Now, this video is for people that are obsessed with planning like I am. You want to make sure before you go ding your credit score, you have everything you need to qualify for a loan.

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1. Credit Score
– This is the first thing people turn to when thinking about buying a house
– I need to have a good credit score, or else I will not qualify
– Well that’s not true
– You can have no credit score and still qualify for a mortgage

But First Lets talk about having a Credit Score:
– Credit score make it easy for lenders to judge the odds of you paying back your debt and also lets them know all the debt you have and who you owe money to basically
– And 100% of the time having no credit score vs having bad credit is better ( because they are looking at two main factors, payment history, and credit utilization )
– They don’t want to lend to someone that’s drowning in debt and is missing payments

General Rules:
– 500-580+: is poor credit, but can usually get you special loans like FHA, VA loans, and USDA ( usually these loans are guaranteed by the government, so it makes it easier for you to qualify)
– But if you want great rates and just conventional loans you’ll want to be around 740 and above
– However, remember when I told you don’t need credit

Manual unwriting or your brand new to credit
– Is because you don’t have a credit score or are new to credit you’ll have to get manually underwriting
– This when they ask you for documentation of your financial life so they cant paint a picture of how likely you are to pay back the loan
– And this basically what dave ramsey teaches

However, here is my advice:
– If you want to build credit without the debt to make getting a loan faster and easier
– Just take out 2-3 credit cards or keep the credit cards you have now and pay them in full
– Add a small bill to each card like your phone bill, internet, and Netflix ( and then set the card to auto-pay in full each month) – in a few months you have good credit but no debt.

2. Debt to Income Ratio
– It uses to be you could just walk into a bank before 2008
– And you could be a waiter and say I make 100k and they would believe you
– And give you a loan with some crazy clauses inside of it
– But today they verify everything by law

The Basic Idea is:
– Banks don’t want you to use all your income for your debt payments
– Because they know its unrealistic and risky
– So they want to exactly how much income to use to support your debt payments and that’s all it is

A real example: with Free Sheet, I stole copied from Meet Kevin
– The best way to buy is debt-free with extra cash to manage your emergencies
– This way you don’t need a massive income
– And this way you don’t have a bunch of payments to worry about

3. Obviously they will Need to verify All your income
– Tax returns, pay stubs, and more
– And they want to see consistent income ( because that shows consistent payments )
– Usually, they ask for 2 years of tax returns and two years of proof of income and average out your income to get a basic figure

Now full transparency here:
– When I did before I had credit card debt, student loans and I wanted to buy a 700k multi-family home in New York
– That needed me to make a lot of money
– Sometimes renting is going to be better, and sometimes moving is going to be better also ( so run the numbers )

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*Some of the links and other products that appear on this video are from companies in which Tommy Bryson will earn an affiliate commission or referral bonus. Tommy Bryson is part of an affiliate network and receives compensation for sending traffic to partner sites. The content in this video is accurate as of the posting date. Some of the offers mentioned may no longer be available. I’m an Accountant but I’m not your Accountant, always review information with your Accountant/CPA and your Financial Advisor.

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