Reply
Regular Contributor
Posts: 209
Registered: ‎07-13-2014
0

In need of advice.. USDA with poor credit scores. Lengthy Read...

[ Edited ]

Hi all, I've recently started looking at applying for a USDA loan. In my price range and location this seems to be the best option for me. They except lower than average credit scores and being a credit beginner this is attractive to me. I assumed my credit would be slightly below average but enough to qualify for the measly 620 required for USDA without requiring painstaking underwriting. I fall right at the limit on income in my area so getting the loan started before my pay would increase any further is important to me. So I signed up for credit monitoring at Mint.com ( An app I regurlay use to track spending) and all 3 reports varied wildly from each other.

EXP 712 Eqfx 630 TU 608

 

 

So assuming my middle score was above the threshold I began investigating further into mortgage rates and stumbled across FICO scores. Which led me here to myFICO. I decided to pull my FICO just to see the FICO score the lender would use. To which I was declined a score. (Equifax score is not high enough to calculate score.) This left me feeling absolutley sick. I stumbled across the forums and began reading through some of the credit monitoring discussion and many people here use USAA because all 3 reports are pulled every month. What I pulled from there was extrememly discouraging.

EXP 575 EFX 589 TU 575

 

My credit is very thin in terms of accounts. So I decided to apply for a secured credit card. (BoA) To which I was denied... 30 days yada.... So not wanting to tempt another inquiry I applied for an OpenSky secured that doesn't hit your credit as an inquiry. Approved last week and just funded the account yesterday. $300 CL I plan on using 1-9% utilization method.

 

My credit report currently contains the following: Honda Finance Auto loan $21K high limit. Originated 9/2005 paid off 11/08. In good standing. No baddies. 3 CA's. 1 $756 CA that I finally this week, sucessfully negotiated a PFD. 1 $88 PIF just this month CA that will drop off 9/14. 1 $50 CA that is PIF yesterday but will remain until 1/16. (3 PFD letters and GW letter led nowhere.) All 3 still report as they have not yet been removed because of new payment. I applied for the secured BoA card mentally thinking it was a slam dunk... I moved in April this year so I have 2 inquiries from utilities and an AMEX credit inquiry that shows up on all 3 reports in different names on all 3, plus the BoA referenced above in the past 12 months.

 

I realize that 2 CA's coming off will improve my score and the 3rd showing paid should also. Have I damaged myself even more with the extra inquiry and then the new Secured card? In my mind the only way for it to rise was the action that I took not thinking of letting the CA's fall off before applying. What else should I be doing to get where I need to be for loan? Any help or insight is appreciated.  This is the first time I have actually needed credit in a long while so I'm kicking myself for waiting this long to get it sorted out. 

New Contributor
Posts: 138
Registered: ‎06-23-2014
0

Re: In need of advice.. USDA with poor credit scores. Lengthy Read...

you kind of have a similar situation as me, I only have 2 accounts(Auto & Student loan) on my CR so I just got 4 cards which hopefully will kick in by the next reporting cycle. I think the slight dip you take from the inquriy + Average Age of Accounts will pay in dividends later when you have more open positive tradelines reporting.

 

A favorite on this board seems to be the SDFCU Secured Card, it doesn't graduate to unsecured but there's no inquriy and only 6.99% interest rate. Although you should be paying in full so interest rates are irrelevent, but if you had to carry a balance that is the card i'd rather have around in such a situation.

 

I would try for another secured card(like the SDFCU) so you can thicken your file and outnumber your few negatives with more positives.

Current Score: 639 (3.06%) 19pt gain

New Contributor
Posts: 138
Registered: ‎06-23-2014
0

Re: In need of advice.. USDA with poor credit scores. Lengthy Read...

Also what's funny is my AAoA is only 2 years and some change, yet higher than 99.9% of people on CreditKarma and many of them have higher scores than me lol.

Current Score: 639 (3.06%) 19pt gain

Regular Contributor
Posts: 209
Registered: ‎07-13-2014
0

Re: In need of advice.. USDA with poor credit scores. Lengthy Read...

I was thinking of applying for the SDFCU card but I'm scared to do more harm than good at this point. They do a soft pull which if done now would still show 3 outstanding collections. I think I may wait it out until I see progress in next months report.

New Contributor
Posts: 138
Registered: ‎06-23-2014
0

Re: In need of advice.. USDA with poor credit scores. Lengthy Read...

[ Edited ]

Well I have 2 co's on my TU, 3 on my EQ, and 4 on my EX...don't ask me how that works lol and I got approved for an unsecured store card, so being secured I think you'll be fine. If I remember  correctly I think the only way to be denied is if you're on the chex system, but someone should be able to verify that for you.

 

Also if you have scorewatch, you should run the simulator and see what it projects your score to be when you card starts reporting, You should be in the 620+ range when it starts reporting.

Current Score: 639 (3.06%) 19pt gain

Regular Contributor
Posts: 209
Registered: ‎07-13-2014
0

Re: In need of advice.. USDA with poor credit scores. Lengthy Read...

Anyone that owns an Open Sky card. Do they report your credit limit or just the high limit?
Regular Contributor
Posts: 209
Registered: ‎07-13-2014
0

Re: In need of advice.. USDA with poor credit scores. Lengthy Read...

Just as a friendly update. I finally secured a PFD for the last 2 collection accounts. And with BoA and OpenSky reporting I was able to pull my EQ Fico of 676! A 100 point jump inside a month. I'm more than ecstatic at this point. I've decided to hold off on buying a home for 12 months to try to let these accounts age and see where it puts me. both reporting for only 1 month at $0 balance got me this far so we will see where this takes me. 

Super Contributor
Posts: 8,362
Registered: ‎09-28-2007
0

Re: In need of advice.. USDA with poor credit scores. Lengthy Read...

Advertiser Disclosure: The listings that appear on myFICO are from companies from which myFICO receives compensation, which may impact how and where products appear on myFICO (including, for example, the order in which they appear). myFICO does not review or include all companies or all available products.
† Credit cards for FICO Score ranges: The score ranges are guidelines based on actual applicant approvals and having a FICO Score in a particular range does not guarantee you will be approved for credit cards recommended in that range.

Copyright ©2001-2015 Fair Isaac Corporation. All rights reserved.   | Terms of Use | Privacy Policy | Sitemap

IMPORTANT INFORMATION: All FICO® Score products made available on myFICO.com include a FICO® Score 8, along with additional FICO® Score versions. Your lender or insurer may use a different FICO® Score than the versions you receive from myFICO, or another type of credit score altogether. Learn more

FICO, myFICO, Score Watch, The score lenders use, and The Score That Matters are trademarks or registered trademarks of Fair Isaac Corporation. Equifax Credit Report is a trademark of Equifax, Inc. and its affiliated companies. Many factors affect your FICO Score and the interest rates you may receive. Fair Isaac is not a credit repair organization as defined under federal or state law, including the Credit Repair Organizations Act. Fair Isaac does not provide "credit repair" services or advice or assistance regarding "rebuilding" or "improving" your credit record, credit history or credit rating. FTC's website on credit.