Bad Credit Ok? - Posted by Marquita

Posted by MM on September 14, 2003 at 18:37:59:

How come creditors report bad credit but not good credit? How do they make thier judgements on what exactly goes on a credit report. I had some credit cards when I was seventeen(no major ones) that when on my credit report as deliquent. As of three years ago, I started trying to fix my credit by buying a car, making on time monthly payments and paying it off in a little less than a year. Wasn’t a big loan but it was paid off and didn’t show at all on my credit report. I decided to get one of those pre-paid visas and work with that. I used a little and paid it off. That didn’t show on my credit report either. If I can’t get approved for a loan, what else that I am paying on can I request be used as a postive on my credit report? Thanks

Bad Credit Ok? - Posted by Marquita

Posted by Marquita on July 14, 2003 at 11:50:29:

I am in the process of repairing my credit. Is it possible to still get started in real estate investment with bad credit or do I have to wait until my credit is fully repaired to start?

Re: Bad Credit Ok? - Posted by Jim FL

Posted by Jim FL on July 17, 2003 at 01:23:12:

The direct answer to your question, would be YES!
You CAN start investing in real estate with bad credit.
I personally did, as well as many other regular posters here.

However, there are a few things that I’d advise you to do. (By the way, I’m not sure why others prompted you about qualifying for a mortgage, no need to do that.)

Because you have credit issues, first, see what they are?
You indicated below you had done a credit report?
Work on that, write letters contesting bad entries, and follow the letter of the law.
There are TONS of websites that will guide you on cleaning your report, for FREE.
Don’t pay for a service, good study and research will get it done for less.

As you clean up your credit, figure out what behavior led to the problem, and correct it.
Even if you make money investing, you need to learn to handle it.
Trust me, even when you make a ton, it is still easy to lose or mis-manage.
Investing is a business, and learning to manage the money from it, will be easier with your personal finances in order.

Learn to budget, time and money.
As you clean your credit, and keep your budget in line, study investing.
Get as much FREE stuff as you can.

Because this post is long enough, I’ll refer you to another.
Goto the main newsgroup here, and search the archives for “Getting started”.
There are some GREAT posts by Johnboy and Ron Starr that will help you.
Read EVERYTHING on this website, and as many others as you can find.
This will take you months, if you read it all.
From there, you will hopefully see a method or technique that interests you.
When you do find something, whether it be lease options, wholesale, retial, subject to, what ever, get a course on the topic.
Study that, reading it until you know it cold.
Ask questions along the way, the main board here, as well as other websites for input and advice from others.

Once you fully understand your chosen method for entry into REI, come back here and ask about marketing.

Then buy some houses.

Along the way, take care of your credit.
The BEST way to fix credit, is to clean up the bad stuff you have now, however you need to.
Don’t forget, older judgements and charge offs might very well take less than the full amount to release.
It never hurts to ask, so try.
And during/after that, make sure there are no more negative entries made, by budgeting your financial life well.

Good luck, as I said, Good credit is not needed to buy houses, but having it is never a bad thing.
Work on that, as well as learning to invest.

I always say, if you can learn to make money with none, you will never worry about finances again.

Take care,
Jim FL

Re: Bad Credit Ok? - Posted by Chris Streling

Posted by Chris Streling on July 16, 2003 at 16:03:30:

There is truly NO WAYto repair bad credit. Bad credit is bad credit. DO NOT go out and get a bunch of loans thinking that it will improve your credit.

Re: Bad Credit Ok? - Posted by Mark P

Posted by Mark P on July 14, 2003 at 19:04:37:

It depends on how bad it is and why it’s bad. Do you have late payments on a mortgage? Do you know your credit score? You should get a 3 agency credit report and score and contest all negative entries. You may still be able to get a loan but will have a higher interest rate. If your score is at least a 550 you should be able to get a mortgage. You will have better luck if you go through a mortgage broker instead of a financial institution. They ususally have access to more programs and private investerors as well. I was able to get a loan this way with 90% loan to value and walked away with 25k at closing. My credit is not bad but not all that great either. Good luck.

Re: Bad Credit Ok? - Posted by Marquita

Posted by Marquita on July 15, 2003 at 08:23:58:

I currently do not have a mortgage. I have a few collections that I am trying to clean up from about 5 years ago when I was in college and unable to pay my credit card bills. I did get a 3-in-1 credit report. My score was 557. I heard that by just paying off collections your credit score still does not go up. Do you know if this is true? If so, what can I do to raise my score?

Re: Bad Credit Ok? - Posted by Pete

Posted by Pete on July 16, 2003 at 08:24:00:

“I heard that by just paying off collections your credit score still does not go up. Do you know if this is true? If so, what can I do to raise my score?”

It must be that “qualifying” for a loan varies from lender to lender and is somewhat dependent on the “times” I have read several posts about bad credit, FICO scores etc and still I remain confused on this subject. Let me explain:

I can’t say my credit was bad; although I did have to pay off some old judgements prior to getting my approval. My problem was not bad credit, rather NO CREDIT! Most of my life has been cash and carry which does little to help the credit score, and actually I have been told can be worse than poor credit. Hmmmmm? Well; this is bologne! I DID secure a FHA loan for myself; although I did have to jump through some hoops…AND my out of pocket expenses were only about 1K. My salary is above average, but by no means stellar…also; I have job history showing consistant earnings, so I am sure that helped as well.
I lived in a apt for two years with a rather juicy monthly payment, so I believe this also helped show my lender I am capable of paying on time.

To answer your question; it is my understanding that paying off collections DOES NOT raise your score, but in time will also NOT hinder your score as you build credit via credit cards etc…It took most of us time to hurt our credit, so it takes time to build it again.

I am in the auto sales biz; what I have seen that hurts credit the most is this:

  1. 30+ days late (Chronic)
  2. Bankruptcy
  3. Short time in credit bureau’s history
  4. Judgements

You mentioned you have judgements. It was my experience that these MUST be paid off before a lender will loan you anything.

Hope that helps.


Re: Bad Credit Ok? - Posted by Sandra

Posted by Sandra on July 17, 2003 at 08:55:41:

You can repair your own credit. Bad credit can be repaired you are not just stuck with it. Try a credit repair site like read and learn.

In the mean time this site is excellent for learning real estate and buying without having to qualify for a mortgage. The two can happen at the same time, you don’t have to wait until you have perfect credit to start investing!