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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.
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.
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.
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.