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Ask Dave

Do More Than Pay Early

Tanner wants to buy a house in a few years and is paying his rent early to build himself up. Is that good enough?

QUESTION: Tanner asks if it will help him to pay his rent 30 days early for the next few years if he wants to buy a house down the road. Dave thinks he should pay early, but that’s not the only factor in the house-buying process.

ANSWER: It won’t help to do it 30 days early; I’d do it 10 days early. That’s the most you should pay it early. It could help you, but I don’t know exactly what will be used to cause you to be able to purchase a home. Your FICO score is likely not impacted by your rental, unless your landlord is reporting to the credit bureau. If they are, they may pick something off of that.

If you can ask your landlord to report to your local credit bureau, then it may be picked up by FICO score. If you’re doing a loan that is dictated by FICO, then it won’t help you to do that. If you do something that has a manual underwriting element to it, which is getting harder and harder to get, then it may not do you any good at that point.

My opinion is that FICO is a piece of crap because it doesn’t measure anything except your interaction with debt. It doesn’t measure net worth, assets, income, or any of that. So to make any kind of lending decision based on FICO only is very stupid.