Posted by JoeKaiser on July 19, 2002 at 18:05:35:
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Why is it bad to be self-employed ? - Posted by Dan-FL
Posted by Dan-FL on July 19, 2002 at 17:37:16:
I have been a full time REI for almost five years now.I have two credit cards with low balances ($50 and $300 ) and have many mortgages in my name and lots of equity in each property and I always pay on time and have no bad credit, but I can’t get my lending score to go up any higher then 680.I have been told we are penalized for being self-employed.Is this true? What do you guys think?
Re: Why is it bad to be self-employed ? - Posted by Jonathan Roy
Posted by Jonathan Roy on July 20, 2002 at 18:44:23:
Income doesn’t affect credit scores at all, nor does your length of employment, type of employment, etc. Those things matter to mortgage companies when they make loans, but credit score is purely based on credit. When you buy a report from the big 3, they’ll tell you the top 4 negatives against your score. What does it list? For me my score is in the mid 600s because I have so much credit card debt, and my #1 negative explanation on their reports is “Proportion of revolving balances to revolving credit limits” as expected. If I paid all my cards off tomorrow, I’d shoot up into the 700s.
-Jonathan
Re: Why is it bad to be self-employed ? - Posted by JT-IN
Posted by JT-IN on July 19, 2002 at 23:41:35:
Dan:
It isn’t so much being self-employed that is likely hurting you as much as frequent inquiries about your credit report. Also, if you are taking out mortgages on numerous houses, regardless if you are timely in paying or not, you are at more risk than a guy with one house, one mtg… in theory. This is reflected in the score.
Incorporation rarely helps due to the fact of having to personally sign for a mtg, even if made to your corp.
I think that one of the suggestions below was a good one, in regards to the “what if” scenario.
Just the way that I view things…
JT-IN
Re: Why is it bad to be self-employed ? - Posted by Joe Clifford (Denver, CO)
Posted by Joe Clifford (Denver, CO) on July 19, 2002 at 20:42:49:
Dan –
Equifax just added a “what if” scenario calculator to their credit report/score web site. Let’s you see what would happen to your personal credit score if you did X. Pretty cool and actually takes a lot of the mystery out of the whole credit score.
Without knowing more about your personal financial situation, I found out that my low limit credit card ($2500) with an average balance of $1,000 each month acutally “hurt” me more than a credit card with a $20,000 limit and a $1,000 balance – credit scores seem to be heavily dependant on the ratio of $ used to $ available on revolving credit accounts.
Anyway visit https://www.econsumer.equifax.com/webapp/ConsumerProducts/pgConsumerProducts?^start=&orderSource=EHW&PP=P3 and go from there.
Re: Why is it bad to be self-employed ? - Posted by Mark-WV
Posted by Mark-WV on July 19, 2002 at 19:19:03:
Dan I don’t think thats is correct, what is between thie lines is a I don’t know how the system works.
I’m self -employed and have been since 1979 , my score is 812 as of yesterday. My wife doesn’t work at all.
The score you have isn’t bad but with a little less un secured loans such as credit cards and lines of credit I think you would be suprised. By the way the balance on cards meaning unused balance can hurt,but unsecured loans and a lot of them that are paid on time then closed really jacks the score up !
But I’m sure Bruce Larson could give you a lot better answer than mine as he deals with repair every day.
Re: Why is it bad to be self-employed ? - Posted by Michael(NH)
Posted by Michael(NH) on July 19, 2002 at 18:11:27:
My wife’s scores are all between 700-750 and she is self-employed, we also declared bankruptcy in 1992.
I think being self-employed can raise a flag because there is no backup income if you make bad decisions in your investments.