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Mortgage loan denied..Please help

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Anonymous
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Mortgage loan denied..Please help

I have read many threads but feel a bit overwhelmed and would appreciate anyone's advice.

 

I applied for a mortgage loan and was sent a denial letter stating my median score was 617, my scores from freecreditreport were 572 in feb/09. 

 

I have a cap1 cc CO from 10/05 for $1700 and a wamu/prov cc CO from 11/05 for $1100, I am assuming with OCs, as no CAs reporting. I am able to PIF but not sure if this would help or hurt my chances of getting a loan. Also 2 medical collections paid from 03/07.

 

I also have 3 defaulted private SLs (each under $1200) that I have since rehabbed and have been current w/ no lates since 01/08 showing as 3 negs and 3 good standing(were not sold: same lender). I have another SL for $25000 that has never been late.

 

I am a recent college graduate and have been w/ current employer since 09/08.  I currently make $42000/yr and expect a salary increase in July to $50000. I have $10000 in available savings.

 

I would like to be able to purchase a home in 1yr (approx $180K in TN).  Is this realistic with my current credit problems?

What should I do to become eligible for a loan?   Any suggestions are greatly appreciated

Message 1 of 5
4 REPLIES 4
brownee
Frequent Contributor

Re: Mortgage loan denied..Please help

You should go to the Medical Collections area of the forum and get those medical collections off of your report by using the HIPAA letters.  Also, see if you can get a PFD on the chargeoffs and if so, pay them off (remember to get it in writing that they will delete).
7/7/09 TU: 630 EQ: 638 EX: ??
4/3/09 TU: 599 EQ: 606 EX: ??
Message 2 of 5
Anonymous
Not applicable

Re: Mortgage loan denied..Please help


@Anonymous wrote:

I have read many threads but feel a bit overwhelmed and would appreciate anyone's advice.

 

I applied for a mortgage loan and was sent a denial letter stating my median score was 617, my scores from freecreditreport were 572 in feb/09. 

 

I have a cap1 cc CO from 10/05 for $1700 and a wamu/prov cc CO from 11/05 for $1100, I am assuming with OCs, as no CAs reporting. I am able to PIF but not sure if this would help or hurt my chances of getting a loan. Also 2 medical collections paid from 03/07.

 

I also have 3 defaulted private SLs (each under $1200) that I have since rehabbed and have been current w/ no lates since 01/08 showing as 3 negs and 3 good standing(were not sold: same lender). I have another SL for $25000 that has never been late.

 

I am a recent college graduate and have been w/ current employer since 09/08.  I currently make $42000/yr and expect a salary increase in July to $50000. I have $10000 in available savings.

 

I would like to be able to purchase a home in 1yr (approx $180K in TN).  Is this realistic with my current credit problems?

 

Of course it's realistic!! You're only 3 points away from qualifying!!

 

What should I do to become eligible for a loan?   Any suggestions are greatly appreciated



Do you have ANY open, good standing credit card accounts? If not, adding a card or two (and keeping the balances super low and paying in full each month) would be ideal and would add to your "mix of credit." If you have no current CCs reporting, by adding one, you could 10-40 points right there.

 

Another thing might be to pay off (or settle) those COs. While you usually don't want to pay off old COs or collections if you don't *have* to, those COs are being seen as maxxed out credit cards by FICO (thus, you're automatically at 100% utilization -- FICO hates that).

 

While you would see an initial ding from those old COs being updated (FICO would see them as "new" ), the ding would, IMO, be outweighed by the reduction in utilization -- which would probably help your scores by about 20-50 points.

 

So bottom line: within about 6 months, you should be able to apply -- possibly sooner if you can reduce your utilization AND get a good-standing CC in your mix.

Message 3 of 5
Anonymous
Not applicable

Re: Mortgage loan denied..Please help

Thank You for your input. Would a secured credit card be the way to go?
Message 4 of 5
Anonymous
Not applicable

Re: Mortgage loan denied..Please help


@Anonymous wrote:
Thank You for your input. Would a secured credit card be the way to go?


I don't think you'd need to go the secured route. Cap One gave my DH an unsecured CC with a CL of $1K for scores in your range. I'd honestly try them first.

Cap One's been good to us. As long as you don't go overlimit or be late on your payments, you'll get auto increases roughly every 3-6 months. That will help your utilization OODLES (just remember to pay in full each month).

You're r-e-a-a-a-a-l-l-l-l-y close. I'd say open that CC, use it wisely, let it age for about 3-6 months and then you'll get a nice FICO boost (since the account will age a teeny-bit in that time) and a nice CL for utilization.

ETA: Didn't remember that you have a current Cap One charge-off. If you pay *that* they'll welcome you back with open arms. Chances are, you'll get an even bigger CL.

That was our experience at least. We had a CO from them a couple of years ago, paid it, and got another TL from them with a $1K CL.
Message Edited by Wonderin on 04-29-2009 08:44 AM
Message 5 of 5
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