In denial: Credit ratings kill many a dream of owning a house

THE FLINT JOURNAL FIRST EDITION
Sunday, July 18, 2004
By Marjory Raymer

Want to buy a house? Better check your credit report.

Lissa Dillard, 37, of Flint, learned that lesson the hard way. It took her five years, thousands of wasted dollars and help of credit counselors to finally buy her first house in January.

Here in Genesee County, hundreds of those who want to be homeowners are rejected every year, and their main problem is bad credit.

Dillard wanted stability for her family. She wanted to be rid of landlords. She wanted security and independence. She never expected the series of problems and disappointments her bad credit would cause.

Her credit score was low - only 420, well below the average 620-650 score. Credit scores are based on a variety of factors including payment history and total debts and are one of the main items looked at by lenders.

Dillard said unpaid hospital bills racked up when her then-husband became disabled and made her credit plummet.

She ultimately spent more than $10,000 on inspections, appraisals and other expenses for five different houses, only to lose the house every time, even though once she'd even been pre-approved.

"It felt like someone had stolen my dreams," said Dillard, a self-employed single mother of four.

Of the 12,715 people who applied for a home mortgage in Genesee County in 2002, just over half - 55.7 percent - were approved, slightly less than the state average.

Of the remainder, 14.1 percent were denied while the others were stuck in limbo for a variety of reasons such as incomplete loan information.

Those in Lapeer and Shiawassee counties were even less likely to be approved and more likely to be denied.

Sarah Vinson, 42, of Flint, said she was amazed when she saw her credit report. There were credit cards on it she didn't even know she had and the total debt of $8,000 shocked her.

"It's like one debt after another, but you've got to start somewhere," said Vinson, a day-care provider. "We took every little bit of extra money we had and whatever the biggest bill was, that's what we started on."

The couple also stopped using credit to make purchases and last month closed on the house they'd rented for two years while paying off their debts.

Regardless of race and gender, bad credit always ranks as the No. 1 problem and accounted for about 4 in 10 denials when a reason was given, according to a Flint Journal computer analysis of mortgage data.

Even if another reason - too much debt or not enough collateral - was the primary problem, bad credit was most likely the secondary reason, the analysis showed.

Nearly 1,800 Genesee County people were turned away from area lenders in 2002, the most recent year for which data are available. Not all lenders are required to detail reasons for denials.

Medical problems, divorce and out-of-control credit card debt are the main avenues to debt delinquency and poor credit scores, said Sharon Levenberry, housing specialist at Mission of Peace Housing Counseling Agency in Flint, one of several agencies that help people become homeowners.

"Depression sets in quick - especially when you spent money and at the end there is nothing," said Dillard, who gained 65 pounds during the five-year ordeal.

The emotional turmoil combines with lost community benefits such as increased voter participation, cleaner neighborhoods and more stable tax base.

After running through her savings, Dillard began working with Citizens Bank and the Metro Housing Partnership in Flint. They helped her improve her credit scores and gather piles of paperwork to document her now-timely bill payments.

"It's not like there's a magic wand. The only way to create good credit is to create good payment histories," said Amanda Crews, director of homeownership initiatives at Metro Housing, whom Dillard calls "an angel in a skirt."

That comes from paying bills on time, paying off old debts, even getting a little money in a savings account.

With dedication and patience, almost anyone can become a homeowner, Crews said, even those like Dillard who had given up hope.

Three months after going to Metro Housing, Dillard bought her first house: a three-bedroom Victorian house with a finished basement and big living room.

Her monthly payment is less than her rent was, she's building equity and she's lost 30 pounds.

"It's mine," Dillard said. "It was all worth it."

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