Having a hard time getting credit?

[kevtex]

Has anyone had a hard time lately getting credit for a car,home,personal loan or know someone who has? I keep hearing about banks not wanting to loan money.

[sehrgut]

In my age bracket, I've not heard much, other than academic loans are more difficult to get. In my estimation, this simply means kids with awful credit and thousands of dollars on credit cards can't get money no one should be loaning them in the first place: a good thing.

[mdo12345]

It will be interesting to see the responses to this question. Unfortunatlely, a big part of me wants to think the Govt and Wall Street are "in cahoots (sp?) together"!

[texasPI]

My wife was recenlty able to get a student loan w/o problems. We were also in the process of applying for a car loan before the "credit crisis" but have decided to hold off for the time being. Our credit union called us yesterday and asked us if we wanted to proceed so it seems loaning the money is not a problem?

[letterk]

Yes and no. Keep in mind my wife and I have just about perfect credit. For personal credit, like credit cards and personal loans, no problems at all. However, we did have quite a difficult time getting our home loan when we bought in early summer.

[ClunkClunk]

No problems with student loans and credit cards, though both I had existing relationships with. I added more to my already existing student loans at the same rate, and I opened another credit line with the same CC company as I had before, so that might have been somewhat of an exception.

[Trench]

I haven't experienced it myself (yet), but I've seen it going on around me.

My parents are trying to sell their house. After months on the market, they finally found a buyer. His bank wanted appraisals on three comparables before they'd loan him the money. After three were found, they demanded five. After five were found, they demanded eight. The deal is now in limbo.

My co-worker's brother has a very high credit rating and was trying to borrow $60,000 for a condo. The bank initially wanted 10% down. The next day they wanted 15%. They kept increasing the downpayment by 5% daily until it got as high as 25%. After that, the bank said they weren't going to be able to do the loan at all.

My boss is trying to refi his house. I don't know the exact details of his story, but I do know he is having a terrible time with it.

I work for a company that provides business services for several automotive manufacturers. We've been seeing dealers across the country going out of business at an unprecedented rate. On top of an already slow economy, the few people who actually are trying to purchase vehicles can't get auto loans. Just today I read a story on MSN that GMAC will not be giving out loans to anyone who doesn't have a 700 rating or better. The lease on my vehicle runs out next month, and I was planning on purchasing it. We'll see how well that goes.

[Eagle]

I know somebody who has not one but two auto repos and a God-awful credit score all a result of poor choices and bad living a few years ago. Now he's kind of getting his life back together and attempting to rebuild. He is currently buying a car and actually found dealers that were willing to finance him. Presumably there's a bank behind the scenes forking over that cash so I guess they haven't locked everything completely down. Of course his interest rate blows chow and it wasn't an easy loan to accomplish. He had to jump through a few hoops but nothing too crazy IMO. I was very surprised he was able to do it though. I've read several stories about people w/ good credit being turned away for home improvement, swimming pool etc. loans. Maybe if it has to do w/ the home there's no money, but other loans are still doable.

Anyway there's my anecdote for this question.

[htownmmm]

Iffen i cants afford it, I doesn't buys it!


marty

[kevtex]

Iffen i cants afford it, I doesn't buys it!


marty

Great words to live by htownmmm.

[ClunkClunk]

Iffen i cants afford it, I doesn't buys it!
Works really well, until you try to go to a university, buy a car or buy a house.

However, I do agree wholeheartedly for those purchases in which people buy on credit, which they should really purchase it outright. Too many people I know buy on impulse, then struggle their way back out of debt almost every month.

[Suzuki]

Has anyone had a hard time lately getting credit for a car,home,personal loan or know someone who has? I keep hearing about banks not wanting to loan money.

In Canada things are much better on the personal credit side - we don't have a sub-prime problem and our banks haven't had the stuffing knocked out of them. In most provinces, if you put less than 25% down on a property, you have to get mortgage insurance. Yes, there have been some defaults, but our lending parameters are different and our housing markets weren't as inflated. We can't write of interest on home mortgages, which impacts purchasing decisions and deciding how much you can carry.

On the business side, credit is pretty tight and I've seen significant business deals that were quite far along the path crater due to credit issues. Also, some companies that were thinking about financing deals out of cash reserves are now deciding to hang on to their cash because they're not sure if they can get credit on reasonable terms and don't want to be caught short.

Banks are making hay about this - extracting better terms even from good credit risks - its actually quite disgusting.


Yes and no. Keep in mind my wife and I have just about perfect credit. For personal credit, like credit cards and personal loans, no problems at all. However, we did have quite a difficult time getting our home loan when we bought in early summer.




My boss is trying to refi his house. I don't know the exact details of his story, but I do know he is having a terrible time with it.

If the value of the house has gone down dramatically, that's a huge issue.


I know somebody who has not one but two auto repos and a God-awful credit score all a result of poor choices and bad living a few years ago. Now he's kind of getting his life back together and attempting to rebuild. He is currently buying a car and actually found dealers that were willing to finance him. Presumably there's a bank behind the scenes forking over that cash so I guess they haven't locked everything completely down. Of course his interest rate blows chow and it wasn't an easy loan to accomplish. He had to jump through a few hoops but nothing too crazy IMO. I was very surprised he was able to do it though. I've read several stories about people w/ good credit being turned away for home improvement, swimming pool etc. loans. Maybe if it has to do w/ the home there's no money, but other loans are still doable.

Anyway there's my anecdote for this question.

Many car manufacturers have their own credit/financing arms - they're desperate to sell cars, so are throwing money at consumers in the form of rebates, good finance terms and easy credit. If someone with a lousy credit history is getting a car loan, I can virtually guarantee its being provided by a vehicle manufacturer's credit arm - and I bet its a US car as well, as they're the ones with the most inventory sitting on the lots and a new vehicle year is fast approaching.

[Eagle]

Works really well, until you try to go to a university, buy a car or buy a house.

However, I do agree wholeheartedly for those purchases in which people buy on credit, which they should really purchase it outright. Too many people I know buy on impulse, then struggle their way back out of debt almost every month.

Do you mean like when I ordered 12 AS's, 4 soaps, 2 creams and an extra brush for good measure? Because those were all necessities IMO.

[D.Irving79]

nope. my score is in the high 700s, we pay a little extra every month on our mortgage/car loan(s)/credit card(s).

i feel very, very fortunate however to be able to do any of this.

my fiancee works for wachovia (wells fargo...haha), so a loan of any sort would most likely be a little easier for us.

[kevtex]

I really feel sorry for the younger generation just now starting out. Housing cost blow me away, there would be no way I could afford to buy a house now. Houses in my neighborhood are selling for more than twice the price I paid 11 years ago.

[cl00bie]

Works really well, until you try to go to a university, buy a car or buy a house.

My wife and I bought every one of our cars with cash (then we pay the car payments to our saving account for the next car). I went to college a course at a time with cash (some of which my employer reimpursed).

We did borrow for our house (6.5% fixed, 30 years). It is our only debt. No credit card debt (we pay off the Discover every month, and they pay us about $250 / year for the privilige of using their card).

It works well in most cases.

[letterk]

If the value of the house has gone down dramatically, that's a huge issue.

Our problem was trying to get one of the new jumbo conforming loans. We were one of the first to get one and our broker had to get one of the senior guys at Countrywide to manually sign off on it.

[77DX]

Works really well, until you try to go to a university, buy a car or buy a house.

Hmm. Apparently I did it wrong. I worked and paid cash for college. Also put 100% down on the last four cars.

[AaronX]

Our problem was trying to get one of the new jumbo conforming loans. We were one of the first to get one and our broker had to get one of the senior guys at Countrywide to manually sign off on it.

Yeah those non-conforming Jumbo loans were fun... even the agency jumbo loans are more involved than before the 'crisis' (I call it reality). I work at a bank so to answer the question of the OP; yes I have seen it be more difficult to get a loan. Several times a day.

[dpm802]

A great resource to learn about the credit industry is The AFTER BANKRUPTCY FOUNDATION (http://www.afterbankruptcy.org/index.html). Its not just for those that have gone belly-up with their credit. They have a lot of useful information that applies to anyone and everyone who wants to learn more about their finances and how to get maximum results out their resources in the current economy.

The best way to check your FICO scores is at www.myfico.com/12 ... there is a modest fee (about $40) to get your 3 scores, but you get the info immediately, instead of waiting for it to come through the mail. And the scores they give you are accurate and up-to-the-minute. Included are explanations about how the scores are calculated, and what you can do to improve them such as challenging derogatory info.

[sehrgut]

Hmm. Apparently I did it wrong. I worked and paid cash for college. Also put 100% down on the last four cars.

Good onya! I did it the same way!

[ClunkClunk]

Hmm. Apparently I did it wrong. I worked and paid cash for college. Also put 100% down on the last four cars.
I didn't say it's the only way to do things, it's just more difficult to get through the big expenditures in life purely in cash for many of us.

I was simply responding to the "don't buy things you can't afford" argument, which is sound until you get to large expenditures. It's not the wrong way to do things by buying things outright, it's just not realistic for the majority of us for things like college, cars, and homes.

[bigmo]

We live by the "don't buy things you can't afford" we also try to pay cash for everything we can. The only debt we currently have is the house and my college loans. Fortunately, we have been able to pay extra on the house almost every month.

[Holton181]

My wife and I bought every one of our cars with cash (then we pay the car payments to our saving account for the next car). I went to college a course at a time with cash (some of which my employer reimpursed).

We did borrow for our house (6.5% fixed, 30 years). It is our only debt. No credit card debt (we pay off the Discover every month, and they pay us about $250 / year for the privilige of using their card).

It works well in most cases.


Hmm. Apparently I did it wrong. I worked and paid cash for college. Also put 100% down on the last four cars.

Did you guys go to college when the costs were bearable? Should kids not go to college now because it's too expensive to pay for outright? I mean, I'm working through college myself, but I don't put down people who don't do the same...

On second thought, we don't support our trade schools as much as we should. That's another problem. Not everyone is going to be a lawyer or a doctor.

[Holton181]

I didn't say it's the only way to do things, it's just more difficult to get through the big expenditures in life purely in cash for many of us.

I was simply responding to the "don't buy things you can't afford" argument, which is sound until you get to large expenditures. It's not the wrong way to do things by buying things outright, it's just not realistic for the majority of us for things like college, cars, and homes.

I could have brought my house in cash, I would have gotten a loan for a bigger house. It's the way of the world.

[Dr. Mike]

After 4 years, my wife and I finally paid off all of my pre-existing credit card debt from my bachelor days - about $14K worth. Now we do not carry a balance on a credit card, and we pay it off every month. We use only one credit card, a BP gas rebate card that gives us a 5% rebate on our BP gas purchases, and so far we have received $100 in gas rebates this year. Our credit is in the mid 700's. We paid one car off completely, and are over halfway there to paying off our other car. Other than that, we have ~$10K in my student loan debt and our mortgage. Based on the recent increase I received in my credit lines on our inactive credit cards, as well as the incessant calls for offers to refinance our house, as well as the credit card offers that haven't slowed down, I haven't seen a difference in your ability to get credit.

[Dr. Mike]

Did you guys go to college when the costs were bearable? Should kids not go to college now because it's too expensive to pay for outright? I mean, I'm working through college myself, but I don't put down people who don't do the same...

On second thought, we don't support our trade schools as much as we should. That's another problem. Not everyone is going to be a lawyer or a doctor.

I would not postpone an education, if it is the right thing for you. But it is just like anything else - don't overbuy. If your goal is to be an elementary school teacher, you don't need to go to Harvard. Try to earn money in advance - save up for a college fund (students can do this too, not just their parents and grandparents). If it is feasible, work. I worked full-time during my summers and part-time during the school year. If you have to borrow, don't borrow more than you need. I had a roommate who would always borrow the maximum amount offered him, even if he needed only half the amount. One semester, after the loan check came through, he went out and bought himself a Japanese sword that cost several hundred dollars. I wonder if he has that sword paid off yet.

[cl00bie]

Did you guys go to college when the costs were bearable? Should kids not go to college now because it's too expensive to pay for outright? I mean, I'm working through college myself, but I don't put down people who don't do the same...

On second thought, we don't support our trade schools as much as we should. That's another problem. Not everyone is going to be a lawyer or a doctor.

I went to school when a course and books cost around $2000. But I tightened my belt, didn't own a lot of "toys". Kids should go to college if they are motivated, have the grades, and can pay for it either with cash or by getting loans they'll be able to repay later.

And we should support trade schools. Know how you call a recent college graduate? "Hey waiter!", while the plumber is making $75/hr. :biggrin:

[Eagle]

All you guys bragging about how little debt you have <p'shaw>. :prrr:

At one time I had racked up around 80k in debt not counting home, auto, school! Now that's something to brag about man. Not everybody can make such a claim. Alas, finally had to stop charging and start paying. Took about 5 years and now it's down to a more reasonable if less auspicious number. Ahhh, but the toys baby, the toys....


Yes, I'm being facetious. Except the part about the toys. I love the toys and you can't take that away from me! :biggrin:

[Jimbo]

I'm still getting a stack of credit card invitation in the mail each week. Last week one credit card sent me notice they increased my credit limit.
The "liquidity crisis" is manly banks not wanting to make short-term loans to other banks because they are scared they won't be in business in 30 days. Money has been going into 30-day T-bills instead.

[Lynchmeister]

I really feel sorry for the younger generation just now starting out. Housing cost blow me away, there would be no way I could afford to buy a house now. Houses in my neighborhood are selling for more than twice the price I paid 11 years ago.

My wife and I were thrilled about the prospect of buying our first home this Spring. We started slow by informally talking to a mortgage officer to get an idea of what we're realistically looking at borrowing and we also contacted a real estate agent and looked at a few homes in our preferred area.

Now I worry that things won't be happening as soon or as easily as we had anticipated just a few short months ago. We both have flawless credit and minimal credit card debt, so that's a strike in our favor, but again, I'm not too optimistic anymore.

[Robxcarlson]

While we are working hard to reduce our debt and not acquire new credit, Last month we had to buy a car. Apparently our bank had pre-approved us for a $40K auto loan. We didn't have to apply. We only spent $6K on a decent used vehicle, however.
When we bought our house last year, we only spent about 75&#37; of what the same bank approved our mortgage for.
If you have good credit, and you deal with reputable, long established institutions, I don't think there's a problem getting credit. And if you don't treat limits as spending goals, then I think credit will be easier to manage.

[Trench]

I haven't experienced it myself (yet), but I've seen it going on around me.

...

The lease on my vehicle runs out next month, and I was planning on purchasing it. We'll see how well that goes.

Well, my lease has now expired and I have experienced the lack of credit flow first hand. I had gone earlier today to my car dealership to sign some paper work on a new deal. They just called me to tell me I was denied. My credit isn't perfect, but it is also far from poor, and is in fact BETTER than it was when I originally started leasing the vehicle. Now I've been denied even though my new payments would be over $60 LESS than the payments I've been faithfully making over the past three years. Now I have no car, and the dealership and GM are missing out on a desperately needed sale.

[Ookla The Mok]

My parents are trying to sell their house. After months on the market, they finally found a buyer. His bank wanted appraisals on three comparables before they'd loan him the money. After three were found, they demanded five. After five were found, they demanded eight. The deal is now in limbo.




As a real estate appriaser, I deal with this all day long. Every day. Hypothetically here's what happened:

The appraiser put together a fairly accurate appraisal, including three comparable sales within a reasonable market area and timeframe. The adjusted values of the comparables supported the value conclusions of the appraisal and the purchase price of the property.

The appraisal goes to underwriting and the bank notices that the most recent comparable also has the lowest sales price. This tells the underwriter that the market is in an obvious decline. Nevermind that the comparable is inferior and has an adjusted value of higher than the agreed purchase price. Also, the three comparables are not an adequate data pool to make a determination of the market's stability. The appraiser is asked for additional comparables to support the value conclusion.

Additional comparables are added. However, the three most suitable comparables have already been utilized. They may be less similar, more dated, or further away. The underwriter does not like this. A request for additional comparables more similar, recent, and closer in proximity is made.

More comparables are added. These comparables are active or pending sales. They support the value conclusions, are similar properties, and are close in proximity. They are not closed sales, but do show the market's current acceptance of the value conclusion. The underwriter does not like these because they are not closed sales. A request for more comparables is made.

Some additional addenda are added to the appraisal describing the scope of work, the stability of the market, and the reliability of the value conclusions. A final statement that no additional comparables will be added, as they aren't necessary to make the results credible and accurate.

The deal is now in limbo.

[tblech]

Works really well, until you try to go to a university, buy a car or buy a house.

However, I do agree wholeheartedly for those purchases in which people buy on credit, which they should really purchase it outright. Too many people I know buy on impulse, then struggle their way back out of debt almost every month.

People should use their credit. If they can afford something, buy it on credit anyway and then pay it off in the next billing cycle. That way you show you have credit and the ability to pay it off. When the time comes to get a "real" loan you have a history of buying and paying that looks good so your ability to get the loan you need goes way up.

[Trench]

As a real estate appriaser, I deal with this all day long. Every day. Hypothetically here's what happened:

The appraiser put together a fairly accurate appraisal, including three comparable sales within a reasonable market area and timeframe. The adjusted values of the comparables supported the value conclusions of the appraisal and the purchase price of the property.

The appraisal goes to underwriting and the bank notices that the most recent comparable also has the lowest sales price. This tells the underwriter that the market is in an obvious decline. Nevermind that the comparable is inferior and has an adjusted value of higher than the agreed purchase price. Also, the three comparables are not an adequate data pool to make a determination of the market's stability. The appraiser is asked for additional comparables to support the value conclusion.

Additional comparables are added. However, the three most suitable comparables have already been utilized. They may be less similar, more dated, or further away. The underwriter does not like this. A request for additional comparables more similar, recent, and closer in proximity is made.

More comparables are added. These comparables are active or pending sales. They support the value conclusions, are similar properties, and are close in proximity. They are not closed sales, but do show the market's current acceptance of the value conclusion. The underwriter does not like these because they are not closed sales. A request for more comparables is made.

Some additional addenda are added to the appraisal describing the scope of work, the stability of the market, and the reliability of the value conclusions. A final statement that no additional comparables will be added, as they aren't necessary to make the results credible and accurate.

The deal is now in limbo.

Fortunately for my parents, they were finally able to close the deal last week. Of course now, I've got my own problems to deal with.

[ScottS]

Well, my lease has now expired and I have experienced the lack of credit flow first hand. I had gone earlier today to my car dealership to sign some paper work on a new deal. They just called me to tell me I was denied. My credit isn't perfect, but it is also far from poor, and is in fact BETTER than it was when I originally started leasing the vehicle. Now I've been denied even though my new payments would be over $60 LESS than the payments I've been faithfully making over the past three years. Now I have no car, and the dealership and GM are missing out on a desperately needed sale.

Can you extend the lease on your current car??

[Trench]

Can you extend the lease on your current car??

I am going to meet with the dealers tomorrow, and that is one option I'm sure we'll talk about. The problem I had today is due to the fact that GMAC, with whom I have a longstanding relationship, is no longer in the leasing business; so I don't know if they would extend the lease. And since the new company the dealer is working with has already turned me down, I don't have a good feeling that they would extend it either.