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2 steps forward 3 steps back

Frequent Contributor

2 steps forward 3 steps back

So we want to buy a house and have paid off all our collection debts a while ago (2 years) and have 3 in 1 Fako scores of EX 600 EQ 581 and TU 620.  And before I started reading these boards I lived in ignorant bliss.  I pulled my EQ Fico and it's at a disappointing 561.  Now we did just pay off ALL of our credit cards ($1800.00 balance totals)to take utilization from 87% on all to 10% on 1 and the rest at 0%.  While I know this will help my score I feel like I just took a huge hit when I found out my real score.  Makes me feel like I'm getting nowhere.  The credit senario the fako's run show that paying off my balance should have brought up my score about 40 points and leave me around 640 and 20 from my goal of 660 to buy a house (this is what the loan officer said we need to shoot for).   We're looking at a house on the market $90,000 5 bedroom and just what we need.  We will have $5000 for a down payment and enough for closing costs as well in 3 months.  But there is little else I can do with the exception of DV'ing and GW'ing all our paid debts. 
 
So while I know that we're much closer than we were I just face the reality that I'm farther than I thought I was.
 
Ok, enough venting, now off to get those DV letters typed.
 
Thanks for being there and hello to everyone here!
Message 1 of 6
5 REPLIES
Senior Contributor

Re: 2 steps forward 3 steps back

Give the CRA's time to update, you should gain some points!  You'll get your house!
 
Do you have any lates that you can gw?
Message 2 of 6
Frequent Contributor

Re: 2 steps forward 3 steps back

I know it's a life story but here it is:
 
everything (car loan, student loan, credit cards, lines of credit) all went to pot around 2000-2003 and weren't cleared up until 2004/early 2005.  My own fault, I am addicted to gambling.  I have gone "sober" and paid the loans.  Rehabilitated the student loans to show as never past due and hold 5 credit cards that range from 2 years to 3 months old. The new cards show never late. Took out a car loan in early 2006 and paid that off this week, again no lates.
 
The old car loan and lines of credit and credit cards hold lates up to 150 days.  again PIF by 2005.  There are a few bounced checks and such that are paid and some old parking tickets PIF that show on my credit report.  Do GW letters really work when it was 200% my doing?  I wasn't the victim of being laid off or bad circumstances.  I in 4 years or so I won't have any lates on my record without doing anything. 
 
 
I have worked for a credit card company in the customer service for the last 2.5 years and I think everyone who ever wants a credit card should spend 1 year working for one.  I have gained so much more insight to the credit world. And how important it is.
 
Gotta love the subprime mortgage collapse. Where 640 would have gotten me great rates now I get mumbling Loan officers that tell me they'll accept my application (because they have to) but I know the mumbling means it will be impossible or a hard hard sell to get funded.
 
 
Minnesota J
Message 3 of 6
Established Member

Re: 2 steps forward 3 steps back

Don't despair.  My loan officer explained that they look hard at your recent (2 year) credit habits.  Additionally your income plays a huge role.  Look at FHA, I have similar scores and was pre-approved for an FHA for a larger loan.  In my case my income to debt ratio helped considerably.  I had to put more down than those with better credit, but the interest rates were not insane and  I actually chose to put more down than the miniumum requirement.  I close in 2 weeks, so everything is not final.  My loan officer seems confident, though I'm losing sleep over it!
Message 4 of 6
Frequent Contributor

Re: 2 steps forward 3 steps back

wow, congrats on the loan, remember he doesn't get paid unless it works, so if he was worried and there was something you could do he would tell you.
 
My last 2 years are spotless.  I also belong to a credit union.  They did have the car loan that was late and credit card too.  But they can be a bit more leniant too.  We will have lots of surplus income for the next 9 months, around $16-$20k but we can't have more than $5000 in our bank at any given time or we lose over $35k/year in medical assistance for our son.  He has autism and we use personal care attendants and respite care and medical bills.  So we have to find something that works for a 5k down payment. (and no prepayment penalty because we'll be putting a lot into the loan fast)
Message 5 of 6
Established Member

Re: 2 steps forward 3 steps back

FHA does allow a gift as a downpayment.  Mine will only be in my account for < 2 weeks.  Additionally, HUD has a website (www.hud.gov) which outlines several programs that offer down payment solutions.
 
My late husband received medical assistance after a car wreck, and I don't remember the specifics, but I was allowed to carry a larger balance in my account as long as it wasn't there for more than xx days (It was never there that long so I didn't have to worry about it).  Also, if you haven't already, you might want to check with your son's medical assitance provider to make sure that a real estate purchase won't hurt your standing with them as you build equity in your new home.  Best of Luck!
Message 6 of 6