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I have a 588 FICO due to some credit card debt charged off about 14 months ago and a car repo from 3 yrs ago, husband has 623 score. About the car repo-I called the bank to alert them I could not make payments due to my husband losing his job, the upside portion was charged off (no lien or judgment). The credit card payments got to be overwhelming with my husbands new job not paying as much along with the cost of child care. Is this the sort of explanation that a lender is used to hearing when determining risk for an FHA loan?
On the flip side, I have had a solid well paying job for nearly 7 years with continuing my education to enhance my salary. My husband has had a solid part time job for 3 years and is enrolled full time in school for a bachelor's degree. We have lived in the same rental for 2 years, and prior to that, 3-1/2 years at another apt. Never have we had any rental history flaws, and all of my other monthly obligations (voluntary health ins, car ins, utilities) are perfect.
My concern is when I have to explain my poor credit history, will a lender weigh in how stable my rental and job history are against those? I am also ordered to pay child support-which is current, and I have never been late. I am the person responsible at my job for maintaining the electronic child support payments for myself, would the lender see this as a positive factor?
With just my child support, our DTI is just under 15%, and I would be seeking a pre-approval rather then shop for a house first then ask for an approval. If I tell my lender that I I don't want to max out my DTI with the mortgage (a 36% with mortgage/child support instead of 41%), does this help in an approval? Any advice is greatly appreciated. Thank you.
Unfortunately the 620 number is pretty much carved in stone right now. Lenders won't go below that because there won't be any market for the loan if they do.
You might try a goodwill letter to the bank - especially if it's a local one that you do business with - explaining the situation and asking them to stop reporting the repo/CO. That would make an impact on your score. Also, the credit card CO is fairly recent. Is that something you might be able to PFD?
Unfortunately the 620 number is pretty much carved in stone right now. Lenders won't go below that because there won't be any market for the loan if they do.
You might try a goodwill letter to the bank - especially if it's a local one that you do business with - explaining the situation and asking them to stop reporting the repo/CO. That would make an impact on your score. Also, the credit card CO is fairly recent. Is that something you might be able to PFD?
We are seeking financing though a city program where we will go through their financial classes and receive a certification for their counseling. The counselor ran our credit, but didn't say "forget it, it's not worth it", instead she told me the classes help prove to the lender our willingness to become better in our credit habits. The charge off was from a credit card last oaid on over 2 years ago. Why do they wait so long to report the charge off?
Remember, this was for an FHA loan, not conventional.
I would recommend hitting the Rebuilding Your Credit board to see if anything can be done regarding the negatives. Also, if you don't have any open positive lines like a credit card, it's probably a good idea to see if you can get something to start reporting positively.
Agreed, minimum mid score for FHA is usually 620 but I think one of the experts said recently that very few lenders are accepting 600. Either way, you still have a bit to go. Good luck, you'll be there soon!