Need advice in rebuilding credit w/ credit cards

Anonymous · ‎09-24-2012

I have spent the last two years cleaning my credit reports (except for two student loands which are deferred) and am finally ready to start rebuilding my credit. The thing is, I desperately need to qualify for a mortgage in the next year as my current home, which I own outright, is literally falling apart.

I called a local mortgage company and went ahead and applied knowing I wouldn't get approved. The guy told me that was the only way he could advise me on what to do next. So, I didn't get approved, of course, but he told me to apply for two credit cards and within 3 months of carrying a 1/3 to 1/2 balance, my score should go up enough for a mortgage. My current FICO, according to him is 611 and he said it needed to go up to 640 at minimum. Also, my Vantage is 620 and my Transrisk is 585.

I haven't had a credit card since college (an AMEX which I defaulted on for 1,000 over 18 years ago) so was worried about applying but again, just took the plunge. I applied for a JCP card which I haven't heard back on yet and also a Capitol One Cash back card which I was approved for but haven't received yet I still can't believe I was approved for the Capitol One card.

Anyway, I only want a mortgage for 50 to 75K (which is normal for my area) so that I can be sure to be able to afford the payments. My personal income is reported at arund 10K AGI and combined household is around 26K. I am self-employed and have been filing schedule c's for a decade.

Oh yeah, I also applied for a car loan in the summer which I did get approved for but opted not to take at the time.

Anyway, I am very focused on doing whatever I can to be credit worthy so I can purchase a good home for my family. If you guys, who seem to know so much, could advise me on what my next steps ought to be, I would really, really appreciate it.

Thanks!!!!!

Wolf3 · ‎09-24-2012

@Anonymous wrote:
I have spent the last two years cleaning my credit reports (except for two student loands which are deferred) and am finally ready to start rebuilding my credit. The thing is, I desperately need to qualify for a mortgage in the next year as my current home, which I own outright, is literally falling apart.

I called a local mortgage company and went ahead and applied knowing I wouldn't get approved. The guy told me that was the only way he could advise me on what to do next. So, I didn't get approved, of course, but he told me to apply for two credit cards and within 3 months of carrying a 1/3 to 1/2 balance, my score should go up enough for a mortgage. My current FICO, according to him is 611 and he said it needed to go up to 640 at minimum. Also, my Vantage is 620 and my Transrisk is 585.

I haven't had a credit card since college (an AMEX which I defaulted on for 1,000 over 18 years ago) so was worried about applying but again, just took the plunge. I applied for a JCP card which I haven't heard back on yet and also a Capitol One Cash back card which I was approved for but haven't received yet I still can't believe I was approved for the Capitol One card.

Anyway, I only want a mortgage for 50 to 75K (which is normal for my area) so that I can be sure to be able to afford the payments. My personal income is reported at arund 10K AGI and combined household is around 26K. I am self-employed and have been filing schedule c's for a decade.

Oh yeah, I also applied for a car loan in the summer which I did get approved for but opted not to take at the time.

Anyway, I am very focused on doing whatever I can to be credit worthy so I can purchase a good home for my family. If you guys, who seem to know so much, could advise me on what my next steps ought to be, I would really, really appreciate it.

Thanks!!!!!

Capital One is good start, the next card will help a little. There is no need to carry a balance, just put some normal expenses on it and pay in full by the due date. When it time to apply for mortgage the reported balance should low.

You might consider financing you car for a small amount, short term to get an installment loan on your report.

Creditaddict · ‎09-24-2012

Is the Mortgage going to be in both names of you and "other" individual in house?

the 640 that this person speaks of, is this to get First Time Home Buyer and put 5% down?

Maybe OP or other in mortgage business, wouldn't that leave about $580/month that you could use towards a monthly mortgage payment including taxes and insurance? That would buy you about $60-$65k mortgage over 30 years, correct? Im little rusty on Mortgage stuff!

Now credit Cards, I would look at a Walmart Credit Card, and I guess maybe Capital One, but do the pre-qualification on the website and don't apply if they don't offer you one, you could do the same over at Discover Card too...