New Buyer – 13 month plan

[justjunie928]

 Hi,

Apologies before you start for this being so long, it just came pouring out….

 I am thinking about purchasing a home and was looking for information about the FICO score and found this site. This is a wonderful site with a wealth of information. I have put myself on a 13 month plan to purchase a home, but would like to get some input if I am on the right track or barking up the wrong tree. I make approx. 107K gross per year and I’ve been on my job for 33 years. I just tried the free trial and got a score of 599; know I need mid-score of 620-640 min which is what I am working on.

I have 41 entries on my report (need to get the others to compare)

(31 of the 41 accounts have derogatory data (having gone to collection agencies and all past dues occurring in 2007-2010))

32 of the 41 reflect a zero balance (19 stating Paid as agreed and 12 Bad debt/collection and 1 stating 120 days past due)

It also states 0 collections and 0 public records

I have the 9 following pending

Clothing CC $948 Pays account as agreed Open

Auto CC $190 Pays account as agreed Closed

Medical CC $694 Pays account as agreed Closed

Clothing CC $2,486 Bad debt/collection Closed

Clothing CC $406 Pays account as agreed Open

CU CC $8,085 Pays account as agreed Closed

Education Loan $5,097 Pays account as agreed Last late was Nov 2011 (writing goodwill letters)

Education Loan $7,593 Pays account as agreed Last late was Nov 2011 (writing goodwill letters)

Auto Loan $24,311 Pays account as agreed Open

My Questions:

Which debt should I tackle first? The 8K is credit card debt that I’ve been paying on for years (the original balance was 16K) and make minimum payments on the smaller balances or pay the smaller balances and continue to make minimum payments on the 8k.

The student loans – how much is the negative hit on those? The late notices was truly an oversight as I had signed up for auto payments and it took longer to implement than I thought and didn’t make a payment because I didn’t want to make a duplicate payment if they were going to do an auto draft it. I am writing a goodwill letter asking if they would remove it….. anyone had any luck working with Sallie Mae?

I am also paying $350 monthly to the IRS for 2007 and 2008 takes of 14K – how negative does that hit?

On the accounts with zero balances – would it do my credit score any good to write goodwill letters to remove the derogatory comments or leave them as is since they are over 2-5 years old?

I know it looks like I should have more free funds, but right now I am also helping my daughter out until she gets employed (there is a timeline on this…. not indefinitely) which her COBRA takes a huge bite every month.

I hope to have 17k saved by the end of the 13 months in addition to what is going into my 401k, starting from next to zero though.

I won’t go over 280K for the purchase. I found a house in a new development. They are starting a new phase of the development; the infrastructure work will take 5-6 months to complete. After that I want to wait about 3-4 more months before I put my choice in and it will take 6-7 months to build the house (total of 14 to 17 months). Once I make my selection I will have to pay 5k (good faith)  which is applied towards the down plus any lot premiums.

Also, I am confused as to why it states no collections, but most of my payments were made thru collections agencies. Is there a difference?

Is 13 months long enough or should I wait longer..... I can, but really don't want to.....

Thanks to everyone who takes time to reply.... really want to do this right the first time around

[Booner72]

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@justjunie928 wrote:

 Hi,

Apologies before you start for this being so long, it just came pouring out….

 I am thinking about purchasing a home and was looking for information about the FICO score and found this site. This is a wonderful site with a wealth of information. I have put myself on a 13 month plan to purchase a home, but would like to get some input if I am on the right track or barking up the wrong tree. I make approx. 107K gross per year and I’ve been on my job for 33 years. I just tried the free trial and got a score of 599; know I need mid-score of 620-640 min which is what I am working on.

I have 41 entries on my report (need to get the others to compare)

(31 of the 41 accounts have derogatory data (having gone to collection agencies and all past dues occurring in 2007-2010))

32 of the 41 reflect a zero balance (19 stating Paid as agreed and 12 Bad debt/collection and 1 stating 120 days past due)

It also states 0 collections and 0 public records

I have the 9 following pending

Clothing CC $948 Pays account as agreed Open

Auto CC $190 Pays account as agreed Closed

Medical CC $694 Pays account as agreed Closed

Clothing CC $2,486 Bad debt/collection Closed

Clothing CC $406 Pays account as agreed Open

CU CC $8,085 Pays account as agreed Closed

Education Loan $5,097 Pays account as agreed Last late was Nov 2011 (writing goodwill letters)

Education Loan $7,593 Pays account as agreed Last late was Nov 2011 (writing goodwill letters)

Auto Loan $24,311 Pays account as agreed Open

My Questions:

Which debt should I tackle first? The 8K is credit card debt that I’ve been paying on for years (the original balance was 16K) and make minimum payments on the smaller balances or pay the smaller balances and continue to make minimum payments on the 8k.  The snowball method is pay minimums on all except one and then take the extra from that one to hit the next, then the extra from that to hit the next, etc etc.  It's up to you which ones you pay first.

The student loans – how much is the negative hit on those? The late notices was truly an oversight as I had signed up for auto payments and it took longer to implement than I thought and didn’t make a payment because I didn’t want to make a duplicate payment if they were going to do an auto draft it. I am writing a goodwill letter asking if they would remove it….. anyone had any luck working with Sallie Mae?  There is no way anyone can give you a magic number of points you are losing with the lates, but I'm sure it's not pretty...but because you already have a "dirty file" it isn't hurtin you as much as someone with a "clean file" with only these lates.  I have had no luck with Sallie Mae - been rebuiding for almost 1.5 years and they won't budge - you could try calling and speaking to the "advocates" and they will look into your file and see if there is any way they can remove it, which they will, if it is their fault in any way.  In my case it was totally my fault so they couldn't take them off, said against federal law, yada yada.   YMMV.

I am also paying $350 monthly to the IRS for 2007 and 2008 takes of 14K – how negative does that hit?  is this reporting as a tax lien?  If so, again, no one can tell you but it isn't good.  if it isn't reporting then it isn't hurting.  Just be sure you are making your payments on time every month and you can prove this, bc you can still get a loan with tax payments but they have to be consistent and on time...

On the accounts with zero balances – would it do my credit score any good to write goodwill letters to remove the derogatory comments or leave them as is since they are over 2-5 years old?  Anything you can get removed that is negative will help.

I know it looks like I should have more free funds, but right now I am also helping my daughter out until she gets employed (there is a timeline on this…. not indefinitely) which her COBRA takes a huge bite every month.

I hope to have 17k saved by the end of the 13 months in addition to what is going into my 401k, starting from next to zero though.

I won’t go over 280K for the purchase. I found a house in a new development. They are starting a new phase of the development; the infrastructure work will take 5-6 months to complete. After that I want to wait about 3-4 more months before I put my choice in and it will take 6-7 months to build the house (total of 14 to 17 months). Once I make my selection I will have to pay 5k (good faith)  which is applied towards the down plus any lot premiums.

Also, I am confused as to why it states no collections, but most of my payments were made thru collections agencies. Is there a difference?  One of two answers:  Either the collection agency was collecting for the OC and the OC still owned the debt, OR you are getting your info from SW, and sometimes the info gets convoluted when it comes over from Equifax.  Have you gotten all 3 of your reports directly from TU, EX, and EQ?  If not you need to.  Annualcreditreport.com.  The info here is much more detailed than the info from SW - dates, DOFD's etc.

Is 13 months long enough or should I wait longer..... I can, but really don't want to.....This depends on how much you can get done in 13 months.  I got my scores up (see below) is seven months, more than I ever thought I could.  Get your cc's down, have all zero except have one report a small balance (1-9 % of the limit for max FICO points).

Thanks to everyone who takes time to reply.... really want to do this right the first time around  Good Luck!

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[germaine47]

My only suggestions is try to pay the collections agencies in full, becuase every time you make a monthly payment the CRA will update as ding to your credit.  I commend you on taking care of your responsibilities.

[justjunie928]

Also, I am confused as to why it states no collections, but most of my payments were made thru collections agencies. Is there a difference?  One of two answers:  Either the collection agency was collecting for the OC and the OC still owned the debt, OR you are getting your info from SW, and sometimes the info gets convoluted when it comes over from Equifax.  Have you gotten all 3 of your reports directly from TU, EX, and EQ?  If not you need to.  Annualcreditreport.com.  The info here is much more detailed than the info from SW - dates, DOFD's etc.

I did pull all three and none of them are reporting collections....  looks like the OC still owns the debt...... learn something new everyday.... thanks again