Cheryl Warner, Home Buyer in Hampton, VA

whys is my credit score so low 550, when I do not have any credit cards for years, no judgements/liens. no open lines of credit at all.

Asked by Cheryl Warner, Hampton, VA Wed Dec 4, 2013

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Jean-Leon Magnotto’s answer
Credit can be very counter intuitive to most people. Lots of good advice in here, talk to a good lender and they can help sort you out, usually fairly quickly. Feel free to contact me directly if youwould like to be put in touch with a good one. Good luck !
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0 votes Thank Flag Link Sat Dec 28, 2013
Most likely since you have no credit cards or open lines of credit. It is a credit score, if you do not use credit, you can not build a credit score. One needs to use credit responsibly to build credit score.

If you are looking to build your credit to purchase a home, get in touch with a mortgage lender for some guidance on building credit.
1 vote Thank Flag Link Wed Dec 4, 2013
There's part of your answer. You have no recent history. Do you have a recent copy of your credit reports from the three bureaus (Experian, Equifax, and TransUnion). If so, is the information 100% correct? Have you been a victim of ID theft without your knowing?

I wrote a VERY informative e-book on the subject. I was plagued with bad credit years ago and turned it around all on my own. Please visit the link below. You'd be surprised to know 1/2 the things that are in there. I hope this helps.
0 votes Thank Flag Link Sun Dec 22, 2013
Because you don’t have a recent payment history, how is a lender supposed to know if you will make payments on time if you don’t have a recent history of do so? So, if you are designing a plan to build a strong credit score, have at least 3 long term open accounts. It is best to have 3 different types of debts, like one credit card, one car loan and one bank loan. That isn’t a requirement, it simply shows a variety of payment types and will build a credit score quicker than say 3 credit cards. Hope this info is helpful, good luck,

Jim Simms
NMLS # 6395
Financing Kentucky One Home at a Time
I answer questions about financing real estate based on my decades of experience dealing with mortgage underwriters. This answer is my personal opinion, has not been reviewed or approved by the company I work for. I do not offer legal or tax advice, if you need answers from an attorney or CPA find one knowledgeable in your local market.
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0 votes Thank Flag Link Fri Dec 6, 2013
Typically credit scores are calculated by several factors:

Payment history (35%)
The first thing any lender wants to know is whether you've paid past credit accounts on time. This is one of the most important factors in a FICO® Score.

Amounts owed (30%)
Having credit accounts and owing money on them does not necessarily mean you are a high-risk borrower with a low FICO® Score.

Length of credit history (15%)
In general, a longer credit history will increase your FICO® Score. However, even people who haven't been using credit long may have a high FICO Score, depending on how the rest of the credit report looks.

Your FICO Score takes into account:
•how long your credit accounts have been established, including the age of your oldest account, the age of your newest account and an average age of all your accounts
•how long specific credit accounts have been established
•how long it has been since you used certain accounts

Types of credit in use (10%)
The score will consider your mix of credit cards, retail accounts, installment loans, finance company accounts and mortgage loans.

New credit (10%)
Research shows that opening several credit accounts in a short period of time represents a greater risk - especially for people who don't have a long credit history
0 votes Thank Flag Link Wed Dec 4, 2013
Assuming you seek a home loan at some point in the future, find a local lender that is willing to work with you to get the score higher. There are between 30 and 40 different factors that make up a credit score. Without looking at the report is it difficult to determine the answer to your question. And I am in Arizona a long way away from you.

And as stated below the reason may be becuse you have no recent credit history to generate a good score. That is a guess on my part.

Dave Jackson
Loan Officer/Real Estate Asset Planner
Financing Solutions for Arizona Real Estate since 1993
American Financial Lending, Inc.
20860 N. Tatum Blvd, Suite 160
Phoenix, AZ 85050-4277
602 277-3800 w
602 631-9788 f
602 524-2401 c
602 912-9438 h
BK # 0910057 NMLS LO ID # 284875
0 votes Thank Flag Link Wed Dec 4, 2013

I would recommend working with a qualified lender.

If you would like some great referrals please contact me direct?
0 votes Thank Flag Link Wed Dec 4, 2013
Your credit score is just that... a score of how well you handle your credit. Not how well you handle your finances.

If you have no credit cards, no open lines of credit, no rotating debt (no car payments, mortgages, etc..) then they have no way to see how you handle credit, therefore your score would be low.

Open up a couple of credit cards (maybe a local department store, and a gas card)... use them, and pay them on time (or early). You don't have to charge a lot... if can be $50.00... but pay it on time, each and every month... and use them. You'll see your credit score climb quickly, over several month... and I wouldn't be surprised if by a year, your score climbs into the 700's.
0 votes Thank Flag Link Wed Dec 4, 2013
Alan May, Real Estate Pro in Evanston, IL
Hi Cheryl!!

As other's have stated, for your credit score to go up, you would need open available credit and to use it wisely! I have a lender that I have partnered with that gives free credit counseling and can help get credit scores up and even at 550, he has programs that would be available for you to obtain a loan to purchase a home if you were looking for one. If you can contact me, I would be happy to assist!

Matthew Potter
Stunning Homes Realty
P) 480-343-7894
0 votes Thank Flag Link Wed Dec 4, 2013
I know this may not make sense, but this is because having no credit is almost as bad as having credit, but not using it wisely. Lenders want to see that you can use and manage credit well. I suggest you get a credit card or two, and use them (sparingly) and pay them off every month.
0 votes Thank Flag Link Wed Dec 4, 2013
Have you spoken directly with a lender or credit repair company about what you can do to bump up your score?
0 votes Thank Flag Link Wed Dec 4, 2013
you need to have open trade lines , this trade line you can owe 0 but they have to be active to give you positive score, when i was a loan officer this question came up all the time ; now this does not mean go and spend money at all just that you have to have something that the credit agency's can rate you b

hope this was helpful , have a great day
0 votes Thank Flag Link Wed Dec 4, 2013
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