It’s Working! Winning the Credit Game, FWIW

A couple of month back, I blogged that I wanted to raise my mediocre credit and wasn’t too happy about the only way I could find to do it: Taking on more credit, in the form of a brand-new Amazon rewards card and asking my credit union to raise the limit on my existing card.

The good news is, at least it’s working! Credit Karma shows that my score has gone up by a solid twenty points. Credit Karma is not super exact, but it does at least show the overall trend. They have me at 695, or poised at the top of “Fair,” but it gets better.

Graph showing increase from 674 in October 2014 to 695 in January 2015.

Upward trend! The shape we like to see.

 

Mr. FP and I wanted to start looking at houses, at least to start getting an idea of the market, and real estate agents don’t like to drive you around unless you are preapproved for a mortgage. So we went ahead and did that, and of course the lender pulled our credit scores.

They showed me at every bit of 725. That’s right, folks, they consider me someone with GOOD credit. And now, this part is petty, but it made me happy: I now have better credit than Mr. FP by a coupla points. His was higher than mine because he carried all our credit cards and had taken out an ill-advised car loan, and I never thought it was fair that an ill-advised car loan ought to raise one’s credit.

I’m happy that our credit looks good, but the system still seems off. Why should taking out more credit cards make me more mortgage-worthy when, let’s remember, I defaulted on my mortgage* a mere four years ago?

Other oddities in the system: According to the lender, our incomes—which are less than $90K a year, even with my side gig editing trivia questions—are adequate for a mortgage of, brace yourselves, four hundred and seventeen thousand dollars. We would have to come up with 5% down, which we could do by cashing out or borrowing against our retirement accounts, and no one would stop us. Yikes, that’s a scary thought. You’ll be relieved to know we are not looking at $400K houses.

Have you ever had to game the credit system? Any brilliant suggestions for how to fix this seriously limited metric?

*Still not proud of this. I remember now, though, that we were required to pay for private mortgage insurance on account of our low down payment, so… I guess the system worked.

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About frugalparagon

I'm a part-time librarian and mom to two small boys. I blog about striving for the long-term goal of financial independence while running a tight ship at home.

6 responses to “It’s Working! Winning the Credit Game, FWIW”

  1. slowlysippingcoffee says :

    Wow! That is crazy they would approve you for so much. Mr SSC and I had the opposite problem in 2013. We were being relocated by our company, and we were having trouble getting approved for an amount that was barely 1 times our yearly salary with over 20% down .(and we have really really good credit) At one point I yelled at our mortgage broker, that if we could pay for the mortgage if we cashed out our investments and part of our 401ks, so why were they hassling us so much. I was thinking “if we can’t get a mortgage, who can?” The whole process just seemed arbitrary.

  2. Amy K says :

    Yay! Glad to hear it’s working!

    The high pre-approval is mind boggling. It’s like we’re back in 2005! When my boyfriend and I were house hunting back then the mortgage guy said “put whatever you want on the pre-approved line.” Under the assumption that we know how to handle money, we wouldn’t go crazy. I don’t even remember what ended up in that field, I just remember being shocked and appalled.

    Best wishes with the house hunt!

    • frugalparagon says :

      LOL, those were the days. My sister had one of those stated income loans you could get back then, where you just told them how much income you made and they took your word it instead of asking for proof. (She was starting a business and had no proof.)

      Thanks for the good wishes! I’ll make sure to update everyone :-).

  3. Tarynkay says :

    It is pretty appalling, isn’t it? We bought our house in 2009. We were both straight out of grad school in new jobs. I had a job for about three months, this was coming off a year of post-school unemployment. The loan the bank pre-approved us for would have taken my entire pretax salary every month to pay the mortgage. We were like, do you guys remember the thing that just happened where you people crashed the entire economy? Are you trying to do it again?

    We ended up buying a house for about a third of what they approved us for. I make enough part time babysitting to cover the mortgage. Best decision ever!

  4. David says :

    Guess it depends on the lender. We were pre-approved for only $20K more than what we ended up buying, and this was in the heyday. The underwriting process was also quite strict – they even hassled us about cash gifts that we’d deposited.

    My priorities in buying property are probably very different from yours. While the Alchemist has aesthetic desires, I’m pretty content with function far more than form. And for me, it’s the land that’s much more important – as in, how much food can I grow? Is the water affordable? Can I have livestock?

    Something to consider in sunny CO is having a really nice southern and/or western exposure for passive solar gain in the cold months. You can aways build out a solar screen of some sorts to provide temporary shade during the hot months.

    Good luck with your search.

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