who caters to buyers with bad credit.

Tread Carefully with Buy Here, Pay Here

Buy here pay here offers on-site financing with less strict credit qualification measures. Sometimes they may not conduct credit checks.

But before trading with them, ensure you ask for the value of the vehicle and its history. Sometimes, the traders take advantage of bad credit owners by selling them poor-quality vehicles and overpricing them.

Final Word

Can you buy a car with no credit? I bet from the discussions above; you can easily conclude that it is very much possible to buy a car with poor or no credit at all. If you follow the instructions above carefully, you will be driving your dream car in no time.

How Old do You Have to Be to Get a Credit Card?

Obtaining a credit card is commonly regarded as the first and most crucial step in establishing a credit history. If you have a credit history, and you are aged 21 years and older, you have a better chance of receiving a credit card with good benefits.

Minors under the age of 18 can enrol as approved users depending on the card issuer. In the United States, the legal age to apply for a credit card is 18 although parents may choose to add minors as the authorized user depending on the card issuer.

The Credit Card Act of 2009 is a piece of legislation that was signed into law in 2009. To be authorized for a first credit card, 18 -20 year’s olds must either have a cosigner or present proof of income or regular allowances.

When using a credit card for the first time, cardholders should exercise particular caution. You should not purchase anything if you can’t pay cash for it. To prevent incurring interest, pay off your bill in full every month. When you use your credit card responsibly, you can avoid paying fees for security and convenience

To prevent late fees and safeguard your credit history, pay your account on time each month. If you are between the ages of 18 and 20, here is how to get a credit card. At this age, many are trade school students, college students, or people who are already employed. 

It is convenient to have a credit card on hand for regular transactions such as cashback. Cards created for persons with less or no credit history or cards such as student credit cards are better for first-time cardholders.

How to Get a Credit Card If You Are 18 to 20 Years

Become a Licensed User 

Getting a credit card as a licensed user is a simple way to receive one since you will not have to fill a long application. A licensed user frequently requires his or her credit card that bears the user name of the authorized person.

You can request your parent or your guardian or even a friend who is willing to enrol you as an authorized person who is comfortable doing so. The addition of licensed users may incur a modest fee from some card issuers. The primary cardholder has the responsibility of paying off both cards. To avoid overspending and late payments, work out a spending and payment procedure with the primary cardholder.

Before taking on the risk, double-check if the card issuer discloses permitted user activity to credit bureaus. After all, one of the key goals for credit card users who are young is to build credit for better cards.

Obtain a Cosigner 

To be appointed for a credit card, those who are applying and are aged 18 to 20 years should have either a designer or proof of work or income. This information assures the issuer that the one holding the card can pay their payments at the right time and establishes the list for the credit for the new cardholder.

Check to see if the cosigner has a strong credit history and a good likelihood of getting a loan approved. Always keep in mind that a cosigner has equal financial and legal responsibility for any card’s balance. The cosigner’s and cardholder’s credit scores may suffer if the cardholder defaults on their payments, so both parties must be careful.

Apply For a Student Credit Card 

Student credit cards are created for people between the ages of 18 and 22 and have no credit or little credit history. For those students who are in college and need a credit card, Discover it Student Cash Back is a good choice.

This card has a 0% initial APR on purchases for the six months then a regular APR of 12.99%to 21.99 percent. Variables 5%cash back on ordinary purchases at a variety of locations each quarter including restaurants, petrol stations, Amazon.com, and grocery stores.

Obtain Protected Credit Card 

Protected credit cards are a fantastic alternative if you don’t have a cosigner. Those who are applying must submit a security deposit to the issuer which establishes the card’s credit limit. 

Protected card functions similarly to a standard credit card in that the cardholder can buy up to the credit card limit and should pay the balance every month. The security deposit is reimbursed when the cash holder has closed the account and paid the whole balance which includes interest and fees.

How to Get a Credit Card if You’re Younger Than 18 Years Old 

Authorized users can be added by their parents if the parents wish to begin building the credit history of their children early. 

There is also a minimum age for permitted users and parents should contact them using the number indicated on the card or review the terms written on that card. Let’s take an example of 

Discover, which permits authorized users who are aged 15 years old at no additional cost to the account owners in a hurry. To avoid any problems, make sure to outline a responsible spending strategy.

How to Get a Credit Card If You Are At least 21 Years Old 

If you are at least 21 years old and have a steady income you can apply for a credit card on your own. These older applicants, particularly the ones who spent their first year working on their credit through a student credit card or as a licensed user have greater credit card possibilities.

Wrapping Up

Although you can receive your first credit card as a minor by being an authorized user on a parent’s account, you must be 18year to apply for a credit card. Young people between the ages of 18 and 20 should apply with a cosigner. 

Applicants who are between the age of 20 can apply for a card without the assistance of a third party. When applying for a credit card ensure that you enter accurate information. Every application normally requires personal information such as annual income, mailing addresses, social security, and more.

How To Get a Loan With a High Debt To Income Ratio

Most mortgage lenders will want to ensure you can afford to repay the loan they are lending you.  

Doing so entails analyzing how much you spend servicing debts relative to your income. It is formally known as the debt-to-income ratio or DTI.

Having a high DTI reduces your chances of qualifying for a mortgage loan. On the other hand, a  low DTI indicates an ability to pay off debt well, thus increasing your chances of qualifying for a loan.

If you’ve been thinking of how to get a loan with a high debt-to-income ratio, some strategies can help lower it and achieve your goal.

1. Restructure Your Debts

Reducing your ratios by restructuring or refinancing the debt can increase your chance of qualifying for a mortgage loan.

If it’s a student loan, you can extend the repayment period over a longer-term. For credit card debts, consider paying them off with a personal loan at lower interest rates.

When you transfer your credit card debt to a new account with a zero percent introductory rate for 18 months, that can substantially lower the amount you repay. It can also help you get a loan and clear debts effectively.

The new account may fail to appear on your credit report for 1-2 months, so keep all your paperwork well once you restructure your loan.

Most lenders will not give you the advantage of lower payments until they see new loan terms.

2. Pay Off Your Debts

Paying off all your debts is an effective and fast way to help you lower your DTI ratio and qualify for a loan.

See, if you reduce the debts you owe, you will, in turn, reduce your monthly payments, thus reducing the percentage of monthly income servicing the loan.

In time, paying off debt also reduces your credit utilization ratio – your debt divided by your credit limit.

A low credit utilization ratio also improves the credit score, which improves the chances of getting approved for a loan with favorable terms.

3. Go For a Less Demanding Program

Different mortgage programs come with different DTI limits. It is likely that with a high DTI, you are looking for a less demanding loan program.

For instance, Fannie Mae set a maximum DTI of 36% for borrowers with lower credit scores and down payments. Borrowers with higher credit and down payments often have a limit of 45%.

FHA loans are a good choice for borrowers with a high DTI. In some situations, they can allow a DTI of as high as 50%, and low credit scores can be overlooked.

Prospective homebuyers living in rural areas can go for USDA loans, where income may be notably lower than in urban areas. They have similar benefits to FHA loans.

Maybe the most forgiving mortgage program of all is the VA loan. It is given only to current and former military service members.

The DTI for VA loans is quite high but provided you show a required minimum level of residual income, and you are good to go. VA loans are the perfect option for borrowers with a high DTI.

4. Get a Lower Mortgage Rate

If a high mortgage rate doesn’t work for you, get a lower one as it also helps reduce your DTI.

You will have to ‘’buy down’’ the rate-pay points to get a lower monthly payment and interest rate.

As you shop, be careful. You will want a loan with a lower start rate. Opt for, let’s say, a 5-year adjustable-rate mortgage plan rather than a 30-year fixed loan.

Homebuyers should not shun from asking the seller to chip in toward closing costs. Sellers can buy rates down instead of reducing the loan amount as long as it lowers your payment.

Look, sometimes the numbers you have may work against you to the point you feel like giving up. Feel free to consult an expert mortgage lender who will assist you in solving your debt issues.

5. Reduce Non-Essential Spending

 How To Get a Loan With High Debt-To-Income Ratio

What better way to reduce your DTI than to cut back on unnecessary expenditure? Look at where you spend your money each month and try as much as possible to go slow.

Splurging on non-essential stuff will increase your DTI, therefore reducing your chances of qualifying for a loan.

6. Do A Cash-Out Refinance

If you want to refinance but your high DTI is holding you back, you can take a cash-out to refinance to lower it.

Here, you take a loan large enough to refinance your already existing mortgage. The extra money can be used to service other debts, thereby lowering your DTI.

Cash-out refinance offers low-interest rates and favorable terms, but you risk losing your home if you fail to pay off your new mortgage.

What Percent of Debt-To-Income Is Acceptable To Get a Loan?

Your DTI measures your debt amount in comparison to your total monthly income.

High DTI indicates too much debt, which lenders dislike, while lower DTI indicates a good balance between debt and income, which lenders favor.

Well, specifically, most lenders want to see a DTI of 36% or lower to consider approving that loan, with no more than 28% of it going toward repaying the loan.

Is There a Maximum DTI Required To Qualify For a Loan?

In most cases, the maximum debt-to-income ratio to buy a house is 43 percent. This percentage makes it easier for borrowers to make monthly payments.

Nevertheless, always strive to lower your DTI and overall credit score since it makes the whole home buying process smoother and less stressful.

Final Word On How To Get a Loan With High Debt-To-Income Ratio

Most mortgage lenders like borrowers whose reports prove that they can manage to pay off a loan. Your DTI can decide whether you qualify for that dream home or not.

If you have a high DTI ratio, lenders view you as a risky borrower, and most of them tend to ignore such loans.

Keeping your DTI low also paves the way for favorable loan terms such as lower interest rates and monthly payments.

So, if you’re stressed out because of your high DTI, follow the strategies mentioned above to improve it and better your chances of qualifying for a loan.

How To Fix My Credit Score To Buy a House

Applying for a mortgage loan can subject your credit to all kinds of scrutiny by mortgage lenders.

It makes the process of buying a home challenging. It may even halt the whole process. You’re probably searching for some tips to fix your credit score to buy a house.

Your credit score influences the amount mortgage lenders will give you and the interest rate they’ll charge.

Is It Important To Fix Your Credit Score Before Buying a House?

Your credit score highly affects the kind of loan you can qualify for. The better your credit score, the lower your monthly mortgage payment, and interest rate.

So if you want to get these favorable terms and more for your home loan, yes, it is important to improve your credit score before buying a house. 

Low credit scores aren’t particularly appreciated when applying for a mortgage. They are viewed as a sign that the applicant is less likely to service the loan.

Borrowers with high credit scores stand a chance to save thousands of dollars with lower monthly payments and interest rates. If you want to save your money too, first, improving your credit score will be crucial.

Look, if you’re eyeing a $200,000 home with a 15-year fixed mortgage, you can save more than $12,000 over the loan period by improving your credit score from 699 to 760.

What Should Your Credit Score Be Able To Buy a House?

how to fix my credit to buy a home

You can qualify for a mortgage loan with a credit score of even 620, but mortgage lenders do not favor it; they charge higher interest and monthly payments for such scores.

Experian, a credit bureau, suggests that a good credit to buy a house starts at 670. Very good credit begins at 740, and the stand-out credit at 800.

Don’t worry about not qualifying for the best rates given your current credit score; each step forward guarantees lower costs.

How Long Can It Take To Fix Your Credit Score To Buy a Home?

The time to repair credit scores depends on how many disputes you have to fix and what you can achieve upon completing the repair.

Most people fix their credit scores with a particular goal in mind. Whatever it is, knowing how long it can take to fix your credit score to buy a home will help you achieve the goal.

From the first steps of reviewing your credit reports to identify disputes to the last ones of responding to the resolutions, a credit repair for the average consumer takes three to six months.

However, Fewer errors and disputes may lessen three periods to even a month. 

How can I fix my credit score to buy a house?

There are several ways to fix and improve your credit score to buy a home.

1. Check And Improve Your Payment History

Payment history is one of the major factors affecting your credit score. It takes up the highest percentage of your credit score – 35%.

From now on, avoid late payments if you want to improve your credit score to buy a house.

Delayed payments can result in all sorts of problems that can damage a credit score: repossessions, bankruptcy, foreclosure, and collection accounts.

Delayed payments by up to 30 days will stay on your credit score for seven years, and no one is waiting for that time to end to buy a house.

So, if you are looking to boost your credit score to buy a house, start paying off all your bills on time. With time, it will positively impact your credit score.

 You can even put all your regular utility bills on an automatic monthly payment to make sure you never miss a payment.

2. Analyze Your Credit Report

Checking and fixing your credit reports may improve your credit score to buy a house. Errors are what you’ll be looking for.

Get your three credit reports from TransUnion, Experian, and Equifax annually and check for:

  • Duplicate accounts
  • Incorrect payment statuses
  • Incorrect accounts
  • Misspelled names
  • Outdated information
  • Incorrect dates

The Fair Credit Reporting Act allows consumers to access a free copy of all the credit reports every year from annualcreditreport.com. Check them out every four months for regularly updated information.

In case you find errors, file a formal dispute on the website of all the credit reporting bureaus or write them a letter. Specify each error and describe them accordingly, then request correction and copies of documentation as evidence.

The bureaus have one month to investigate your claim. They will send a letter with the results.

3. Opt For A Debt Consolidation Loan

Balance transfer or debt consolidation loan combines all your outstanding debts from different accounts into one monthly payment.

If you have several credit accounts that give you trouble managing, a debt consolidation loan may be most suitable for you. It helps avoid missing any payments and improves your credit utilization. 

Applying for a consolidation loan results in a hard inquiry on your credit reports. It means your score will drop slightly after the inquiry.

So make timely payments above the minimum amount required after getting a debt consolidation loan.

4. Clear Credit Card Debt

You’ll witness an increase in your credit score once you pay off your credit card debt.

What you spend compared to your credit limits is called credit utilization. It accounts for 30% of your credit score. 

Mortgage lenders use your credit utilization to determine whether you manage your debts well or not.

Generally, Utilizing 20 – 30% of your credit card limit is considered okay. Using more might indicate the possibility of delayed repayments or hint that you are in financial challenges.

Poor credit utilization is straightforward to solve. Simply clear, or at least pay down your credit card debt.

It sounds easy, but in truth, it may not be; however, this method is not complicated. By having little or no credit card balances, your credit score improves by up to 30% in no time.

Having fewer expenses can help you manage your credit card debt. Unsubscribe from apps and services that you no longer use, or instead charge monthly.

5. Become An Authorized User

For those with very little or no credit history at all, becoming an authorized user in someone else’s credit account can help fix your credit score to buy a house.

It helps boost your score, especially if the original holder’s credit score is high. Although you can purchase items or pay for services using the card, total liability still falls under the original holder.

Becoming an authorized user to an account with good credit adds more credibility to your credit.

Final Thoughts

Fixing your credit before you buy a house is a worthwhile action. It increases your chances of qualifying for a loan and attracts favorable terms.

The results may not be instant, but consistency is key in improving your credit score.

If you’re thinking of buying a house with bad credit, apply these steps and start getting ready to go house hunting. 

What Credit Score Do You Need to Buy a House?

The credit score is crucial in obtaining a mortgage loan, that is why most prospective home buyers fear that theirs may be too low to acquire one. It has not only an impact on your qualification but also the interest rate to be charged.

So, what is a good credit score to buy a house in 2022?

Whether or not a credit score is good is often subjective and may have minimal influence on buying a house. This is because mortgage lenders follow specific rules that decide what credit score you require to purchase a house.

There are, however, minimum credit score requirements to take out a mortgage loan. These requirements differ based on the type of loan you want to obtain.

Here are the loan types and the required credit scores.

Conventional Loan: 620

Conventional loans are the most common loans and have a minimum credit score of 620. For those who may want the best interest rates, a score of 740 and above will help.

Conventional loans are suitable for borrowers with high credit scores who can provide a down payment of 3% or more. They also provide the best interest rates and flexible repayment periods of 8 to 30-year loan terms.

Conventional loans aren’t federally insured, but they follow standards set by Fannie Mae and Freddie Mac, government-sponsored mortgage loan lenders. There are conventional loans that do not follow the standards established by these organizations, termed ’’jumbo’’ loans, which we’ll discuss later in this article.

Conventional loans are obtained through credit unions, mortgage brokers, and mortgage lenders. They are popular because of their simple approvals and low-interest rates.

FHA Loan: 580

FHA loan is the earliest mortgage loan program, designed by the Federal Housing Administration in the 1930s to make homeownership achievable.

FHA mortgage loans require a credit score of at least 580 and a down payment of as low as 3.5%, making them easily accessible than other loans. They also offer low-equity refinances that let you refinance up to 97.75% of the property’s value.

FHA loans are covered by the Federal Housing Administration, making qualification easy and allowing lenders to administer low-interest rates.

FHA loans specifically tend to attract first-time homebuyers who have either a young or lousy credit history partly because of the lenient credit requirements of FHA loans.

You see, with an FHA loan, you can qualify for a mortgage with a FICO score of even 500, but with such a low score comes some significant drawbacks.

First, you’ll require a down payment of at least 10%. Secondly, this type of loan is considered a subprime loan, meaning you might get the least favorable terms and end paying high-interest rates. Finally, you ought to have some very low qualifying ratios, that is, your overall debt-to-income ratio and your housing expense ratio.

All in all, the higher your credit score is, the more benefits you’ll accrue out of an FHA loan.

VA Loan: Not Specified

The VA loan is a type of mortgage insured by the Department of Veterans Affairs. The Department of Veterans itself doesn’t issue VA loans: they decide who is eligible for one and the lenders to issue it. It can be a clever move if you meet the requirements.

The requirements are that you must be an eligible veteran, service member, or a surviving spouse. A Certificate of Eligibility(COE) is a document issued upon proof of your claim to show your loan lender that you are, in fact, eligible for a VA loan.

VA loans don’t need any down payments and lack an industry-set minimum credit score requirement to obtain it though many lenders opt for a score of 620.

VA loans have simple credit requirements and offer more benefits than conventional loans, for example, the lack of down payment, more lenient credit requirements, lower interest rates, and no monthly mortgage insurance.

However, VA loans charge a one-time funding fee, which varies based on your down payment, the number of times you have chosen a VA loan, the type of service you logged, and the type of loan.

If you don’t provide any down payment on your first VA loan, you will receive 2.3% of your loan amount as the funding fee, whereas if you provide a 10% down payment on your house, you will receive 1.4%.


The U.S Department of Agriculture develops USDA mortgage loans to make homeownership in eligible rural and suburban areas accessible.

Like the Department of Veterans Affairs backs VA loans, the Department of Agriculture backs USDA loans.

USDA provides three main loan programs:

  • USDA Loan Guarantees issued by participating mortgage lenders and offer minimal down payments and low-interest rates.
  • USDA Direct Loans issued by USDA for eligible low-income persons with interest rates of 1%.
  • USDA Home Improvement Loans issued to qualified homeowners to improve the state of their homes.

The credit score requirement to obtain a USDA loan is not official though most mortgage lenders prefer a score of 640 and higher to receive streamlined processing. Lower than that may subject you to more stringent underwriting standards.

USDA loans are specifically for low-income families, so for you to be eligible, your adjusted gross income mustn’t be above 115% of the median income in the area.

Your lender will also look into your debt-to-income ratio before approving you for a loan. The recommended DTI is typically 43% or lower.

USDA may be an excellent option if you are looking for a zero percent down payment mortgage and don’t qualify for a VA loan.

Jumbo Loan

Jumbo loans are meant to finance homes that are too costly for a conventional conforming mortgage loan.

They surpass the loan limit set by Fannie Mae and Freddie Mac; for this reason, they are referred to as conventional non-conforming mortgage loans. Lenders of this loan, therefore, take a risk in case of defaulted payments as Fannie Mae and Freddie Mac don’t insure them.

There is no fixed credit score requirement, but the non-conformance to loan limits makes mortgage lenders consider a minimum score of 700 for approval. The higher your credit score, the better the mortgage rate you will get. 

Depending on income and credit, you may require a down payment of between 5 and 25 percent. Compared to conforming loans, jumbo loans may charge higher interest rates depending on your financial status and the lender.

Jumbo loans also have higher closing costs because the loans are bigger and contain other extra qualification procedures.

Final Word

If you were wondering what is a good credit score to buy a house? This article has made it clear that the credit score requirements to buy a house vary depending on the mortgage loan you choose.

The higher the credit score requirements, the better the mortgage plan you get.

Other than the credit score, there are other considerations worth looking into, such as the debt-to-income ratio, income and assets, and the loan-to-value ratio.

This article offers insights designed to help prospective home buyers understand what loan type corresponds with their credit score to buy a house in 2022.

Do you need help with your credit score? Credit score experts at Ebony Credit can help. Book an appointment today for a free consultation.

How to Get a Repo off Your Credit Card: The Ultimate Guide

Having your car towed for defaulting on your auto loan will have you trying to figure out how to get a repo off your credit card. That’s some very important information because a repo will stay on your credit report for up to seven years after the default is reported to credit bureaus.

The dent it leaves on your credit score will also make it difficult to access new lines of credit. If you do manage to, it may be at higher interest rates.

How Repossession Happens

Many only know of repossession when a bank takes back a car. When a client defaults on payments, the bank can send someone over to collect the vehicle, usually without prior notice.

You can also choose to voluntarily give the vehicle back. This gives some kind of control or order on how the repossession occurs. 

While both may be painful, one is much less embarrassing and dramatic. They, however, both carry the same weight when it comes to their impact on your credit score. 

In the event that selling the car doesn’t enable the bank to fully recover its money, you will still be left paying a car loan with no car plus a bad credit rating. It becomes more difficult to maneuver. 

The Repo Effect on Your Credit Score

A repo means you had a debt and stopped making payments for a while. The lender then repossessed the car to recoup their cash.

The whole premise of the credit rating is the ability to pay back debt and within the required length of time. A repo, therefore, causes the credit rating to take a dip. A lender may even charge an extra fee to give you credit since they would be taking a risk with your soiled repayment record.

It is not just the repo in itself that causes damage. Your credit score will suffer because of the following too:

  • Towing fees to move your car, where applicable
  • Late fees plus their interest
  • Several months of missed payments
  • Car storage fees as the car sits in the lot
  • Any balance still owed after repo

Any other additional costs incurred lower the credit score even further. Seven years is too long to let it feature on your record. There are proper ways to address this situation. 

How to Get a Repo off Your Credit Card

1. Dispute It

According to the Fair Credit Reporting Act (FCRA), negative records must be true. Check for any inconsistencies in your report. It could be a wrong date or even a misspelled address. If there was an error, you can and should dispute it immediately. 

Make sure you explain why the item is incorrect when you dispute it. Send your complaint to all three bureaus (Equifax, Experian, and TransUnion) because they usually have the same records. You can do it online or via certified mail.

They are required to address the complaint within 30 days.  

2. Check with All Credit Bureaus

Once one credit reference bureau is reporting a repo, the higher likelihood is that the other two are as well. That’s because your lender shares the same information with each of them. Reach out to them with your details and confirm. 

If they are reporting inaccurate information, they will have to correct it or remove it. 

Where there are inaccuracies and any of the credit bureaus doesn’t respond to your request, reach out to the Federal Trade Commission (FTC).

3. Speak to the Lender

There is room to negotiate with your lender. You can work out a new arrangement that works for both parties. Maybe they can allow you to refinance the car or trade it in. Some may accept delayed payments or a different payment plan altogether. 

Be sure to speak to someone who has the authority to sign off on the new arrangement. You may need to be persistent in your asking before you get a favorable response but it will be worth the trouble. 

When you do get them to bend, make sure to have it in writing.

4. Hire a Credit Repair Professional

You can also ask credit repair professionals to do the heavy lifting for you. It will come at a monthly cost but they will handle all the disputes and negotiations for you and ensure errors are cleared.

Building Your Credit Report after Repo

Regularly going through your credit report will ensure you catch any incorrect information in good time. Sometimes this happens because of credit card fraud or even double listing of a credit account.

If the information is correct, you can start by slowly building trust with your lenders. Take out small loans you know you can repay and make sure you repay them on time. You may also consider a credit card with a low monthly limit. Start slow and build back slowly.

While a repo is a negative mark, it has less impact as it ages. Going forward, it is best to keep your credit report looking healthy. As the repo ages, lenders will look less into it and more into your current abilities and creditworthiness. 

Utilize your credit wisely, keep your total debt in check, maintain a good repayment history over an extended period, and diversify your credit lines a little. If you don’t need it, don’t get it yet. It will serve you better if you take it at the right time.

Final Words

A repo does not mark the end of your borrowing days. It may take about two years of a spotless repayment history for most lending institutions to consider extending credit your way but it soon ends.

In the event, you can’t wait that long, second-chance auto financing options exist. A second-chance car loan offers you credit after you’ve been denied by top-tier lenders. They know their clients have less-than-perfect histories and still accommodate them.

Whichever option you choose to take, be responsible for your credit. Remember, the goal isn’t just to own a car or how to get a repo off your credit card but to have a good credit rating to allow for better financial opportunities in the future.

7 Benefits of Using Credit Unions

Are you considering shifting to a credit union?

First, it’s essential to understand what a credit union is and what it’s all about. They are financial institutions run by co-owners and have no stakeholders.

The outstanding advantages of joining a credit union are the high interest on savings and low interest on loans.

The present technology has made the research about these unions easier, where most of them have websites.

Here we will help you understand the advantages of trade unions you will enjoy upon joining.

But first,

Types of Credit Unions

Before we get to the advantages of credit unions, let’s check the types of credit unions you are likely to come across in your community.

  • Employer Credit Unions: It serves people in a specific profession or company. They include firefighters, postal employees, and teachers. Government employees may not be part of this plan but rather have their credit unions.
  • College Credit Unions: Colleges and universities have these unions that target students, faculty, staff, and alumni. The students get affordable services here.
  • Military Credit Unions: These credit unions are accessible to military members.
  • Group Credit Unions: Mostly serve fraternal groups and churches, limiting their membership to a particular group.
  • Local Credit Unions: Provide services to a specific community. The requirement is residing in the region the union is located.
  • Federal Credit Unions: To join these national unions, you need to be 18 years and above and a U.S citizen.

Advantages of Credit Unions

1. Lower Fees

advantages of credit unions

It would be best to consider joining a credit union because of the low fee they charge on joining and monthly fees.

Unlike banks, the unions don’t charge for ATMs; their main aim is to help their customers save and not make the stakeholders richer.

The rates on loans are lower compared to that of banks. According to the National Credit Union  Administration report in 2021

Additionally, the union’s overdraft fees are lower than the banks’ amounts. The best part is that the fees collected are used in improving loan rates and upgrading services for the clients.

With credit unions, you don’t need a minimum balance in your checking account, making it easier to build up your savings habit, unlike banks that require you to have a minimum balance.

2. Voting Rights

Credit unions offer you a chance in decision-making through voting. 

The leader you choose presents all your concerns to the other board members. The board of directors oversees and supervises services offered.

Each member of the union has the right to participate in elections since they are co-owners of the union.

To run for a position on the board, you also need to be a member and in good standing.

The election is conducted during the annual general meeting with some of the unions providing an online voting system that saves both time and cost.

If your credit union has branches in various regions, the delegates vote on behalf of the members.

3. Focuses on the Community

One of the significant advantages of credit unions is the impact on the community they serve.

The union invests the resources in the communities by involving other local organizations to keep their income revolving in the community.

While banks return their profits to the stakeholders, credit union profits go back to the community by giving high dividends on savings.

When there is a business to settle on, the union doesn’t get into it without consulting the members who decide the way forward.

4. Cooperation Between Credit Unions

Maybe the credit union near you has a limited geographical footprint, and you feel it may interfere with your banking services. 

However, you don’t need to worry since most credit unions have ATMs spread out in other areas. 

And another thing, if you settle on using another financial institution, your credit union covers the reimbursement fee.

Some credit unions have formed a partnership and agree that you can make transactions in any branch of the union.

5. Personalized Service Experience

We already mentioned that once you become a member, you are a co-owner of the credit union, and since it covers a smaller area, we expect better-personalized services.

Experts in the union will guide you on how to go about saving and make the borrowing process more manageable.

Credit unions partnering with local investors will bring some of the services at hand. For example, if you need to purchase a house and your credit union has partnered with a real estate company, you will likely get the best package.

Don’t be afraid to approach your credit union when you have a unique financial need; they care for the welfare of their members.

Credit unions are focused on helping each member reach their financial goal through building their saving habits.

6. Offers a Variety of Services

Despite covering a small area, the credit unions offer various services.

Besides mortgage loans and business loans, they offer additional services: financial education, overdraft protection, car loans, and consumer loans.

You may think that unions are not advanced compared to banks; I suppose you might be wrong.

They have adopted online banking services such as mobile apps where the customers access the services at their comfort.

7. Favors Small Borrowers

Do you have a small business in mind that does not require a large loan to start or a small amount for your loan?

A loan from a credit loan will work perfectly for you, unlike the banks which offer larger loans.

The lower interest rates will make it even easier for you without mentioning that you don’t need collateral for personal loans.

When the union is evaluating you for a loan, they look at your credit score and check your job history. The approval may be favorable compared to that of banks.

Final Word

Thorough research on the credit union near you will help a lot. Remember that different unions have different governing policies. Check the requirements, too, before settling on one. 

Terms and conditions may be tiresome to read, right? But these are essential; make sure you read each and understand them before signing your agreement. In addition to that, choose a financial institution that fits your financial needs.

How to Fix Credit Repair After Identity Theft

I don’t know how to fix an identity theft credit score! Maybe you are in such a crisis and don’t know where to begin. It can be very frustrating!

Victims of identity theft most often experience a dip in their credit score. This is because the thief may have run up new debt on the card or applied for loans. 

Getting another loan can be quite difficult in such circumstances and it is frustrating.

How Identity Theft Affects Your Credit Score

identity theft credit score

The impact of a messed up credit score is far-reaching. What does a ruined credit score imply?

  • It could mean the amount you are eligible to borrow reduces, the interest rate could increase, and lending terms could generally have less wiggle room.
  • You may have to pay more in insurance premiums.
  • You might have to postpone buying that house you’ve been eyeing for a few more years.
  • Those that consider it a speculative investment to allow them take out a line of credit for something they haven’t yet planned for will no longer have that option.

The implications are life-altering! Having the option to borrow and getting optimal borrowing rates works in your favor in the long run. For that reason it should be guarded as much as possible. 

Thankfully, a dent to your credit report can be remedied. You can take several steps to bring your identity theft credit score back to where it was.

Where To Begin 

1.Respond Immediately

Identity theft can drastically affect your credit score and the sooner you catch it, the higher the likelihood of less damage. The thief can keep digging deeper into your pockets with every transaction.

Change all your passwords, PINs, and login details. 

Keep a record of all your transactions so you can easily cross-reference and identify a transaction that didn’t originate from you.

2. Place a Fraud Alert

Talk to one of the three credit reference bureaus. These are Experian, Equifax, and TransUnion.

Have them place a fraud alert or freeze your credit altogether. Whichever company you call is expected to share the information with the other two.

A fraud alert brings to their attention that you’ve been a victim of identity theft. That way they will pay extra attention to your account and will be cautious about lending you money. 

Any time someone tries to access credit in your name after placing a fraud alert, the business will ask for identity verification before consenting.

Placing a fraud alert is free.

A credit freeze locks all access to your credit report until the freeze is lifted. 

3.Report the Identity Theft

You will need to file a report with the Federal Trade Commission using the online form. Creating an account with FTC will ensure they take you through every step of the process, including the recovery plan, and pre-fill letters and forms for you.

If you choose not to create an account, you will need to print and save your Identity Theft Report and recovery plan immediately. It will no longer be accessible once you leave the page.

Where you are required to, report the issue to the police or sheriff. 

Furnish the authorities with all the necessary information including a copy of the FTC Identity Theft Report, proof of your address, a government-issued ID that has a photo, and proof of theft. Keep a copy of the report.

In instances where you don’t know the perpetrator, local law enforcement may not write a report. Take note of when you filed the report and who you spoke to.

4.Close All Affected Accounts

how to fix my credit score identity theft

You can now call the companies where the fraud occurred and explain the situation. Ask them to close the account. 

Make sure they provide you with a letter that frees you of any liabilities relating to the fraudulent account.

The letter should also state that the account isn’t yours and was removed from your credit report.

Keep this letter safely in case the account still shows up in your credit report later.

The sooner you close the accounts the higher the likelihood of the companies not holding you liable. 

5. Highlight and Dispute All Inaccurate Charges

Send communication to the three credit reference bureaus with a list of all the fraudulent transactions and ask that they remove them. 

Make sure to send a copy of the FTC Identity Theft Report or police report.

They should respond within 30 days of receiving communication from you. Make sure they confirm with a letter.

6. Correct Your Report

It would be best to reach out to the credit reference bureaus asking them to block all fraudulent transactions from your credit report. 

You will need to show them proof of  identity plus the FTC Identity Theft Report, highlighting the relevant transactions.

You have the right to block this information from your records.

7.Stay Alert

After such a scare, you want to be a little more alert about your account activities. Take a look at your credit reports as often as possible.

In the event debt collectors are attempting to collect debts you know nothing about, take the time to stop them.

If you know of a Social Security number that is being used inappropriately, it would be best to report it. Report and replace any government-issued identification that is lost.

If a person is arrested and uses your name or credentials, reach out to whichever agency apprehended the perpetrator. File an impersonation report and avail all your details so they can exonerate you.


There may seem to be a lot of back and forth but it is possible to fix your credit after identity theft. Take it all in your stride and keep calm through the process.

Once restored, be careful to keep your Social Security number hidden at all times. Whenever you leave the country, don’t pay for items using your credit card.

Keep tracking your credit score as you go along and remember, with a little patience and clarity of mind, it is possible to recover.

6 Ways To Start Building Credit at 18

At 18, many people look forward to opening a credit account and learning how to start building credit score.

A good credit score has many benefits, but most credit newbies may be apprehensive about achieving it.

Here, how to build credit is made easier if you follow the six strategies mentioned.

Most common tips on how to start building credit at 18

1. Understand The Basics of Credit Scores and Credit Reports

Credit scores are decided based on the information recorded on your credit reports. Understanding how credit scores and credit reports work is crucial in learning how to build credit.

Credit Scores

how to start building credit at 18

A credit score is a number, which helps loan lenders get an idea of a borrower’s creditworthiness. The greater the credit score, the greater the chances qualify for a loan with favorable terms.

Lenders use the FICO credit score model to help them make accurate, reliable decisions when reviewing loan applications.

The credit scores are calculated based on the weighted factors listed below.

  • Payment history (35%): The payment history assessment is made by reviewing the borrower’s overall record of making payments on time and general financial responsibility.
  • The total amount of debt (30%): Concerns your total debt amount, mainly the percentage it represents relative to the maximum credit available. Lenders opt for a credit utilization rate of 30% or less.  
  • Length of credit history (15%): Applicants with an established credit history that indicates a sustained financial responsibility spanning several years are more likely to get approved for loans.
  • Credit mix (10%): Lenders favor borrowers with multiple types of credit accounts, for example, credit cards, mortgage loans, installment loans, and personal loans.
  • New credit (10%): In most lenders’ eyes, borrowers applying for or creating new credit accounts are a risky lot. Some applications for new credit lead to a “hard inquiry” notation that stays in a credit report for two years.

Credit Reports

Credit reports are like financial report cards – giving lenders a brief overview of your payment history, outstanding balances, and a list of credit accounts.

Positive remarks on your credit report, like timely payment history, can build your credit, while negative remarks like untimely payment history can damage it.

2. Become an authorized user

Being 18 doesn’t directly impact your credit score; it just means you will hold a thin credit file. That is why becoming an authorized user on another person’s credit card is so crucial in helping build credit.

Authorized users can make purchases using the owner’s card but do not bear any liability.

If the primary owner adding you has a positive payment history, it will appear on your credit report. it will be of great help in improving your credit score. However, if the primary owner has a poor credit history, it could also affect your credit.

But before being added, ask the primary owner to ensure the credit card company reports activity for authorized users by the three main credit bureaus, or else you will not build credit.

3. Get A Secured Credit Card Or A No-Deposit Credit Card.

Do you want to be responsible for your credit card and learn how to start building credit at 18? Opt for a secured credit card, then.

Most consumers seeking a secured credit card lack credit at all or hold a poor credit history.

Secured credit cards require the applicant to make a deposit – typically $200 to $500 – that becomes the applicant’s credit limit.

Compared to traditional unsecured credit cards, secured cards are easier to acquire, given you make a deposit. But, to qualify, you’ll need a source of income and a savings account, depending on your lender.

If you repay amounts borrowed on time, you can receive your deposit when the card is closed. However, failure to pay bills on time could put your deposit at a risk of being taken by lender.

You can also look for alternative credit cards that don’t require security deposits.

4. Take Out a Credit-Builder Loan.

Credit-builder loans are specifically designed to assist people with little or no credit history in building credit. This loan doesn’t need you to have good credit to qualify.

A credit-builder loan keeps the borrowed amount in a bank account as you make payments. Usually, you can’t access the money until you repay the loan entirely, meaning you build credit and savings simultaneously

It also cushions lenders dealing with inexperienced credit card holders or those with poor credit scores.

Credit-builder loans are an excellent choice for learning how to start building credit at 18, but may not be suitable for people with existing loan debts.

However, an analysis conducted by the Consumer Financial Protection Bureau in 2020 determined that “consumers without existing debt saw a credit score increase of 60 points more than consumers with existing debt.”

5. Get a Student Loan

best to start building credit at 18

Like other lending activities, student loans too appear on credit reports and affect the credit score. The repayment time set to present an opportunity to build your credit history.

There are three types of student loans: private, refinance, and federal loans – all of them appear on credit reports and influence the final score.

Take out federal loans first as they contain favorable borrower protections, such as income-driven repayment plans. Most don’t check credit. Fill the FAFSA to apply.

However, most student need a co-signer approval to get private student loans. It will appear on both the student’s and the co-signers’ credit reports.

After you graduate, consider refinancing student loans. Refinancing is beneficial because you could get a lower interest rate or a lower monthly payment. To acquire it, you require a credit score of 690 or more.

With refinancing loans, you can also bundle multiple loans into a single account, which can help your credit score as you will have decreased the number of accounts with balances.

6. Make Your Payments In Time.

Payment history makes up 35% of the FICO score, so its importance on building credit need not to repeated.

It means paying all your bills without exception and in time. Also, risking being reported by your credit company to the three main credit bureaus for late payment.

Late payment by 30 days is one of the major causes of low credit scores and negative credit reports.

Final Thoughts

When joining adulthood, accessing credit can be challenging because of a lack of credit history.

The issue of how to start building credit at 18 will be solved if you follow steps mentioned in this article.

Remember, being timely with payments and maintaining a low credit utilization ratio are two of the most vital things to consider to build credit.

A good credit score can’t achieved overnight, but developing correct habits can save you a lot of money in your life.

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