O.V.E.R.W.H.E.L.M.E.D.

[Anonymous]

I need some input....although I have a feeling I'm not going to like what I'm going to hear.

My husband and I are getting ready to try for a USDA guaranteed loan in the next few weeks. We've done everything we can to repair our credit from our bankruptcy nearly 5 years ago. I've been monitoring our scores and trying to get them where they need to be so we can start the pre-approval process.

Here's the facts:

-My husbands scores are TU: 643; EX: 610; EQ: 631

-He has 95% utilization on his CC's. I know, I know that's what's hurting his scores. We didn't realize over the last year that we've been preparing for this what an impact high utilization has on your actual score. Dumb, I know. Currently it breaks down to $3800 balance on a $4000CL between 3 different cards. We are planning to pay about $1100 on them to see if that will bump his EQ score up into the 640's. Monthly minimums total $120.

-installment loan $319/mo.

-income $47K

Nothing derogatory for 4 1/2 years. No collections. All the bad stuff was included in the BK.

My scores suck. 580's (ish) so I know I'm probably not going to be able to get on the loan with him. I have no income, so it probably doesn't matter anyway.

Ok, so my question.....if we get his EQ score into the 640's that would give him a midscore of 640. With the midscore and his debt to income (which I think isn't too bad) are we good to go??  We are so close to the 640 mark so I feel like we only have one shot at this. If we get denied at one lender I don't think we're going to be able to shop around b/c of the score dings. Also, is paying $1100 (ish) enough to bump up the 631 score 9 points??? I did the fico "next steps" simulator and it says the new range of score would be between 631-651....Which doesn't really tell me much.

I know its not good to rush these things but our lease is up in 2 months so we are kind of in a hurry. We already found a house we love. $100K, so I think his debt:income ratios would be ok.

Any advice or input would be greatly appreciated!!! Thanks in advance.

[mauve]

Are you sure you don't qualify for USDA Direct? 

Also, I'd think that that much of a dent in utilization % would do it, but I really don't know. 

[Anonymous]

Oh, we might qualify for that....but I don't know that we want to go Direct. Seems like a lengthier process and more of a headache. I obviously don't know much about it though.

[mauve]

http://www.rurdev.usda.gov/mi/sfh/direct.htm

I can't do it for the home I'm planning to purchase because it needs renovation and that 2% overage isn't enough for it.  I'm not sure how lengthy the process is, but I've definitely heard horror stories.  However, it may be a really good deal for you overall.  I'd look into it if I were you - the income link is on that page so you can figure out if you qualify.  Keep in mind that that income number is based on AGI, not on GI.