‘No ability to move forward’: Low credit scores cripple a family paying $2,400 a month to live out of a hotel
SPOKANE, Wash. – First-time homebuyers are struggling to break into the housing market.
Nationwide, nearly 2 million prospective buyers are expected to be priced out this year, according to the National Association of Realtors.
NAR says that accounts for about 10 percent of local families.
Credit scores are critical in this tight housing market, particularly for first-time homebuyers.
The higher you can get that number, the more competitive you will be.
Local loan officer Jared Wash says 680 is a good starting point, but 720 will get you better interest rates. One local family was inching closer to a decent credit score before COVID-19 hit. Today, their reality is much different.
The Keifer’s are a family of four cramming into a hotel room for housing. During the shutdowns, they both lost their jobs and started making ends meet by paying bills with credit cards.
Pre-COVID, they were trying to boost their credit score by around 20 points – to around 630 – so they could buy a home.
Now, they are just trying to dig themselves out of a hole with a credit score that’s tanked and is now in the low 400’s.
“Right now, with the amount that we pay for the hotel, for transportation, for everything like that, we’re maybe able to pay one back bill per month. At that rate, we will never be able to get our credit score anywhere,” said James Keifer. “We’re paying the amount here that most people would pay for a house payment.”
They pay around $2,400 a month for two beds and a kitchen. What’s keeping them there is a low credit score.
Over at Wheatland Bank, Jared Wash meets people every day who want to buy a home but can’t.
“I see a lot of people that during this time they had to put a lot on their credit cards, so they’ve steadily seen their credit score go down,” he added.
That’s what the Kiefer’s did when they lost their jobs, and they’re still paying for it today.
“Without being able to pay the back bills that are in collection, we have no ability to move forward,” James added.
The first step to move forward is to establish a credit-boosting plan by paying down credit cards and paying your bills on time.
“Those late payments have very negative effects on your scores,” Wash said.
He says if families stay committed to these plans, it will take around three to six months to see your credit score start to improve.
At this point, the Kiefer’s aren’t close to home ownership, but they’re working on that score.
“I would give a kidney to give my children a room,” James said.
Credit cards can be dangerous, but Wash says they’re still needed to build your credit score and help you qualify for a mortgage. He suggests putting small purchases on them every month and make sure you’re paying them off. There are also down payment assistance programs to help first time home buyers.
If you don’t have tens of thousands in savings, a local loan officer can help you find other ways to foot the bill.
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