Please help :(

[Anonymous]

Please forgive me as I am not completely familiar with this forum yet.  A friend recommended it and I'm just diving in.  My husband and I were hoping to buy our first home in a few months when our lease is up.   A year ago, my score was around 585 (according to a mortgage lender we initially applied with).  I have spent the last year paying big chunks on my credit cards (I have 6) which were all maxed out.  I went from every card being maxed out to 50% utilization.  I had 21 inquiries and am now down to 6.  I was using Credit Karma to track my credit scores (big mistake).  Credit Karma showed I had increased my score to 700.  I was so excited.  Then I read somewhere how inaccurate Credit Karma is so I decided to pull my actual credit report and scores through the credit bureau.  It shows my scores are 614, 580 and 600!!!  I am devastated.  I have had credit line increases on almost all of my credit cards since I started paying them down.  I have had no late payments since 2014.  I do have 2 judgements from 2012 and 2013 that are paid in full, both less than $500.  I have 2 car loans, both loans are a few years old with perfect payment history.  WHY is my score not going up?  I have several late payments in 2013 and beginning of 2014 due to my childs sudden illness and hospitalization.  Would writing letters to ask for goodwill adjustments on those lates make any difference at all?  Any advice or suggestions would be greatly appreciated.  Thank you!

[Anonymous]

You mention that you have paid your credit cards down to 50%, and do not mention any further paydown.  If they are still at 50% that is very high.  From the perspective of the FICO mortgage scoring model, it will like you much better if you pay that debt off entirely, and then continue to use exactly one card for small purchases, with all the other cards at a $0 balance.  If that is financially completely impossible, you would get a huge benefit from:

     *  Making sure that all cards are reporting under 47% (actually it's 48.99% but you should aim for 46.99% given that you are paying interest).

     *  Then paying off all cards with small balances so that you can create several cards that report $0.

     *  Then paying down your remaining cards to < 27% of their credit limits.

     *  Then paying your total utilization (that includes all your credit limits added together) down as far as you can.  You really should aim for under 8.99% and if that is impossible, that's a warning sign that you may not be in the right place to buy yet -- see below).

You also have a lot of negatives or derogs (lates, judgments, possibly other things like collections).  Even if they are paid off, they will still be on your report, and the mortgage models are pretty unforgiving of that.  You may very well be able to get them removed (you mention Goodwill Letters, great idea) but that may take time.

The big problem you are facing is the perceived timeline you face.  I use the word "perceived" because you may be backing yourself into that stressful sense of urgency.  Bottom line is: getting your reports clean, your CC debt paid off, and your scores very high is completely doable.  It may be very hard to do in three months.

Brutal Body Shots and others may be able to help guide you regarding the process of getting derogs removed from your report.

Hope this helps!

[Berk]

I would work on what "Credit Guy in Dixie" suggests and think about buying your first house in a few years rather than months.

[Anonymous]

These guys know what they're talking about. You came to the right place!

Good credit takes time. Rushing yourself only creates frustration.

Like you, I had pretty high utilization before I found this place. Paying that down made a very fast difference in my score, about 80 points over a couple months. If you're anything like me, it can be very, very satisfying to watch the score jump up as you pay it down.

Good luck!

[Anonymous]

Thanks  for helping me.

[Anonymous]

I agree completely that waiting on the mortgage is your best bet.  While I know it's not the answer you want to hear, it really is the right move right now.

Until your scores are 700+, considering a mortgage is move that would financially be a poor one as even in approval your monthly payments will be significantly higher, resulting in paying tens of thousands of dollars more in interest over the life of the loan.

The advice given by CGID above is very sound.  2/3 of your score is comprised of payment history and utilization.  If you get both of those factors in check your scores will increase significantly.  As far as payment history, keep making on time payments as you have been since 2014 but also take this time (say the next year) to focus on getting any old negatives that you have removed.  You can try phone calls, emails or good old snail mail letters asking for forgiveness of negative items.  The rebuilding forum here has some very good information.  This process can take some time to get you the results you are looking for, but one thing you'll find when it comes to improving credit is that time is one thing you have plenty of.  The second factor is utilization, which comes down to simply paying down and off those credit cards.  How long would it realistically take you to pay them completely off?  Ideally you'd want all of those balances to be under 10% of their credit limit prior to applying for a mortgage.