A Zero Credit Score?!

I have to admit that, though we have owned a house in the past, the task of getting a loan, searching for a house, deciding on a house and then closing on a house all sounds like a really daunting, overwhelming task. This process would be intimidating in of itself, but we have one other complication to add to the mix: a zero credit score.

“What?” you may be asking. “How does anyone have a zero credit score?”

The answer is simple; we currently have no debt and no lines of credit. We did purchase our first home with a mortgage. But since we sold that house four years ago, we now have no lines of credit and therefore a zero credit score.

We have scrimped, saved, trimmed fat and worked numerous jobs over our last 15 years of marriage in order to avoid debt besides a mortgage- no student loans, no car loans, no credit cards. For us, debt is not an option.

Now, I have to admit that I have not always been on the debt free plan. My parents taught me to pay cash for purchases. However, I was also taught that upon graduating high school, I should start to build my credit. So during the first week of school my freshman year of college, I signed up for my first credit card. (Free 2 liter of Pepsi anyone?) My plan was to use the credit card for emergencies and when I did use it, to pay the entire balance off each month.

The problem occurred when I became a resident advisor in my dorm my junior year of college. I wanted to host a program in the dorm to welcome all of the new residents, and I wanted to buy some pizzas to share. Of course, I could be reimbursed for the cost of the pizza, but I had to pay the money up front first. So I used my credit card. This became a fairly regular habit during my time as a resident advisor, but the problem was that I was not disciplined enough to take the reimbursement checks, deposit them and use the money to pay off the credit balance. I got lazy, and my bookkeeping was nonexistent. Pretty soon, I was carrying a couple hundred dollar balance and only paying the minimum payment each month.

The crazy thing was that in the process of being undisciplined in my finances, I was actually building an amazing credit score. I was making regular payments on time. Never mind that I didn’t have the money to pay off the balance or that I had no savings. I was still considered a good borrower.

After I graduated college, I finally decided to stop the insanity of the minimum monthly payments and pay the whole thing off. After all, Andy and I were to be married nine months later, and I didn’t want to bring any debt into our marriage. I was able to pay it off in a few months.

When Andy and I purchased our first house three years later, I still had that great credit score, and I still had that open line of credit. It made our mortgage approval process easy, but Andy and I both began to question the credit game. A year or so later, we both decided to close our credit card accounts and to quit the senseless credit score game for good.

How the Dream Was Born

For me, buying a house represents permanency and stability. I lived in houses most of my childhood. Very fond memories are still attached to the two houses that I have memory of living in.

However, at the age of 38, I have owned only one house. That was a house that we bought in 2004 in Cincinnati, Ohio while my husband was in graduate school. We were told by some advisors not to purchase a home while in graduate school, since we may need to sell the house in less than five years in order to take a job upon graduation from grad school. On the other hand, the country was in the midst of the housing boom, and buying a house seemed like a great way to invest some money and then sell the house a few years later for a considerable profit. Home prices were going up while interest rates were relatively low. So we bought a modest, two-bedroom eighty-year-old house less than a mile from both my work place and my husband’s school for $65,000. The monthly escrow payment was less than what we had been paying in rent for our dumpy two-bedroom apartment. Our neighborhood was indeed a hood, but in the reurbanization trend of the city, we could see signs of neighborhood revitalization taking place.

As it turns out, we owned that house for nine years after my husband received a job offer on the west coast. By then, it was 2013, the housing boom had busted, and we were able to sell our house for $67,000. It wasn’t the return in investment that we hoped for when we first purchased it, but we were happy to be able to pay off the rest of the mortgage and walk away with a few thousand dollars. That was much better than many people were able to do in the housing market at the time. Plus we were satisfied in knowing that our little two bedroom house had been fertile ground for creating so many family memories: getting our first dog, bringing home our two daughters from the hospital, hosting international students, building raised bed vegetable garden, sledding down the hill in the side yard, hosting birthday parties, hammering out a dissertation in the little basement office that my husband crafted. Our house had become a permanent part of our family’s history.

Our move to the west coast was an adventure that we were thrilled to embark upon, and we knew that owning another home right away was out of the questions given the temporary nature of my husband’s job. He had received only a one-year contract to teach at a university, and we knew that renting for that year was the wisest thing to do. Andy’s one year contract was then renewed twice, so we spent three wonderful years in the green, woodsy, scenic Willamette Valley of Oregon.

When Andy’s contract expired after the third year, he landed a job in sunny, spicy San Antonio, Texas. This time, his job was a permanent job, at least as permanent as any job could be. We were sad to leave Oregon, but glad that we could go to San Antonio to put down roots and establish permanency for the first time on our married life.

Andy was offered the job, and two weeks later, we moved to San Antonio. Since we needed to move in such a short time frame, and since we had never even visited San Antonio before moving here, we decided to rent. We found an apartment and began to build our new live in the sunny southwest.

That was one year ago. Now, we are more familiar with San Antonio. We know the layout of the city, the places we like to go, the neighborhoods that we would like to live in. We are ready to sink our roots deeper and purchase a house.