The brutal wait and a Question

[Anonymous]

As of  5 days ago my mid FICO was 587 (that was my TU04 score) and therefore I was turned down for a mortgage. We need a minimum of 620 according to the LO. 

Since then I have done the following:

-Cap1: $500 limit was at $495, paid down to $10

-WF Charge: $3,500 limit was at $1,700, paid down to $0

-Medical Collection from 2009 $160, paid off

-I also have 2 late payments in 2010

And now I get to wait and see what that does to my credit score and the wait is killing me already. I know it would be helpful if I had another line of credit (the LO told me 3 is ideal) but it's a little late for that at this point in the game. Opening a new one now would just decrease the average age of my accounts, right?  I wish I had known that sooner.

The only other option I have is to add myself as an AU to my wife's 12 month old credit card which has been always on time and is at 0% utilization. BUT that's younger than all of my other accounts. Would you advise doing that or should I just wait and see if my credit score bounces up enough from paying off the collection and paying down my utilization? We are in a 1st time home buyer program that we pay $140 into each month. Next month will be month 12 that we're in this program and the LO said that at that point, we could try to use that savings account as a third tradeline and "see what the underwriter says." 

Thoughts/Advice?

[Anonymous]

My $0.02-

I would not apply for any new credit if you're planning on apping for a loan again in less than six months. The additional inquiry and AAoA hit won't help anything, and the extra credit limit won't help much either since you've already paid down existing balances. However, adding yourself as an AU may be ok, but probably won't do a ton to the score either way.

Very smart move as well, paying the cards down/off. That should be a sizable bump to the score, but won't report until at least your next billing date for each card. I understand that paying off an open collection will not affect the score much (if at all), but lenders will see it much more favorably than if it was still open.

As for your late payments, those will hurt. Not much you can do there unless the creditor will remove them from your records. But, the older they get, the less they hurt.

I'd wait to apply again as long as you can. You're 587 may go up to 600-640 quickly once the new balances report. But, the lates and the collection will slowly start falling off, and a higher score should result.

EDIT: What's the 1st time homebuyer program all about? How would it report as a tradeline? Does it build equity?

EDIT 2: I keep confusing AAoA with AAoC! My bad.

[Booner72]

Having both of your revolving accounts report a zero will hurt.  One of your accounts should report a small balance to show that you can responsibly use credit.  FICO dings for not using.

  I'd get myself added to wife's account that has the low balance, and make sure she keeps it low.  if it is older than any of your accounts, then it could help a lot.  If this occurs, then don't let the other two report any balances.

You  need to make sure that the AU account credit-reports - what is the name of the company?

Paying the collections will do nothing for your scores.

You should GW the lates and the collections, asking for removal out of the goodness of their hearts - this is the only real way to get serious pointage in your situation, in my opinion.  

I would also encourage you to spend some SERIOUS time reading these posts in the rebuilding and mortgage sections so that you gain the knowledge you need to get the points you want.

Do you know all three scores, or just one?  It might be  smart to go ahead and have a lender pull your scores now so you know how far you need to get.  Remember, only 2 need to be over 620/640....

GOOD LUCK!

Good Luck.

[Anonymous]

EDIT: What's the 1st time homebuyer program all about? How would it report as a tradeline? Does it build equity?

It's a program through M&T bank to help you with downpayment and closing costs. You pay $140 over the course of 14 months to show that you're capable of saving money, they match you 4-1 at the end of the program. It doesn't build equity and it wouldn't report to my CR as a tradeline, but the LO said that with situations like ours, they might be able to USE it as a tradeline. I think it's along the same lines as nontraditional mortgages for people who have NO credit, where they use ontime payments for utilities and stuff to show ability and willingness to pay things on time. Hope that makes sense.

Having both of your revolving accounts report a zero will hurt.  One of your accounts should report a small balance to show that you can responsibly use credit.  FICO dings for not using.

My CC  still has a $10 balance. That's a 2% utilization--does that sound okay?

HOWEVER: I just realized that my CR states for the Wells Fargo Charge that I just finished paying down to $0 says "Closed by Credit Grantor" on the account. Does that mean it won't show up as a trade line on my CR anymore since it's paid off? My CR does still show my CL as $3,500...I'm just wondering if it's all going to disappear now that I paid it off since Wells Fargo closed the account due to my 2 late payments in 2010. I'm going to send them a Goodwill letter asking them to remove the late payments...should I also ask them to consider reopening the account?

  I'd get myself added to wife's account that has the low balance, and make sure she keeps it low.  if it is older than any of your accounts, then it could help a lot.  If this occurs, then don't let the other two report any balances.

You  need to make sure that the AU account credit-reports - what is the name of the company?

The CC is not older than my other accounts. It's younger than my youngest account by about 12 months. It's a Capital One card, so I'm confident that it will report to the CR if we go this route. I'm just not sure if I should go this route considering it will lower the average age of my accounts.

Paying the collections will do nothing for your scores. 

We paid off a medical collection for $3,000 a few months back that was only 6 years old and it was deleted from the CR, which raised my wife's CS by 30points. Is that just because it was a medical collections? The collection I just paid off was also a medical collection from 3 yrs ago. I paid another one off in September that was from College.

[Anonymous]

Do you know all three scores, or just one?  It might be  smart to go ahead and have a lender pull your scores now so you know how far you need to get.  Remember, only 2 need to be over 620/640....

EQ: 584 

TU: 587

EX: 633

[Booner72]

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@Anonymous wrote:

EDIT: What's the 1st time homebuyer program all about? How would it report as a tradeline? Does it build equity?

It's a program through M&T bank to help you with downpayment and closing costs. You pay $140 over the course of 14 months to show that you're capable of saving money, they match you 4-1 at the end of the program. It doesn't build equity and it wouldn't report to my CR as a tradeline, but the LO said that with situations like ours, they might be able to USE it as a tradeline. I think it's along the same lines as nontraditional mortgages for people who have NO credit, where they use ontime payments for utilities and stuff to show ability and willingness to pay things on time. Hope that makes sense.

Having both of your revolving accounts report a zero will hurt.  One of your accounts should report a small balance to show that you can responsibly use credit.  FICO dings for not using.

My CC  still has a $10 balance. That's a 2% utilization--does that sound okay?

HOWEVER: I just realized that my CR states for the Wells Fargo Charge that I just finished paying down to $0 says "Closed by Credit Grantor" on the account. Does that mean it won't show up as a trade line on my CR anymore since it's paid off? My CR does still show my CL as $3,500...I'm just wondering if it's all going to disappear now that I paid it off since Wells Fargo closed the account due to my 2 late payments in 2010. I'm going to send them a Goodwill letter asking them to remove the late payments...should I also ask them to consider reopening the account?

So this means you only have one open account reporting?  I'm not sure what to do in a case like this, whether zero or small balance is better.......If it were me, I'd add the AU.  Don't just listen to me. Hopefully others will come along and offer their advice.  Please do what you think is best.

  I'd get myself added to wife's account that has the low balance, and make sure she keeps it low.  if it is older than any of your accounts, then it could help a lot.  If this occurs, then don't let the other two report any balances.

You  need to make sure that the AU account credit-reports - what is the name of the company?

The CC is not older than my other accounts. It's younger than my youngest account by about 12 months. It's a Capital One card, so I'm confident that it will report to the CR if we go this route. I'm just not sure if I should go this route considering it will lower the average age of my accounts.

Paying the collections will do nothing for your scores. 

We paid off a medical collection for $3,000 a few months back that was only 6 years old and it was deleted from the CR, which raised my wife's CS by 30points. Is that just because it was a medical collections? The collection I just paid off was also a medical collection from 3 yrs ago. I paid another one off in September that was from College.

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Regarding the collection - I think that was a fluke.  CA's are not required to delete the account when paid.  In fact, most CA's claim it is against their agreement w/ the CRA's to do so (lie).  It has nothing to do with medical vs. nonmedical.  As I said, the only way to be sure it deletes is to GW them = letter, calls, etc  ....Or have already arranged to pay if they agree to delete.  I think it's fine for you to call them up and beg and plead your case.  If that doesn't work, send letters/faxes/emails begging away.

Good Luck, and let's hope others come along and chime in regarding your balances.  I initially read your post to see that both were reporting zero, I didn't see the 2%.  That's what I get for skimming!