All 3 FICO scores are above 700 but I have several charge-offs. Can I qualify for a loan today?

[Anonymous]

Hello all,

I'm a first-time home buyer looking for some advice. Here's my situation:

All 3 of my FICO scores are currently above 700 but I have several charge-offs/unpaid collections that equate to several thousands of dollars. All of these delinquents are due to drop-off my credit reports between now and February 2010. However, I'm trying to take advantage of the $8000 stimulus tax-credit this year and need to close before December 1, 2009 to get the credit.

So, should I wait until next February 2010 before I pursue buying a home (and forget about the $8000 stimulus tax credit) or do I have a good chance of getting approved today without having to pay down the charge-off /collection balances?

Any help would be greatly appreciated.

[Anonymous]

The charge off's will have little effect on approval if they are that old.  The only thing is that some lenders and some laon programs may require that they be paid at closing.  You should be able to find a lender that will totally ignore these charges.

[Anonymous]

Thanks for the help mickie08.

[valley_man0505]

I was recently PRE-approved for FHA with a mid score of 623.  I also have several charge-offs and one paid collection and one unpaid collection.  Mine appear to be about 6 months newer than yours since mine are scheduled to start dropping off in 2010 to early 2011.  My LO said the only thing he thought would be an issue was the one unpaid collection that I had.  He said he didn't think the CO's would be a problem, even the unpaid ones, but he was pretty sure that any lender would want the one collection paid off.  However, note that this was only PRE-approval.  I am waiting to hear back on my final approval any day now, so this all may change.

I have to admit, I am kind of envious (and encouraged at the same time) that you managed to get all your scores above 700 when you seem to have a similar history as mine in respect to baddies.  Do you have a lot of new credit in good standing that is bringing your scores so high?  I have 3 new CC's, but they are only 5-6 months old and I have one that is about 18 months old.  Maybe once I get a little more age on those newer accounts, I can break the 700 mark too

[Anonymous]

Thnaks for the reply valley_man0505,

My revolving credit utlization rate is only 1% so that's really helping my scores. I've worked really hard to get my credit scores up but I haven't opened up a new credit account since 2004 so that has helped a bunch too.

Also, the myFICO score simulator shows that my scores should get to between 830-850 in the next 12 months. Therefore, I may just end up waiting to buy a house in 2010 and hope the $8000 stimulus (or something like it) will be available at that time as well.

So, I'm proof that it is possible to get scores above 700 even with some delinquencies.

Message Edited by schlebrock on 02-25-2009 05:26 AM

[DallasLoanGuy]

Ask your loan officer their policy regarding paying these UP FRONT.

Some lenders will ask to to pay all or part of them. Some will not ask you to pay any of them.

[Anonymous]

Thanks for the information DallasLoanGuy. I'll do that.