Prepping credit to purchase house

[Anonymous]

We are looking at either buying, or building a house within the next 6 months to a year. I am trying to get my hubbys credit in the best possible shape in order to get the best rates, mortgage etc (obviously). We took out a loan on a used vehicle in June and his credit was 702 then. We also have one credit card (it's mine that he is a AU on) that has less than 10% utilization. That is our only debt. My main question is the negatives on his account. He has a few collections, not many and they are all paid off. Most of them should be reaching the 7 year mark to drop off within the next year or less. I was wondering if I should try to get them removed in preparation for the mortgage loan? I have read that it hurts you to take a negative off after it is 5-7 yrs old as it lowers your age of credit, but the negative doesn't really effect your score anymore? I don't know how true that is but was looking for some insight anyways.

Another thing is, he does have a foreclosure on his record. We bought the house in 2009 as a fixer upper and quickly realized we couldn't afford to fix everything it needed. We also overpaid on the property, so we were upside down on the mortgage, and the house was not livable. Because of this we ended up foreclosing in 2012. I was thinking of writing the CEO of the mortgage company to see if they would remove it in goodwill (long story but I do have some leverage). But I wasn't sure if that would actually hurt us by getting it removed. When we got the vehicle loan this summer they did ask the circumstances on the foreclosure before the approved the loan so it makes me a little nervous. Anyways, I would love some insight on where to go from here. I applied him to 2 credit cards (that he probably wasn't qualified for but wishful thinking) a few months back and he got denied. I don't really want to apply him to anymore for fear it will hurt his score more, but would apply him to a low usage basic one that I know he would get approved for if you feel it would help him. 

Any insight is much appreciated! We did the mortgage thing 8 years ago and learned lots of hard lessons along the way. I want to make the best decisions possible this time around! 

[StartingOver10]

Welcome to MyFICO!

Do you know the source of his score of 702?   If the source is Credit Karma, that is not the score that any lender uses for mortgges at all.  Credit Karma scores are Vantage scores and mortgage lenders use FICO scores.

The mortgage lenders use a different version of FICO (older version) that we usually refer to as the 'mortgage score'. It is not the FICO 8 score that you usually see through credit cards.  Take a look at the sticky above the mortgage section - it will tell you about the scores uses for mortgage scores. You can get those scores here and through your mortgage lender. The difference is this:  if you get them here it is a soft pull and if you get them through a mortgage lender they are hard inquiries.

You should pull your husband's scores so you know where you are score-wise while you start on this journey to increase his scores.  Lenders use the middle of the 3 scores for qualifying.  If you and your husband are going for an FHA mortgage and he does have a 702 mid mortgage score, then he is fine for mortgage qualification purposes.

If you are going for a conventional mortgage, then it helps if the score is higher, but he qualifies (based on credit score only) with his current 702 assuming it is the mortgage score version and not something else. 

As to his foreclosure, leave it alone.  He has to disclose it anyway on the mortgage loan application. Gather up the documents showing it is completed - usually a copy of the recorded deed showing the house went back to the bank.  I wouldn't mess with it on the credit report because it is more likely to create issues if you try to goodwill the foreclosure off his record.  

Are you in a community property state?  If so, the lender will check your credit and debt as well, even if you aren't on the loan.

Remember, the lenders aren't looking at the type of card's you have - just at the utilization on those credit cards as it affects your credit score and your DTI. Having said that, it doesn't sound like you have debt with only one card less than 10% of its credit limit.  If you get him another card and have it report zero, it should boost his score. Use the card but don't let it report a balance until after you close on your home. Ideally he would have 3 credit cards (open) and two would report zero and the third would report a balance less thn 8.9% of its limit to optimize his score. 

[kc0039]

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@Anonymous wrote:

We are looking at either buying, or building a house within the next 6 months to a year. I am trying to get my hubbys credit in the best possible shape in order to get the best rates, mortgage etc (obviously). We took out a loan on a used vehicle in June and his credit was 702 then. We also have one credit card (it's mine that he is a AU on) that has less than 10% utilization. That is our only debt. My main question is the negatives on his account. He has a few collections, not many and they are all paid off. Most of them should be reaching the 7 year mark to drop off within the next year or less. I was wondering if I should try to get them removed in preparation for the mortgage loan? I have read that it hurts you to take a negative off after it is 5-7 yrs old as it lowers your age of credit, but the negative doesn't really effect your score anymore? I don't know how true that is but was looking for some insight anyways.

Another thing is, he does have a foreclosure on his record. We bought the house in 2009 as a fixer upper and quickly realized we couldn't afford to fix everything it needed. We also overpaid on the property, so we were upside down on the mortgage, and the house was not livable. Because of this we ended up foreclosing in 2012. I was thinking of writing the CEO of the mortgage company to see if they would remove it in goodwill (long story but I do have some leverage). But I wasn't sure if that would actually hurt us by getting it removed. When we got the vehicle loan this summer they did ask the circumstances on the foreclosure before the approved the loan so it makes me a little nervous. Anyways, I would love some insight on where to go from here. I applied him to 2 credit cards (that he probably wasn't qualified for but wishful thinking) a few months back and he got denied. I don't really want to apply him to anymore for fear it will hurt his score more, but would apply him to a low usage basic one that I know he would get approved for if you feel it would help him. 

Any insight is much appreciated! We did the mortgage thing 8 years ago and learned lots of hard lessons along the way. I want to make the best decisions possible this time around! 

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The collections don't really hurt anymore, they're just there. 6 months, get a secured credit card from your bank and utilize 9% of the maximum limit and pay it off every month. That will show history, might hurt a bit because it will be a short history, but it will show history anyway.

For the foreclosure, how are you going to remove something that is public record?