cancel
Showing results for 
Search instead for 
Did you mean: 

Serious about buying home - But Credit scores are low -

tag
Anonymous
Not applicable

Serious about buying home - But Credit scores are low -

Hi...I'm really looking for some truth and advice.

 

I'm single, no children, income of $108k, soon to be $130k.

 

I have been sloppy and careless with my credit rating.

I have the following:

medical collections (was told by Mortgage broker not to worry about them)

1 old car repossession (2013) with balance of $6700

 

And the main reason, 2 capital one cards that I let go becaues of a misunderstanding.  I am currently working to get those cleaned up and they will be PIF in about 2 months.  I have another 2 credit cards with low limits, but are about 50% utilization.  I will also clean those up.

 

I am 100% sure the last 2 points regarding credit card delinquency on the first 2 Cap one card and 50% util on the second 2 (no lates on those) are what dropped my scores to their current levels.

 

My scores previously averaged around 560-565-570 but I looked and they dropped 50 points (because of 2 cap one cards) so now dealing with about 497-511-520 or around their.  

 

My questions:

1 - If I a)Get my cap one cards caught up and then pay them off and b) pay off my other 2 credit cards over a 3 month time period, could that be enough to get me up at least back where I was?   The myFICO simulater says yes.

2 - Are there really truly mortgage brokers that loan on 550 scores even with 10% down (which I will be able do)?  I'm not sure if I'm allowed to mention the names but there is one named direct something something and a couple others that swear they can because they're direct lenders..or do I absolutely need a 620?

3 - I am looking for a home in Florida (moving from up north) around the 200k price range.

 

Thank you for reading!

 

 

6 REPLIES 6
Anonymous
Not applicable

Re: Serious about buying home - But Credit scores are low -

What you have to ask your self is if you want to be stuck with an awful subprime loan rate for the duration of a mortgage, or is it smarter to put 6 to 12 months of work on credit repair and become eligible for far more competitive rates.
Message 2 of 7
ShanetheMortgageMan
Super Contributor

Re: Serious about buying home - But Credit scores are low -

Not sure what the scores will bounce up to, and keep in mind there is a specific set of scores that mortgage lenders use (so when reviewing the myFICO.com reports, make sure you are reviewing the correct scores).  I think the simulator just works on the FICO 8 scores (could be wrong), which aren't the mortgage scores.  A change with one version of the scores doesn't directly correlate to the same difference on other versions of credit scores.

 

There are lenders who can go down to a 500 score.  Although with mid 550 scores and 10% down, you'll need to be able to qualify for FHA financing.  Most likely you'd have to qualify via manual underwriting.  So for that you'll need no installment loan late payments in the last 12 months, and no more than two 30-day lates in the last 24, also need no more than three 60-day late payments on revolving within the past 12 months.  Odds are though you'll need clean credit for the past 12 months.

Free Mortgage Advice & Pre-Approvals (FHA, VA, USDA, Fannie, Freddie, Non-Prime, Construction, Renovation/Rehab, Commercial) since 2002
Located in Southern California and lending in all 50 states
Message 3 of 7
Princess9483
Valued Member

Re: Serious about buying home - But Credit scores are low -

With those scores the only thing I can see helping you is if you have the creditors pay to delete, because paying them off or even settling them won't get you to where you need to be, been there done that. I had similar scores 4yrs ago, settled half of my debt to only see my score hit 580. I pretty much had to wait until they started to fall off  last year before my score reached 620. Hindsight, I should have saved my money and been on this forum for tips on how to properly ask to delete the debt if paid, but hindsight is always 20/20. Good luck!

Fico: Beginning 506 (11/2013)
TU 619 (10/2015)
1/2017: Equifax 659, TU 655, Experian 642
Mortgage middle: TU 630
Goal 700 (but will settle for mortgage 640)

Current: TU 665 Oct '17
Message 4 of 7
Anonymous
Not applicable

Re: Serious about buying home - But Credit scores are low -

Thanks...I'm planning on a 12 month turnaround time to boost credit, finish saving and research on the house.

MY FICO simulator said they will bounce to 550/560/565 in 3 months..which makes sense considering it was 2revolving accounts which made it drop.

I have never been late on any installment loans, rent etc...and within a year the two cards that dropped my score will have eclipsed the year requirement of no 60 day lates (and will be paid off way before). And to be clear, they weren't charged off which is where the misunderstanding occurred on my part so I saved my credit that much at least.

I feel good about hitting 550 in 6 months...but like the other user posted, why not try for 620 for another 6 months.

Thanks!
Message 5 of 7
Anonymous
Not applicable

Re: Serious about buying home - But Credit scores are low -

My 2 cents (and that's about what it's worth):

 

Take your time and give it 2 years. Pay off the baddies or settle in full. Just get them cleared up some way, even at the expense of getting to a 10% down payment. Reason being that you won't need it all in 2 years if you start now. 

 

2 years ago I had 560's scores and 22 active collections. I went to work cleaning it all up. My income went up on a similar trajectory. And in the past 2 days I've pre qualified for zero down loans from 2 diferent banks/CU's. And the money I did save for a DP can now work for me.

 

It may seem hopeless now and that you have to take what you can get, but put in the time and effort and you'll have more control over the terms of engagement. Everyone's needs are different, but if you can wait and work I advise it. My current score is 715 and banks are competing for me, much like a popular commercial (except I didn't use them and instead worked the contacts I've built over the past 2 years). 

Message 6 of 7
Anonymous
Not applicable

Re: Serious about buying home - But Credit scores are low -

I disagree about not paying collections and charge offs. I paid one collection, and the CA said that they wouldn't delete. I settled and paid, and then they deleted it!  Also, charge offs should always be paid because they report every month. And they can lower utilization. 

Message 7 of 7
Advertiser Disclosure: The offers that appear on this site are from third party advertisers from whom FICO receives compensation.