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    1 Reply Latest reply on May 16, 2009 12:09 PM by phanio

    Having 100% equity still isn't enough .....

    seafoodrlife Newbie
      We own our house out right with $250 to $300,000 in equity and because of not having credit we keep getting turned down from using it. Either we have too much equity and not enough credit or its great with so much collateral but always paying for everything was the worst thing we have ever done. I never knew not being in debt was so anyway I was wondering if you have ever heard of such thing? I had always heard collateral was a sure thing but its not according to a few unnamed banks. Just wondering if we weren't alone in this. It ends up being funny cause I always can tell by the sound of their voice what they are going to who would of known., Life isn't supposed to be simple anyway .... just wondering if anyone has been \same trouble?
        • Re: Having 100% equity still isn't enough .....
          phanio Pioneer
          The problem you face is common for people who do not use credit. Credit scores are based use - they want to see how well you manage your credit - if you don't use it - they think you can't manage it. Banks first and foremost do credit scoring (profiling) - meaning that if you meet a certain credit score level - your application is automatically declined. However, usually if you explain that you do not have bad creidt - just no credit - they will usually go back in and verify this from your credit reports.

          Couple of things you could do:

          1) Credit Unions - might be easier to work with - especailly as they usually do all of their underwriting in house.
          2) There are other non-bank financing companies that understand your situation.
          3) Keep at your local bank - go in and talk to the branch President - see if you can convience him/her why your credit is like it is.
          4) I think this would be you best bet - not only for now but if you ever need capital in the future - develop your credit scores. There are easy ways to do this - but it may take time - a few months at least to get creditor reporting into you files. Credit Buearus like to see three trade lines at a minimum. Two of these can be revolving (like credit cards) and one should be a term loan. This is how I built credit when I was a kid - could work for you now - I went down and opened a department store account (JCPennys, Sears, etc). I did just one. Once I got the cared, I charged $10 on it - paid it off as soon as I got the bill - then never used the card again - One trade line. Second, I opened a very small secured (used $100) credit card. Used it once - paid it off. It was secured by my $100 - but provided me a second trade line. In today's worlkd you do not have to do this - you could get a cell phone which reports to your credit. Third, I used $500 cash to secured a bank term loan. As the loan was secured by cash - it was easy to get. I let it sit for one month - paid it off (as I never used the cash). Then took my $500 out of that bank. As I did not have any prepayment penalties - it only cost me one months interest.

          After I let all of these sit out there for two months (to ensure that each reported to the credit buearus - then I went and used my new credit score and opened a true credit card - closing the first one and getting my $100 back. Next thing you knwo I had great credit.

          Just some thoughts

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