Any Hopes of Getting Mortgage?

[KeithW]

My credit report has been trashed by about a dozen medical collections, many of which were under $100. I paid them all off about 2 years ago but my worst FICO score is 540. It also is still showing several of the debts as not paid even though they have been and TU is showing them as paid. I opened a dispute so maybe that will help.

In the meantime I have a car loan and 4 credit cards. The car loan has only had one 30 day late payment in the past 2 years, due to a bank routing number error, and my credit cards have recently been paid down to less than 20% of their balance.

My wife and I are really looking to get a mortgage and build a house before the end of the year. We have $35,000 in cash in the bank and 8 acres of property that we own. We will be first time home buyers so do you think there is any change of getting my score up enough to get a mortgage or is this going to take years longer?

My TU FICO which doesn't have the errors is 589.

[LondonMassey]

Take this time to work on your credit.  Write good will leters to the collection agencies and see if they will remove any of the reporting paid debts from your credit.  Also, if the 30 day late was from a routing number error, send them a good will letter explaining this and request that they remove the 30 day late from your credit. 

Ensure that you can have a mid score of at least 620, I would actually recommend having over 620 to leave room incase something happens between your pre-approval and closing.  Right now, though you may find a small bank willing to lend at a score of 589, is that your HIGH score or is that your mid score? 

You'd be better off just working on your credit for 6 months and see where your scores stand after that.  If you can secure a 620+ mid score, you could be able to get an FHA loan to build and would only need 3.5% down.

*I'm not an expert though...

[rckstrscott]

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@LondonMassey wrote:

Take this time to work on your credit.  Write good will leters to the collection agencies and see if they will remove any of the reporting paid debts from your credit.  Also, if the 30 day late was from a routing number error, send them a good will letter explaining this and request that they remove the 30 day late from your credit. 

Ensure that you can have a mid score of at least 620, I would actually recommend having over 620 to leave room incase something happens between your pre-approval and closing.  Right now, though you may find a small bank willing to lend at a score of 589, is that your HIGH score or is that your mid score? 

You'd be better off just working on your credit for 6 months and see where your scores stand after that.  If you can secure a 620+ mid score, you could be able to get an FHA loan to build and would only need 3.5% down.

*I'm not an expert though...

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well said! the repair process could save you lots of money in the future, it is worth taking the 6 months or year to get it done.. your score can move quite a bit, I went from sub-500 to above 700 in less than 2 years..

-scott

[KeithW]

I was not aware that a creditor could actually remove a paid debt. Are you saying they can so that it no longer shows up?

My middle score is the 589.

[Catacam]

Hi Keith,

Welcome! Yes, you can attempt to have those baddies deleted from your reports. Check out the Rebuilding your credit forum for some great information!

http://ficoforums.myfico.com/t5/Rebuilding-Your-Credit/bd-p/rebuildingcredit

Lots of people have had great success, and everyone here is very helpful and full of valuable info!!

[ripper998]

Also, what me and my wife did, dispute anything that is inaccurate on your credit report.  Me and my wife had a bunch of medical collections on our report from items that we either didnt really owe or were constantly being readded.  If you request for verificiation from the CRA and the collection agency doenst respond, it has to be deleted.  Also you can sometimes negotitate a pay for delete.  You will pay the amount fully, if they delete it from your CR.  Rememeber, most collection companies buy the debt for pennies on the dollar so if your willing to give them a $100 for something they only paid .10 for, they will jump at that.  The rebuilding credit forum here is really good, it helped me get my credit score up 120 points in 6 months.

[Catacam]

Keith, I'm not sure of your timeline for applying, but one thing I will caution you on, the underwritters hate disputes on your account, so unless you are 100% positive there is an error and will be deleted, I would hold off on disputes because even if they bring your scores up, your loan could die in underwritting.

With all that I have learned, I am waiting for close so I can attack my reports with disputes, but I was advised to wait until closing before I go crazy because it can bring up some serious problems!

You should check out some goodwill letters and talk to your auto finance company, especially if they still hold your loan. You could probably get your late off of your report!

[rckstrscott]

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@KeithW wrote:

I was not aware that a creditor could actually remove a paid debt. Are you saying they can so that it no longer shows up?

My middle score is the 589.

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I removed over 10 negative accounts with what is known as a Good Will adjustment... Check the rebuilding part for examples.. it takes a little persistence, but in Nov 2010 I had 19 negative accounts and now I have 3..  if yo uhave outstanding ones,  you could try a PFD (pay for delete) as well.. there are options. Good luck!

-scott

[KeithW]

All of the collection accounts I have are paid and belonged to a local collection agency owned by the hospital. I called and asked them about the possibility of getting some of them removed and they said that there was no way that would happen. They only notified the credit agencies that they were paid. They would never have them removed.

Since they have every one of my collection accounts I guess I am out of luck there.

[jaypeedee]

You are not out of luck.  As you read you will find others on here that have presistantly contacted creditors and collection agencies to have items removed and eventually it can pay off.  Just send them a letter explaining your situation.  Explain that you are trying to improve your credit score in order to buy a home for your family.  Come up with a reason why you failed to pay them.  Just keep sending those letters and calling until you have some luck.  Start with the most recent collections and work back.