Can I get some advice?

[Anonymous]

Hello! So blessed to have found this  board and the wealth of info here. Wondered if you guys could give me some advice? My husband and I want to purchase a home and land we have found. Here are our scores

Hubby- Equifax- 574 Transunion- 547 Experian- 616

Me- Equifax- 574 Transunion- 551 Experian- 612

We both have collections and some charge off's but they are all set to drop off in 2013, nothing recent. We have disputed all the negatives. We have no credit cards on our credit and our loan broker suggested we should get one ASAP. I am sure we could only get a secured card, but my mother has perfect credit and has offered to add us both as an AU on one of her cards that she has had for 10 years or more. No lates, but a 10k limit, but she may charge a few hundred each month, but PIF each month so that she never has to pay interest. WOuld this boost our scores instead of us having to get a secured card? We need our middle scores to get to 620 ASAP! i do not want to let this house go, It is a foreclosure and I know it will not last long. What else can we do to boost our scores? Our income is about 48k a year, but hubby has about 125k in school loans but we are paying 0 on those thanks to the IBR. We have 4 children. Also, is there a lender who would do an FHA loan for us now with our scores and maybe we could refinance in the future?

[YHWHUDAH]

Most lender require three active positive tradelines; however, some lenders will use other non tradition things in place of credit tradelines. For examples, rent and utilities can be used. As far as been added as an AU that will help your credit report and score, but it may not help as far as getting a mortgage.  Automated underwriting don't count AU as a positive it just ignore it. Its going to be very hard to get a mortgage with out no reporting tradelines. If I were you I would open and account ASAP. If possible three! Your scores can get you unsecured cards. For examples, Orchard bank, First Premier and etc...  Some lenders do allow less than 620 FHA. You will have to search the forums because some people have closed recently with scores bellow 620.  

Here is my advice...I would open 3 credit cards and let them report for 6 months, then I will PFD or goodwill those collections and charge offs to try to get them removed since its only one year. Besides those collections should not be impacting your score that much since the will age off in the next year. Save up about 6 months in reserves( whatever your mortgage will be). Open up a separate account for this. This will strengthen your file, and bank statements. Reapply in 6 months.  I would let this home go if it were me. Homes come on the market everyday and there could be a better deal then so don't get stuck in that as a reason.

In spite of my advice, it is possible to get a FHA mortgage with less than a 620 and no positive tradelines. Google FHA underwriting guileless and read it. You can use non tradition tradelines for FHA.

Good luck!!!

[CS800]

There are lenders out there who will go down to 580 but you might not get the best terms.

Are your collections all paid off? Just be ready to write a lot of letters if you have lots of baddies

Good Luck

[Anonymous]

Thank you so much for responding. We do have some open positive trade lines just no credit cards. WHo would we be able to get approved with to get an unsecured card? So is the AU idea not worth fooling with at all?

[MarineVietVet]

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@Anonymous wrote:

Thank you so much for responding. We do have some open positive trade lines just no credit cards. WHo would we be able to get approved with to get an unsecured card? So is the AU idea not worth fooling with at all?

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It sounds like the account is a good candidate to be added to as an AU but there are certain criteria necessary for it to help.

It can help you IF the account is older than any of yours (older than your current AAoA is even better), IF the payment history is long and clean, IF the utilization is very low, and IF it will report to the CRA's. Not all cards will do this. You need to ask the company first. You will inherit the entire history of this account. One caveat however; if this account starts to go south your credit will be affected as well. Keep that in mind.

From a BK years ago to:
EX - 3/11 pulled by lender- 835, EQ - 2/11-816, TU - 2/11-782

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".

[Anonymous]

yes, all those apply. My mom has like 850 CS and is VERY responsible with credit. She has agreed to do this if it will  help, but i still would like to get both my husband and I a card to add in our own names. Where can i find a list of who will approve with our scores?

[MarineVietVet]

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@Anonymous wrote:

yes, all those apply. My mom has like 850 CS and is VERY responsible with credit. She has agreed to do this if it will  help, but i still would like to get both my husband and I a card to add in our own names. Where can i find a list of who will approve with our scores?

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Have you looked at the Credit Card Center here onsite?

From a BK years ago to:
EX - 3/11 pulled by lender- 835, EQ - 2/11-816, TU - 2/11-782

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".

[StartingOver10]

Put the AU account on first before you add your own accounts. Make sure it is reporting before you apply for any credit.

[Revelate]

Ugh, I feel your pain, I only just started transitioning my cash-based existence so I know what you're stuck with.

You don't have the time for the AU to hit, and then open tradelines, and then wait for the score boost, and then still hit that short sale... unless it's still on the market 3+ months from now.  I apologize for being blunt, but it's going to be a challenge anyway: raising credit score is not a quick endeavor, and neither is getting a mortgage underwritten.

Go open up the secured cards tomorrow with whatever minimum is required for each.  Get the AU on there as well, but as others have mentioned you're stuck when it comes to mortgage underwriting as they'll universally drop out AU accounts from their calculation.  It will help for future credit requirements, and I think as you may have just found out, it's an important thing to start building even if you're perfectly comfortable living with your means out of a checking account.

I'd suggest that FHA is absolutely the way you want to go in your situation: the larger documentation requirements make your case look better from a mortgage underwriting perspective, and any sort of conforming loan is six months out from where you're at based on your scores and starting from zero positive tradelines.  You may be able to find a lender that will take non-traditional tradelines into account (demonstrated good payment of rent / utility / etc over some period of time), heck try to do both... but establish the credit history starting tomorrow anyway, it will help you in the mid-term and long-run when it comes to a mortgage or many other things.

[Booner72]

My scores were in the low-low 600's and my LO wrote me a preapproval letter to submit with a short sale offer.  This she did knowing it was a huge risk that I wouldn't make it.  We made it through those months on bated breath!  That bought us time for me to get my scores up.  The first offer was in May and it took until the end of July.  I paid down revolving debt which is the quickest way to get a score boost and was able to get my most recent collection deleted which gave me 15 points. 

 Why are your scores so low is the first question to ask yourselves.  You and your spouse's scores are almost dead-on, so I'm assuming you have very similar credit profiles?

I agree that I don't think you're going to get this foreclosure house (Unless it is a short sale) as you don't have time.  BUT now you have the motivation to figure out what you guys need to do to get your scores up.

Get on over to the Rebuilding section and get to work!