Our Story

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OUR STORY

We'll try to make this fairly brief, but there's a lot to tell & much could be relevant to many people.

My wife and I got married about a year ago. I am 44 and she is 37, both from previous marriages. I had been living abroad for the previous 7 years, so there was a big gap in my credit history in the US. My wives' credit had been damaged from her divorce, which is very typical when you split up and there is debt involved. When I returned home from living abroad, I started my own furniture company and put all my savings into the startup. I also used most of my available balance on my credit cards to finance the startup. As some of you may know, being "self-employed" is considered kin to being "unemployed" by most banks, mortgage companies and auto dealers. It’s a shame, because entrepreneurship is something that makes this country great and small business owners are the backbone of the economy, but when it comes to being considered for credit you are looked upon as a loser!

My wife and I lived together with her 12-year old son for about a year before we got married. She finally left her social work career to help me with the business and now both of us are "self-employed". We rented an apartment for a year for $1700.00 per month and in the second year (because business was improving) we rented a house for $2500.00 per month. Neither of us had terrible credit, but I knew we surely showed some late payments, a charge-off or two and a few other black marks, but nothing too outrageous. So there we were plotting along, trying to grow the business and thinking about having a baby! Yes - at our age!

At that time we had never heard of a FICO score. Had no idea what it was. We knew that our credit reports were important, but didn't have clue as to what we could do to improve them or whether they were below normal or above normal. We had two cars, but my wives father co-signed for hers and I bought a van for cash for the furniture store. I had 4 credit cards, so I thought I was in pretty good credit standing to have those, even though I kept them pretty maxed out with business expenses. My wife had no credit cards and her credit was a bit more damaged then mine.

Shortly after we got married was when the interest rates on homes started to fall dramatically. Everywhere we turned, someone was talking about what a great time it was for buying a first home or refinancing. We were sad thinking about all the money we were spending on rent ($30,000.00 per year) and started thinking about the possibility of actually buying a home. We talked to a couple of realtors and when we mentioned that we were self-employed and the business was not yet 2 years old, they told us that we would have hard time qualifying for a mortgage. We pretty much gave up and figured that we were destined to rent for a few more years until the business got stronger and we improved our credit.

One day, we had a customer come into the store and buy a few nice pieces of furniture. During our "small talk", he mentioned that he was a mortgage broker. He was a really nice guy and we decided to try and pick his brain about buying a home. He spent quite a bit of time educating us on the ins and outs of getting a mortgage. He told us about a few tricks (which we include in our e-Book) to drastically lower the amount of money we needed for a down payment, how to find a good mortgage broker (because many are deceptive), how to prove our income and most important - what a FICO scores is and why it is so important.

Feeling pretty encouraged and inspired by the education we had just received, we began the process of trying to get pre-approved for a mortgage. After a few weeks, a few different mortgage brokers and a lot of paperwork, we got pre-approved for a $300,000.00 mortgage with only a 5% down payment required! At that time, we still did not know what our credit reports said about us, what our FICO scores were, how much the interest rate would be, etc. All we knew was that we had a pre-approval letter for $300,000 and we were on our way to owning our own home!

Note: The reason we did not know what interest rate we qualified for is because; the pre-approval is good for 30 days. You have that time to find and negotiate for your home, but in that time, your credit score can and does change. The mortgage company can give you a ballpark, but it can change dramatically once it is time to lock the rate!

We were elated! Now all we had to do was to find our dream-house! After looking hard for about 2 weeks, we found it! A lovely English Tudor, 4 bedrooms, 3 baths, a yard, a two-car garage - fantastic! Let the negotiations begin!

Around the same time that we found our home, two added pressures were thrown upon us. Our landlord from the house we were renting informed us that he had sold the house and we would have to be out a month earlier than expected. Next my 80++ year old parents in Florida learned that my father had cancer and the best place for his treatment was in Chicago (where we live). They needed to know that it would be all right for them to come up every 90 days for 6 weeks and stay with us for his treatment. Of course it was perfectly fine with us, but this really added to the pressure of getting this house, to make sure that we had room for them. They had to come up immediately for my dad to start his treatments and we were still living at the rental house and trying to negotiate and set a closing date for the new house. We were hoping for a smooth transition, but we were so scared that something might go wrong and we would have to find another place to rent, move with my parents, etc.

We negotiated for a few days and finally agreed on a decent price for the house. (We also did not have to put any money down, even though we fully expected to). Everything seemed fine and a closing date was set that would perfectly coincide with having to move out of the rental home. Now we were really excited and could not believe that we were actually going to have our own home.

Then the bottom fell out! While all the work was being done (by realtors, lawyers, title companies, etc.) to put everything together to make the purchase happen, our mortgage company called us and told us we had been turned down for the mortgage! How could this happen? Well, about 2 weeks before you close on a mortgage, they run your credit scores again. They get all three FICO scores from Experian, TransUnion and Equifax and take the middle score to determine your interest rate. Within that time, our scores had slipped below any acceptable number to qualify for a mortgage! The mortgage company said they were very sorry, but there was nothing that could be done, as it takes about 6 months to change your FICO scores and we would have to pass on the house, work on getting our scores up - and try again!

Please!!!!! We were devastated and panicked! We just lost our home, had two weeks to move out of our rental and had my sick father to take back and forth to the hospital! We immediately called our lawyer for his advise. He told us that this happens all the time and with my original low score anything could have pushed it over the edge. My low score? How did he know my score and I didn't? What is a good score and what is a bad one? Who determines these score? Can I talk to them and tell them my story? How can we fix this score? Please!!!

OK - deep breathes now! Called 20 different mortgage companies and told them our story. All of them told us the same thing - "Your FICO scores are too low right now for us to help you, when you can get it up higher, give us a call and we will see what we can do". We didn't have time to get our FICO scores higher. We couldn't lose this house when we were so close! We called a lot of people that day - I guess to vent and share our grief. Family, friends, sisters, brothers. We called them all.

Sometime around 7pm that evening, our doorbell rang. It was my sister and a friend of hers that we had never met. I can tell you that we were in no mood for visitors! She introduced this woman to my wife and I and told us that Linda had worked for TransUnion (one of the big 3 credit reporting bureaus) and she knew the inside information on raising FICO scores very quickly. She explained how the whole process of FICO scores worked and how they were calculated. She told us step-by step how we could raise our scores in just a few days. We were fascinated and absolutely desperate. We would have tried anything at that point! I took a lot of notes while she described in detail exactly how to manipulate the FICO scores at each of the 3 reporting bureaus and get it done in a few days.

It all made a lot of sense to us, but we would have never figured it out without her inside knowledge and her experience from working at one of the big three credit reporting bureaus. We had nothing to lose by trying, so the next morning, (with my notes in hand), I sat down at the computer began the process. I followed all her steps to the letter. I will tell you that it was a bit time consuming and a lot of work to cram into a day or two, but I can not begin to explain to you how big it paid off and what it has done to educate us for the future.

Four days later, we had successfully raised 2 out of 3 of our FICO scores. Experian was raised by 36 points and TransUnion by 41 points! Since they throw out the lowest and highest score and use the middle for determining your qualifying and interest rate, we had raised them more than enough to get re-qualified for the house. With not a lot of time to spare, we called our original mortgage broker and convinced them to re-run our FICO scores. We did have to pay them an additional $40.00 to run the scores again, but when they did, they were amazed that they were now even better than when we first pre-qualified! After a lot of work by the mortgage company, they got the original lender to re-approve our mortgage and we closed the on the house on the last possible day before having to move out of our rental.

Our mortgage rate was not the lowest you could get and we plan on refinancing after in a few years, but we got a great house at a very decent rate (6.5%) and we learned some very valuable lessons and acquired some fantastic tools to help us take control of one our most important assets - our FICO scores.

Since then, we have been steadily approached by auto dealers, credit card companies and refinance brokers that all want to extend credit to us. I can tell you that we approach credit a lot different than we used to, but it is nice to know that we can get a new car whenever we want or a new credit card. Our mortgage company has called us several times asking us to help a few of their clients to increase their FICO scores, as the same thing happens to people all the time. The mortgage company has asked us to fill them in on what we did to increase our scores, but we feel that if they don't know how to help their clients and that is their business, we are not going to give them any of the techniques that we learned.

After going through our horrible experience and learning what we learned, we really felt the need to put some much-needed information out into the world. A part of us thought we should just put a web site up and share what we have learned for free. However, another part of us felt that we had done a lot of work and went through a lot to come out the other side with a method that could help thousands of people, so perhaps we could also benefit from our experience, while providing some good tips and techniques for free, but charging something fairly nominal for the real inside track that you might need when your in a bind like we were. Everyone is not lucky enough to have a sister with a friend that works at TransUnion!

Personal finances, credit reports, learning about credit are all things that should be taught in our schools. They really need to teach our children things that can and do make a difference in their lives and your credit is certainly one of them.

We still own the furniture store and actually opened a second smaller one in the suburbs. Also, for those of you that might have thought we were maybe a little too old (44 and 37) to have a baby, I will share with you, that my wife is due with our first daughter in early January! Believe me, you’re never too old!

This is our story and our initiation into the wonderful world of FICO scores and the purchase of our first home. As we said on our home page, we hope that by sharing our dramas, successes and secrets that many of you out there in similar situations will be able to benefit from them.