Owner financing or bank financing

[southernmom]

My question here is which way should we go. Owner financing or bank financing. We are almost at our 2 year mark from our Ch 7 bk. I feel like I am sinking when it comes to our credit score.

When we went to buy a 2nd car (trans went out on our 11 year old van) to replace the van the car company did over 40 hits on the credit report on 2 different days which dropped the score badly. How that happened was we went in did the paperwork signed it and gave them a check for the down payment. Two weeks later we get a call saying they messed up on some of the papers and we needed to resign them. Ok so we go in and they said that we had to pay another $2000 down or trade in our newer car. Well we couldn't do that because we need 2 cars since husband works on one side of town and we have kids in school that I have to pick up. They tell us to sit tight and they will try to figure out something. While we sat there they were running our credit again which we didn't know about until I pulled our credit reports because I was getting a lot of we are sorry letters from banks in the mail.

So we didn't buy the 2nd car from them, but we got a used car for $4000 from a different dealer where a friend works.

Because of what they did it has killed our credit score. We really need to buy a house before this next summer. My niece is moving in with us to go to college. With 2 daughters and home and then my niece here a 2 bedroom apartment will not work since that is what we are in now.

We live in Huntsville, Alabama and my husband is a UPS driver and makes really great money. I go to school full time using my GI Bill and collect VA disability. I hope someone can lead me in the direction I need to go to find out some more info on this.

[OhioFiler]

What are your FICO scores?

[HHM]

First, what is your credit score and is it the true FICO score or a FAKO. Note, generally, repeated hits in a narrow span of time generally have no impact on credit, FICO understands that people shop around, so something is a bit amiss.

In any event, you are facing a double edged sword.
1. Owner financing will seriously limit your options as to which house you can buy, as most owners do not entertain such an option. So, it is like finding a needle in a hay stack and hoping it is not rusty and covered in tetanus. Also, owner financing will do nothing to improve your credit going forward.
2. Without knowing your credit score, hard to say whether you should do bank financing. You should be okay so long as your score is north of 660 and have a good job history. At least with bank financing, you can make an offer on any house you want, and long term, the payment history will help your credit.

Once you hit the 2 year mark from BK (2 years from discharge), see if you can get pre-approved by a mortgage broker. That will tell you if you really have issues. If you have a good BK attorney, he or she probably knows a mortgage broker that can help those with spotty credit get a mortgage.

[southernmom]

Mine is 620's and a month ago when I looked at my husbands it was a 650. What is the difference between a true fico and a fako. Husband has been at his job almost 11 years with a 2 year break due to his guard unit being deployed. He makes $6000 a month before taxes and all the other crap that comes out of his pay. We can also use our VA loan which would hopefully help. So where can I go to get a True Fico score.

[OhioFiler]

myfico.com

[HHM]

2 years from chap 7, score should be higher...

Have you taken steps to rebuild, do you have 1-3 credit card right now? Have you checked your credit report for errors after the BK?

The 3 keys to post BK credit rebuilding are
1. Passage time (you have done this)
2. Establish credit usage, get a credit card or two after BK, charge a small amount (e.g. $50) and pay them off every month
3. Fix errors on your credit report, if any.

[rmcmorran]

I believe that your scores are high enough with a VA loan, once you hit your two year mark, you would be good to go. Do not open any other credit inquiries though . . .

[southernmom]

There are a few errors on reports that we are still fighting to fix. The lawyer is now getting in on it since I am getting the run around. We have one credit card that is used to pay a couple bills and then paid off each month. We have a car loan that is paid each month and that is it. I guess I should look into at least one more credit card to help build the score.

2 years from chap 7, score should be higher...

Have you taken steps to rebuild, do you have 1-3 credit card right now? Have you checked your credit report for errors after the BK?

The 3 keys to post BK credit rebuilding are
1. Passage time (you have done this)
2. Establish credit usage, get a credit card or two after BK, charge a small amount (e.g. $50) and pay them off every month
3. Fix errors on your credit report, if any.