Credit and I have had a love-hate relationship. I had my first line of credit at 17 when I financed a laptop through a special school loan, then, by the time I graduated from college I had three credit cards, all of them, um, maxed out. That along with a car loan left me with a pretty hefty debt to income ratio. (Read: not the best thing to have in the world.)  It took me several years to get my credit cards paid off, and when I did, I was sitting pretty credit wise with a score well into the high 700s.

Then, my wife and I bought a house. At the top of the real estate bubble and I mean the very top, like crashing the next day, top of the bubble.

Needless to say, we lost more than 40% of the value of our home, and with the economic down turn, we had to short sell our home. We knew our credit would take a hit, but no one could tell us how much, or really, for how long.

Fast forward two years, our credit scores have recovered somewhat, and we learned that, as long as we had 20% down we would be able to buy a house again. Oh, but that credit score came back to haunt us while trying to secure a mortgage loan. As it turned out one of us was just a few points shy of a low risk score. Who would have thought that just a few lousy points would have such an effect?

Because of just a few points, one of our scores was no longer in a low-risk range, our escrow process was subject to increased scrutiny, the number of lenders available to us dwindled, and we had to write copious amounts of letters of explanation.

It’s a blur to me now, but I’m pretty sure I had to write one that explained why I gave my first born son the name that he as. (Okay, maybe not, but it felt like it.) We later learned that had we had those couple of extra points, the process would have been significantly smoother and quicker. Who would have thought a few points would be so important?

 

 

Adam R. was an actual employee at freecreditscore.com. This story is his… really his. Every story differs.

This article is provided for general guidance and information. It is not intended as, nor should it be construed to be, legal, financial or other professional advice. Please consult with your attorney or financial advisor to discuss any legal or financial issues involved with credit decisions.

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