Living with Bad Credit
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no_vaseline_IHB
New member
[quote author="autox" date=1251780086]Since bad credit seems to be the only real downside to walking away from an underwater mortgage. How hard is it to live with really bad credit?</blockquote>
If you were cash flow positive before you walked away everymonth, it's fairly easy with some unexpected complications (your auto insurance, for example, will skyrocket and getting a new landline turned on might be a wee bit tougher than you expected).
If you were living beyond your income stream by using your HELOC and credit cards, well, it probablly won't be so good.
Is this the question you were asking?
If you were cash flow positive before you walked away everymonth, it's fairly easy with some unexpected complications (your auto insurance, for example, will skyrocket and getting a new landline turned on might be a wee bit tougher than you expected).
If you were living beyond your income stream by using your HELOC and credit cards, well, it probablly won't be so good.
Is this the question you were asking?
ABC123_IHB
New member
Is it true that couples who are considering walking away will put the mortgage into one spouse's name so only one of them will have the bad credit and then the other one will be able to qualify to buy the next property?
no_vaseline_IHB
New member
[quote author="ABC123" date=1251781660]Is it true that couples who are considering walking away will put the mortgage into one spouse's name so only one of them will have the bad credit and then the other one will be able to qualify to buy the next property?</blockquote>
I'm sure that's possible but in practice I'd think it would be next to impossible to pull off. Ask Soylent Green is People for confirmation, but IMO I think this is urban legend.
I'm sure that's possible but in practice I'd think it would be next to impossible to pull off. Ask Soylent Green is People for confirmation, but IMO I think this is urban legend.
caycifish_IHB
New member
My only-slightly indirect experience is that if you apply for a new credit card, you will probably only get a $500 limit, if you are approved at all. Your interest rate on a used car will be the highest possible (20-something%), and the amount you will be qualified for won't get you very much. It will not keep you from getting a job at a police department. You may or may not need to put down a large deposit for any new utilities at a new residence, but most likely you will. You may have difficulty renting an apartment, even if there is proof of enough income to cover the rent.
Most of the day to day things will not be affected at all. The real result is that a lot of things will just cost you more, either up front or in interest payments.
Most of the day to day things will not be affected at all. The real result is that a lot of things will just cost you more, either up front or in interest payments.
qwerty_IHB
New member
[quote author="ABC123" date=1251781660]Is it true that couples who are considering walking away will put the mortgage into one spouse's name so only one of them will have the bad credit and then the other one will be able to qualify to buy the next property?</blockquote>
if both people were were on the mortgage originally, my guess is that they would not be able to transfer the mortgage to the other spouse very easily, if at all. So both of their credit history would be screwed. This seems like a possibility in cases where someone owned a home on their own then got married.
if both people were were on the mortgage originally, my guess is that they would not be able to transfer the mortgage to the other spouse very easily, if at all. So both of their credit history would be screwed. This seems like a possibility in cases where someone owned a home on their own then got married.
Thanks for the reply. I'm wondering if the increase number of people with bad credit will blunt some of the affects of bad credit. In the past, there were huge stigmas with having bad credit, foreclosure, or bankruptcy in your history, but now, it seems almost prudent. With more people having bad credit, land lords/insurance/utility companies will feel the pressure to relax some of their standards.
FairEconomist_IHB
New member
[quote author="autox" date=1251841129]Thanks for the reply. I'm wondering if the increase number of people with bad credit will blunt some of the affects of bad credit. In the past, there were huge stigmas with having bad credit, foreclosure, or bankruptcy in your history, but now, it seems almost prudent. With more people having bad credit, land lords/insurance/utility companies will feel the pressure to relax some of their standards.</blockquote>
More specifically, as "bad credit" comes to include large numbers of people who are responsible with credit except in the extraordinary circumstance of being hundreds of thousands underwater on a house, the risk in making loans to people with "bad credit" will drop and so will the difficulty and fees. If the credit companies don't adjust ratings for this special circumstance, it will improve access to credit for truly bad borrowers and cause some nasty losses down the line for them. If they do start to adjust, "good credit except for a bubble foreclosure" will probably end up a pretty ordinary category. I'll bet there's a real opportunity offering credit cards for people in this circumstance trying to rebuild their credit.
More specifically, as "bad credit" comes to include large numbers of people who are responsible with credit except in the extraordinary circumstance of being hundreds of thousands underwater on a house, the risk in making loans to people with "bad credit" will drop and so will the difficulty and fees. If the credit companies don't adjust ratings for this special circumstance, it will improve access to credit for truly bad borrowers and cause some nasty losses down the line for them. If they do start to adjust, "good credit except for a bubble foreclosure" will probably end up a pretty ordinary category. I'll bet there's a real opportunity offering credit cards for people in this circumstance trying to rebuild their credit.
SoCal78_IHB
New member
In the way of credit cards, there are a couple options available to someone with less than desirable credit. A person can get a prepaid card. I have read that some are reported to credit bureaus and some are not. You can also get a secured credit card. You put down a deposit and your credit line reflects it. However, when you make a purchase, it does not come out of the deposit. You are allowed to carry a balance and it can be used to rebuild your credit. <a href="https://www6.bankofamerica.com/credit-cards/marketingdetail.action?context_id=marketing_detail&offer_id=ECOMM090XFEQ00400800121983EN001">Here </a>is one kind from BofA as an example.
usctrojanman29_IHB
New member
If you use cash for most all purchase then you don't need credit.
Geotpf_IHB
New member
[quote author="FairEconomist" date=1251843816][quote author="autox" date=1251841129]Thanks for the reply. I'm wondering if the increase number of people with bad credit will blunt some of the affects of bad credit. In the past, there were huge stigmas with having bad credit, foreclosure, or bankruptcy in your history, but now, it seems almost prudent. With more people having bad credit, land lords/insurance/utility companies will feel the pressure to relax some of their standards.</blockquote>
More specifically, as "bad credit" comes to include large numbers of people who are responsible with credit except in the extraordinary circumstance of being hundreds of thousands underwater on a house, the risk in making loans to people with "bad credit" will drop and so will the difficulty and fees. If the credit companies don't adjust ratings for this special circumstance, it will improve access to credit for truly bad borrowers and cause some nasty losses down the line for them. If they do start to adjust, "good credit except for a bubble foreclosure" will probably end up a pretty ordinary category. I'll bet there's a real opportunity offering credit cards for people in this circumstance trying to rebuild their credit.</blockquote>
Personally, I wouldn't want to give out credit to somebody with a foreclosure, no matter what the circumstances. They either bought more house than they could afford with some of exotic loan (bad credit risk), lost their job and weren't able to get another quickly (bad credit risk), or broke the contract they signed merely because their house was underwater (bad credit risk).
More specifically, as "bad credit" comes to include large numbers of people who are responsible with credit except in the extraordinary circumstance of being hundreds of thousands underwater on a house, the risk in making loans to people with "bad credit" will drop and so will the difficulty and fees. If the credit companies don't adjust ratings for this special circumstance, it will improve access to credit for truly bad borrowers and cause some nasty losses down the line for them. If they do start to adjust, "good credit except for a bubble foreclosure" will probably end up a pretty ordinary category. I'll bet there's a real opportunity offering credit cards for people in this circumstance trying to rebuild their credit.</blockquote>
Personally, I wouldn't want to give out credit to somebody with a foreclosure, no matter what the circumstances. They either bought more house than they could afford with some of exotic loan (bad credit risk), lost their job and weren't able to get another quickly (bad credit risk), or broke the contract they signed merely because their house was underwater (bad credit risk).
trrenter_IHB
New member
[quote author="ABC123" date=1251781660]Is it true that couples who are considering walking away will put the mortgage into one spouse's name so only one of them will have the bad credit and then the other one will be able to qualify to buy the next property?</blockquote>
I have heard some people get an amicable divorce and one spouse gets the house.
That spouse then lets the house go into foreclosure.
Then they get some marriage counciling I guess and have a reconciliation.
I have heard some people get an amicable divorce and one spouse gets the house.
That spouse then lets the house go into foreclosure.
Then they get some marriage counciling I guess and have a reconciliation.
garrison_IHB
New member
TI
qwerty_IHB
New member
[quote author="autox" date=1251848913]Does bad credit history make it difficult to find employment?</blockquote>
It definitely does, especially in finance & accounting.
It definitely does, especially in finance & accounting.
Soylent Green Is People_IHB
New member
Some thoughts on the above....
1) Everything has an explaination. If you lost your home because of documented job loss or death in the family, you get a great deal of sympathy. If you lose your home because you've decided to not put any more cash into the pot, your sympathy from banks and creditors is zip-a-de-doo.
2) If you need to rent after losing your home, AND if your credit is a wreck - because sometimes it isn't - most landlords today will take the rent application with your credit report and make an informed decision. If you fudge numbers or misstate circumstance, landlords will roundfile your rental agreement.
3) No, you cannot transfer a mortgage into another persons name. You can transfer property, but without a refinance the loan is still yours.
4) Lack of credit focuses priorities. Plain, clear, simple...unless...
5) lack of credit and a blame everyone else for your own shortcomings is your gig. I've gotten more of my share of calls to qualify for mortgages that goes like this: "Two years ago I was making $200k with my regular job and being a part time Realtor. I decided to get out of the Real Estate biz because the market wasn't like it used to be. That caused me to go BK in 2008. Once I sell my house short, what kind of loan can I get now that I'm only working one job at $45kpy?" - none of this apparantly is this callers problem or fault. It's that kind of perspective that shows a why this person will be living with bad credit for a long time into the future. My advice: don't be this person.
My .02c
Soylent Green Is People.
1) Everything has an explaination. If you lost your home because of documented job loss or death in the family, you get a great deal of sympathy. If you lose your home because you've decided to not put any more cash into the pot, your sympathy from banks and creditors is zip-a-de-doo.
2) If you need to rent after losing your home, AND if your credit is a wreck - because sometimes it isn't - most landlords today will take the rent application with your credit report and make an informed decision. If you fudge numbers or misstate circumstance, landlords will roundfile your rental agreement.
3) No, you cannot transfer a mortgage into another persons name. You can transfer property, but without a refinance the loan is still yours.
4) Lack of credit focuses priorities. Plain, clear, simple...unless...
5) lack of credit and a blame everyone else for your own shortcomings is your gig. I've gotten more of my share of calls to qualify for mortgages that goes like this: "Two years ago I was making $200k with my regular job and being a part time Realtor. I decided to get out of the Real Estate biz because the market wasn't like it used to be. That caused me to go BK in 2008. Once I sell my house short, what kind of loan can I get now that I'm only working one job at $45kpy?" - none of this apparantly is this callers problem or fault. It's that kind of perspective that shows a why this person will be living with bad credit for a long time into the future. My advice: don't be this person.
My .02c
Soylent Green Is People.
OCCOBRA_IHB
New member
[quote author="ABC123" date=1251781660]Is it true that couples who are considering walking away will put the mortgage into one spouse's name so only one of them will have the bad credit and then the other one will be able to qualify to buy the next property?</blockquote>
Nope, sounds good but they will be looking at the last 4 years for both. And the new one must get new credit past the incedent to prove in the last year you can make you payments. You used to be able to do this in the loose days of loan approval but not no more.
Nope, sounds good but they will be looking at the last 4 years for both. And the new one must get new credit past the incedent to prove in the last year you can make you payments. You used to be able to do this in the loose days of loan approval but not no more.
RobertLarsen_IHB
New member
[quote author="ABC123" date=1251781660]Is it true that couples who are considering walking away will put the mortgage into one spouse's name so only one of them will have the bad credit and then the other one will be able to qualify to buy the next property?</blockquote>
Do a short sale. Talk to the bank about taking off your late payments on your credit report if you go through with the short sale. The effect will not hurt you for nearly as long. Foreclosure = 4 years of no credit. Short Sale = 18 months.
Do a short sale. Talk to the bank about taking off your late payments on your credit report if you go through with the short sale. The effect will not hurt you for nearly as long. Foreclosure = 4 years of no credit. Short Sale = 18 months.
IrvineRenter_IHB
New member
[quote author="autox" date=1251780086]Since bad credit seems to be the only real downside to walking away from an underwater mortgage. How hard is it to live with really bad credit?</blockquote>
There is a premise hidden in your question that you need to examine: Why do you need credit at all?
The premise in your question is that credit scores matter to your daily life. Your credit score is completely irrelevant if you do not borrow any money. If you save for things and pay cash for them, nobody is checking your credit score, and you don't need to either.
There is a premise hidden in your question that you need to examine: Why do you need credit at all?
The premise in your question is that credit scores matter to your daily life. Your credit score is completely irrelevant if you do not borrow any money. If you save for things and pay cash for them, nobody is checking your credit score, and you don't need to either.
Minimorty_IHB
New member
[quote author="IrvineRenter" date=1252021898][quote author="autox" date=1251780086]Since bad credit seems to be the only real downside to walking away from an underwater mortgage. How hard is it to live with really bad credit?</blockquote>
There is a premise hidden in your question that you need to examine: Why do you need credit at all?
The premise in your question is that credit scores matter to your daily life. Your credit score is completely irrelevant if you do not borrow any money. If you save for things and pay cash for them, nobody is checking your credit score, and you don't need to either.</blockquote>
While I am not totally disagreeing with your comments, there are other instances where a credit score can matter. If two equally qualified candidates are interviewing at a professional services firm, one candidate may end up getting the job over the other candidate due to credit scores. Employers do often take into account credit when hiring/firing employees.
Edit: i should have read the whole string. Looks like cayci mentioned this as well as auto.
There is a premise hidden in your question that you need to examine: Why do you need credit at all?
The premise in your question is that credit scores matter to your daily life. Your credit score is completely irrelevant if you do not borrow any money. If you save for things and pay cash for them, nobody is checking your credit score, and you don't need to either.</blockquote>
While I am not totally disagreeing with your comments, there are other instances where a credit score can matter. If two equally qualified candidates are interviewing at a professional services firm, one candidate may end up getting the job over the other candidate due to credit scores. Employers do often take into account credit when hiring/firing employees.
Edit: i should have read the whole string. Looks like cayci mentioned this as well as auto.