Opinions Please!

[Anonymous]

So my husband and I are looking to buy a home in December of this year. I started repairing my credit two years ago and have done fairly well so far. Below is a snapshot of mine and my husband's profiles. Can anyone tell me if my negative will severely impact our house buying process...?

Me:

Credit Scores: EQ 670 | TU 665 | EX 678 (i'm hoping that with one of my negatives removed and another year of positive credit history that my scores will go up to around 700)

Income: Salaried at $60,000 with a year end bonus.

Monthly Debt: $0 (I have no car payment as I payed off my car loan last May, no CC debt, no studen loans)

Employed: 4 years at the same emloyer with steady income growth.

Negatives: I have (1) Charged off bank account that was overdrawn with a fall off date of 7/2016 and (1) Charge off that is due to fall off this August (This will not be on my report when we apply for a loan. *I am doing everything in my power to have my CO bank account removed, but I am afraid if I am unsuccessful that this will hurt my chances. I have not told my husband about this account (I know, horrible, but I was 19 when it happened and it's embarassing and I was hoping to handle it before the mortgage process.) **Both Charge-offs have been paid. 

I have $6,000 in my savings account.

My Husband:

Credit Scores: Perfect, literally. 840-850 across the board.

He is salaried at $70,000.

He has no car payment or credit card debt. He only has a student loan in the amount of $45,000.

He has $4,000 in a personal savings account. (We only share a savings account for the house fund and our mutual bills. Our "allowance" money and our personal savings are seperate. 

We have about $50,000 saved so far and will continue to save $1,500/$2,000 per month until december. Possibly more.

I guess my big question is: Will my credit drag us down? What will happen when a LO sees my negative? Will I have to explain? 

*I am aware that my situation is a lot better off than others on this forum... I just really want to know what to expect and have as few surprises as I can. 

[StartingOver10]

The lender will use the lower of the mid scores that the lender pulls. So if you can get your score up prior to application that would help.

The negative you have is old, the lender may not even mention it. If they do, they probably will be satisfied with a letter of explanation for the file.

You both have good savings and decent income - you don't say what price point you are shooting for in your new home. That information would really help. So far everything looks very good.

[Anonymous]

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@StartingOver10 wrote:

The lender will use the lower of the mid scores that the lender pulls. So if you can get your score up prior to application that would help.

The negative you have is old, the lender may not even mention it. If they do, they probably will be satisfied with a letter of explanation for the file.

You both have good savings and decent income - you don't say what price point you are shooting for in your new home. That information would really help. So far everything looks very good.

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Oh, yes, I should have mentioned that. Our price point, depending on what amount we qualify for is anywhere from $425,000 to $500,000. Hoping to have $75,000 saved for the down payment by December.

[Tarkovsky]

You shouldn't have any problems. Your combined annual income of $130,000 puts you in the top 12% of U.S. earners, so "decent" is pretty much an understatement as far as your income is concerned. You also have very little monthly debt with just the one student loan (probably somewhere around $400/month, I'm guessing), so your DTI ratio is very low, which leaves a lot of income left over each month to make a mortgage payment. The only *blemish* (and it's not much of a blemish) is the effect that the negatives are having on your credit score, and that's not really even all that problematic. As was mentioned earlier, the negatives are old enough that the loan officer probably won't even give them a second thought, but their existence (or the existence of the one) will probably still cost you some points on your credit score, which in turn might cost you a slightly higher interest rate, but that's about the worst that you'd have to worry about. Being approved won't be a problem, but getting the best interest rate might require you to shop around. Between your high income, low debt, and husband's near-perfect credit score, you have compensating factors that you should be able to use as bargaining chips to get a better rate.

I'd be curious to know if your score goes up after the first CO drops off your report later this year, or if the remaining one will still continue to have the same adverse effect as two. The general consensus seems to be that relatively minor negatives like 30-day and 60-day late payments cease having much of an effect after a couple years, but that more serious negatives will continue to ding your score for the full seven years. In such a case, is one just as bad as two?

[Anonymous]

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@Tarkovsky wrote:

You shouldn't have any problems. Your combined annual income of $130,000 puts you in the top 12% of U.S. earners, so "decent" is pretty much an understatement as far as your income is concerned. You also have very little monthly debt with just the one student loan (probably somewhere around $400/month, I'm guessing), so your DTI ratio is very low, which leaves a lot of income left over each month to make a mortgage payment. The only *blemish* (and it's not much of a blemish) is the effect that the negatives are having on your credit score, and that's not really even all that problematic. As was mentioned earlier, the negatives are old enough that the loan officer probably won't even give them a second thought, but their existence (or the existence of the one) will probably still cost you some points on your credit score, which in turn might cost you a slightly higher interest rate, but that's about the worst that you'd have to worry about. Being approved won't be a problem, but getting the best interest rate might require you to shop around. Between your high income, low debt, and husband's near-perfect credit score, you have compensating factors that you should be able to use as bargaining chips to get a better rate.

I'd be curious to know if your score goes up after the first CO drops off your report later this year, or if the remaining one will still continue to have the same adverse effect as two. The general consensus seems to be that relatively minor negatives like 30-day and 60-day late payments cease having much of an effect after a couple years, but that more serious negatives will continue to ding your score for the full seven years. In such a case, is one just as bad as two?

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Thank you for your feedback. I'm hoping that since my CO with my bank is not reporting any lates to EQ or TU, just to EX, that the CO from Cap1 that is due to fall off in a few months is where most of the hold-back is. On my Cap1 CO I have 30/60/90/120 lates (many - two years worth) reporting to all CRAs. On top of that, my two AMEX accounts that are going to be added have been backdated three years, so hopefully that will help my score. I think if I could get up to 700 on all three CRAs, then I would be less concerned about the 1 CO from my bank acct. 

[frugalQ]

Between the two of you, there's only 1 credit tradeline.  You may want to consider opening a couple of cc's to have the tradelines.  Otherwise, you will need to use alternate credit tradelines like utility bills.

Since you are not about to start the mortgage process, opening these cards will probably give you a decent credit score boost over time.

Other than that, you seem to be in a good position!

[Anonymous]

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@frugalQ wrote:

Between the two of you, there's only 1 credit tradeline.  You may want to consider opening a couple of cc's to have the tradelines.  Otherwise, you will need to use alternate credit tradelines like utility bills.

Since you are not about to start the mortgage process, opening these cards will probably give you a decent credit score boost over time.

Other than that, you seem to be in a good position!

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I have 5 CCs (you can see cards and limits in my signature) and my husband has 3 CCs - all fairly high limits ($8,000+/ no lates/ 3% util). I have a paid installment loan, he has a paid personal loan that was paid off 2 years ago, plus his student loans, which have all been paid on time/ no lates. 

I wouldn't need to open up more TLs, would I?

[Revelate]

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@Anonymous wrote:

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@frugalQ wrote:

Between the two of you, there's only 1 credit tradeline.  You may want to consider opening a couple of cc's to have the tradelines.  Otherwise, you will need to use alternate credit tradelines like utility bills.

Since you are not about to start the mortgage process, opening these cards will probably give you a decent credit score boost over time.

Other than that, you seem to be in a good position!

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I have 5 CCs (you can see cards and limits in my signature) and my husband has 3 CCs - all fairly high limits ($8,000+/ no lates/ 3% util). I have a paid installment loan, he has a paid personal loan that was paid off 2 years ago, plus his student loans, which have all been paid on time/ no lates. 

I wouldn't need to open up more TLs, would I?

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No, you don't; think Frugal's message was intended a reply to a different thread.

[frugalQ]

My apologies. I didn't look at signature. I just read "no cc debt" and took that to mean you didn't have any cc's.

I hope I didn't alarm you. 😁

[Anonymous]

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@frugalQ wrote:
My apologies. I didn't look at signature. I just read "no cc debt" and took that to mean you didn't have any cc's.

I hope I didn't alarm you. 😁

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No problem! I mean, there's a few cards i'm itching to get so it would have been a good excuse! Oh well, no more apps/inq until after the mortgage process is over.