The Effect of Your Spouse’s Bad Credit in Buying a Home  

After getting married with a spouse having a bad credit, does it stop you from buying a house with your good credit record? The answer is “no” because your plan to buy a home you want is still very possible or within your reach. Before you castigate your spouse for ruining his credit, take note that after the severe financial crisis in 2008 only few Americans were greatly affected by the credit crunch. In fact, many American families are uncertain about their financial situations. In other words you are not alone in such kind of situation.

Tips to buy a house with Bad Credit

It is not only you and your spouse who are struggling to buy a house because of bad credit. Here are some options you can choose from when your spouse’s credit is not desirable.

1. Buy the house together: If you buy it together, you can set aside the bad credit of your spouse. This is an option which will charge you high interest rate and no financial expert would advise anyone to choose this option but this is just one way for you to buy a house.

2. Buy it alone: If your spouse’s credit is bad but yours is good then buy it using your own credit. This will be easier for you to get a loan because of your good credit record. The amount of loan will be based on your income and available cash.

3. Loan granted with no verification of income: This is an option where the single income of the one who has a good credit record or the bad credit record of the participating spouse are not the basis for granting the loan. This type of loan, however, requires a large down payment ranging from 25 to 30 percent of the principal. The bad news is this option eliminated because of the financial collapse.

4. Replacement of “Bad” Credit with “Good” Credit: A third party can help a couple to buy a house. Usually one of the parents with excellent credit rating can replace the spouse with a bad credit. The third party is required to co-sign the couple’s house loan.

Financial Setbacks for Engaged Couples, Ameritrade Reports

The majority of couples who are currently engaged are planning to pay all of their wedding expenses without asking for any financial assistance from their parents. Moreover, almost one half of engaged couples are planning to spend lower than $10,000 on their wedding day. This is according to a recent report from TD Ameritrade Holding Corp.

Moreover, the report also found out that the majority of lovers do not regard as deal-breakers setbacks such as bad credit, foreclosures, student loan debt, and unemployment.

In the end, the major problem is bankruptcy. In fact, over 3 out of 10 engaged people said that it would be one of the reasons to cancel the wedding. In addition, 27 percent said that they would reschedule the wedding.

According to Carrie Braxdale, managing director of investor services of Ameritrade, more couples are getting married in the latter part of their lives. Consequently, they are creating more financial problems into their marriage such as credit card debt and student loan debt.

The areas where couples are likely to have very high expenses for their wedding day are the Northeast, and then next to that is the West. The majority of people begin to set aside money in the same year prior to the wedding. On the other hand, 9 percent begin saving money for the wedding more or less two years beforehand.

Ameritrade also discovered that 41 percent of couples below 31 years old asked financial assistance for their wedding expenses from their parents, while 21 percent of older couples ask help from parents.

Based on data from wedding website The Knot, wedding funds are getting bigger for the first time since the year 2008 at the same time as the improving economy. Another report from XO Group Inc. last March discovered that 11 percent of couples have expenses exceeding $40,000.

With the exception of honeymoon expenses, the average cost for a wedding was $27,021. The most costly place to have a wedding is in Manhattan, with average costs of $65,824.

How to Get a Loan with Poor Credit

The majority of the public have a time in their lives that they had poor credit and those who already experienced this are aware that it is never easy to have no access to credit. Those with poor credit can still loan money but they will be charged higher interest rates because they are a risk to the lender.

However, if they manage their credit well, then their credit scores will improve. Here are some tips for those with poor credit on how to get a loan and improve their credit rating.

First, consider getting payday loans, which are short-term loans that are created according to your capacity to pay off the loan. When getting a payday loan, your credit report is not checked. Moreover, a payday loan does not have an effect on your credit score, except when you do not completely pay off the loan.

A payday loan is ideal when cash is needed immediately for unforeseen happenings. You need a regular source of income and checking account as well.

Second, seek the help of a broker, especially when you are planning to apply for a mortgage or home improvement loan and you have poor credit. There are some brokers who have a certain connection with several lenders and banks, so they can assist borrowers with either good or poor credit history in getting loans appropriate to their needs. In addition, brokers are able to offer assistance to those people with poor credit since they know the credit terms of a lot of lenders.

Third, consider a cosigner, especially someone who has good credit, for instance, a family member, a friend, or an acquaintance. If you fail to pay the loan, the cosigner has the responsibility to pay your loan instead. Also, once you become a borrower with a cosigner, and pay the loan on time, then your credit score will improve.

Bad Credit Doesn’t Really Reflect a Client’s Responsibility

Credit reporting industries believe that an individual’s credit status reveals his personality, most especially his sense of responsibility. However, the New York Times and the Columbus Dispatch, two renowned newspapers are arguing otherwise.

Recently, New York Times studied how destructive medical bills are to people’s credits. Columbus Dispatch on the other hand, has been focusing their time in investigating how frequent credit errors occur on reports and how difficult it is to have them corrected.

In fact after a year of intense investigation, the team gathered and analyzed about 30,000 of the complaints that consumers filed in the Federal Trade Commission office. Many lawyers in 24 different states held cases against credit unions for their breach in the Fair Reporting Act. Among these credit unions in the United States are the Equifax, Experian and TransUnion.

According to reports from observers, the study that the Columbus Dispatch conducted on the protests against credit-reporting companies was the most inclusive one ever done.

Some of the errors that were documented include errors on personal information such as birth dates, names, and age. In fact, most of the complaints include mistakes in the customer’s transactions in car mortgages, credit card loans, and approved bank sales for foreclosures, paid-off automobile loans that were mistakenly recorded as repossessed and paid-off credit cards that were reported as delinquent.

The sad thing is, even if many of this information are just minor errors, credit unions seem to be powerless in changing them. This makes it very difficult for clients to have their records fixed.

However, not only errors in records can cause bad credit for customers. Medical necessities also play a vital role in the area. According to the New York Times, since most of the earnings of medical producers come from patients, many hospitals and doctors are billing debts to clients, and these debts can be overwhelming.

According to FICO, it isn’t surprising for someone with a spotless credit to fall into bad credit since medical-related debts and collections from credit agencies have equally damaging effects on a person’s credit standing.

But this can be remedied with a good policy for medical related appointments. New York Times suggest that an act for Medical Debt Responsibility and the Affordable Care Act could help in the financial needs of Americans.

Credit Scores Continue to Improve in The United States

The recession that hit the United States on 2008 has placed borrowers and lenders alike in a bad place. Credit scores suffered, and worse, it was difficult to get a loan when your credit falls in the range of 700 to 749.

In a recent study by FICO Labs, it was revealed that most customers have FICO scores that range between 800 and 850. It represents about 18.3 percent of the total population.

The great news does not stop there, it was also reported that the number of customers that are recovering from bad credit has increased too.

The CEO of the Quizzle based on Detroit, Todd Albery concludes that the economy is recovering from the recession based on the latest findings of the study. Credit card owners are now wiser spenders, they no longer just swipe away their purchases, and they also work hard to pay their bills on time.

Many companies have also recovered and the number of unemployed people has decreased. Therefore, more people are capable of paying their bills and recovering from bankruptcy and bad credit.

Now, more than half of the whole American population has fair credit ratings with their FICO scores ranging from 700 to 850. The ratio of customers that have scores between 700 and 749 now represents the lowest point of the survey, only representing 15.5 percent of the population since April of this year.

Moreover, only 20 percent of the respondents of the survey expect to have delinquencies in their automobile loans compared to the 33 percent in the previous quarter.

The survey also found out that 28 percent of its respondents compared to the 39 percent of the last survey expected law-breaking on small-business loans.

The breaches on credit card terms and regulations have also decreased in this quarter and more citizens are making sure that they qualify for loans.This is definitely great news for the country.