Can't get a HELOC with this?

[Anonymous]

Hello,

So, I had about 5 revolving accounts and, yes, due to being disorganized and also annoyed I was paying over 30% interest and $35 late fees each month per account, occasionally I would pay one 31-59 days late.  I always made double payments if this happened.

I got robo-called by Citibank and, yes, I ignored the robo calls that were like 3 - 4 times a day.  I felt I was pretty much their best customer, they were making a killing off me and getting paid regularly.

Then I noticed some of my accounts were closed.

I recently sold some assets and pretty much paid off all my revolving debt.  I only have 4 open accounts now.  A couple of them cut my credit line to like $250, from $3000, which is ridiculous since it tanked my credit score.  I have about $5000 in revolving debt, earn $120,000 a year, have a long credit history paying off numerous cars and paying mortgages always on time.  I have given my bank $200,000 over the last 7 years and never missed a mortgage payment, I figured that was what was really important.

I have maxed out some cards in the past, so I guess there lies the problem.

I also have about a 45% loan to value on my house worth 500K, and they won’t give me a HELOC of any amount with that income, debt to income, and loan to value.

They say my Equifax rating is 606 using the FICO formula for mortgages, which is the bureau I guess they use.    It is about 650 from TransUnion using their FICO formula for mortgages, but they use the lowest score.

I had been checking on my credit using the wrong formulas from the free sites, which I guess are for cars and credit cards, not secured mortgages, where you get much lower scores for some reason.

So, what do I do now, wait 6 months or a year and be good to qualify for any kind of HELOC on my 100K of 80% loan to value?

Thanks.

[jamie123]

Wow! Dude! You need to stick around these forums and read and learn how credit scores work!

One, yes I mean ONE late payment can drop your credit score up to 75 points! YOU MUST PAY ALL YOUR BILLS ON TIME EVERYTIME NO EXCUSES ALLOWED!

Okay...I'll quit screaming now.

First off you need to set up all your accounts to automatically make the minimum monthly payment from your checking account. You can and should pay more each month and not carry balances but if you forget to make a payment, it will automatically be made without incurring late fees or credit score penalties. You should be able to set this up for all your accounts nowadays.

Those 31 day late payments will haunt your credit scores for 7 years from the time that you incurred them. The points that each late payment affects your score will lessen over time. Any late payment that is less than 2 years old will have a MAJOR negative impact on your score and will be a red flag with lenders.

The amount of money you have in the bank or how much you earn or have invested has absolutely ZERO impact on your credit scores. Credit scores are determined by how much you have borrowed as a percentage of what your credit limits are and your payment history. (For the most part.)

You could be a super rich billionaire but have a terrible credit score because you make late payments.

Your situation is pretty complicated now so I'll ask a question or two to help you out.

How many open credit cards do you have right now?

What are their credit limits?

How much do you owe on these cards?

[Anonymous]

I agree 100% with everything jaime123 said. You absolutely cannot make late payments, especially over 30 days late. Every one of those reports to your CB's and will tank your scores.

Why do you consistently make late payments? You don't have the money or you just forget? Not being critical, just curious.

Banks don't view you paying late fees as a good thing just because they are making money off you. It's a ding against you every time and a huge red flag if you do it consistently.

I work in equity at a very large bank and we wouldn't approve you with both the scores you mentioned and the late payments. You're going to have a really hard time finding any lender who will, just to be honest. It's not all about income and LTV. As mentioned, those late payments will significantly. damage your credit a lot for 2 years and slightly less for five years after that.