Can someone settle this fight

[momof2]

Yesterday me and DH had a fight about credit, I told him in order to get a good interest rate to buy a house next year is to keep out credit limits under 10% which is the advice I have gotten on this site, however my Dh's uncle is a mortgagt loan lender and he and his uncle talked about a week ago and DH said his uncle said that in order to get a good interest rate on a loan is to pay off ALL collections that are on your CR and to keep CC's under 50%, DH says that all you guys are wrong and that he is right. He always thinks he's right about EVERYTHING!! it of course ticks me off.

   Cn someone please settle this fight for me and give me the RIGHT advice, am I right, or is he right??    thanks

[modernsurrender]

To get the best from your scores, your Utl should be under 10% (and only 1/2 your accounts should show balances.)

As for the paying collections, while that doesn't necessarily improve your scores, a lot of what I've read here is that lenders require that all the Collections and whatnot on your account be paid off before they'll do a mortgage for you.

I'm so glad my bf knows nothing about credit, but has great history lol

I can look forward to never having this talk with him... unless his Uncle gets involved... uhoh.

Message Edited by modernsurrender on 03-30-2008 11:00 AM

[Anonymous]

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momof2 wrote:

Yesterday me and DH had a fight about credit, I told him in order to get a good interest rate to buy a house next year is to keep out credit limits under 10% which is the advice I have gotten on this site, however my Dh's uncle is a mortgagt loan lender (lendors don't wtite the scoring algortym) and he and his uncle talked about a week ago and DH said his uncle said that in order to get a good interest rate on a loan is to pay off ALL collections (this if done properly will help (i.e. pfd's), if not it could update them to show recent activity and tank scores.) that are on your CR and to keep CC's under 50% (major score killer and the higher above 50% the worst it hurts), DH says that all you guys are wrong (being married i already know that) and that he is right (buy your scores at 50% uti, then pay the uti down and buy the scores again, let him see for himself (and then show the mortgage offendor, err lendor). He always thinks he's right about EVERYTHING!! it of course ticks me off. (his marital duty i suppose)

   Cn someone please settle this fight for me and give me the RIGHT advice, am I right, or is he right??    thanks

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now that being said, some banks will condition collection items to be paid. this should be done as a condition to close.

[Anonymous]

Do you have CC's? Use the FICO score simulator and show him. Or show him your score now and then pay down the balances and show him.

[momof2]

dnm----  thank you, so in other words, i'm right and he is wrong?

[Anonymous]

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momof2 wrote:

dnm----  thank you, so in other words, i'm right and he is wrong?

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as long as you guys don't know where i live, yep.

[haulingthescoreup]

Agree with modernsurrender. How about this? --you're both right.

Mortgages are driven by a lot more than scores. Nevertheless, scores are a part of it, and getting util under 10% generally results in a really nice score boost.

As for collections, mortgage lenders seem to be reasonably OK with them, as long as they're paid off. But other creditors will give you stink-eye even if the collections are paid, and they will certainly hold down your scores over the long run. That's why you should do a PFD if it is in any way possible. If you just pay them off to make the mortgage people happy, you're stuck with the paid collections afterwards, and you have a lot less leverage to get them off after you pay. You're reduced to GW's.

So for the mortgage, sure, DH's uncle is pretty much right, although I would still try to improve scores with a quick pay-down on your CC debt.

For the long run, what is good enough for the mortgage is not going to be good enough for other credit products.

[momof2]

sidewinder----    where is the score simulator at? on this site or on another?

also where would i find to see if hosiptals do or dont have a SOL for collections? i know the SOL for california is 4 years for a medical bill but doesnt say what or if their is a SOL for hospital bills, that have gone to collections?

[Anonymous]

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@momof2 wrote:

dnm----  thank you, so in other words, i'm right and he is wrong?

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In my marriage, my wife is never wrong. Sometimes she is incorrect, a little mistaken, or perhaps misinformed, but she is never ever ever wrong.

[momof2]

dnm-- i will keep that in mind thanks.