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Trying to Qualify.....Seems like when I take 2 steps forward...i'm kicked back 3

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Anonymous
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Trying to Qualify.....Seems like when I take 2 steps forward...i'm kicked back 3

I have been in the process of or should I say preparing my financial / credit worthiness to purchasing a home for almost a year now.  Wished I had been reading these post months ago.

 

My information (i'm trying to remember all the information asked to provide, so bear with me):

 

Current Scores:  550 / 584 / 647 

Salary:  $45K

Time on J:  8yrs

Collections: 

  1 foreclosure over 4yrs ago (ARM Loan)

  2 collections settled (just sent a PFD letter for the remaining balance)

  1 collection deleted (delete letter went to CRAs last week)

  3 PFD letters mailed on yesterday for the rest of the collections on my account

 

Open good tradelines:

  2 CD loans purchased to build credit ($65 monthly) - Balances less than half of initial loans

  3 Credit Union loans ($200 monthly) - balance over half of initial loans

  Auto Loan ($488 monthly) will pay this off in March

  2 Credit Cards ($60 monthly) - keeping the balance at less than 20%

  Conns credit ($105 monthly) - Balance over half of initial loan

 

The reason for the step back remark.....well my scores were 584 / 606 / 647, two months ago, but for some strange reason the scores slipped backwards.  the mortgage loan officer stated that three of the collections (the ones I paid / settled above) reported my old accounts as new and that could have made them drop.  So he advised me to pay them off.  Ok, I did it, but two of the three stated that they will not delete only list as settled / paid in full.  So did it help my scores?  Then he told me to pay all the balances on the loans to less than half - I'm working on it.  The last thing he told me was to pay off my car to bring down my DTI.  therefore I had to double up on the payments to pay the car off in 2 months.....needless to say.  peanut butter and jelly sandwiches are getting pretty boring nowadays.  But the flip side of that is, I can't pay the car off and also pay the loan balances down to less than half..I'm doing all i can just to make the monthly payments to keep from having lates on all the accounts i have.

 

I have not been late on any accounts in over a year.  Please help me.  What is the best way to qualify for this FHA loan.  my loan officer is throwing things at me in bits and pieces.  i wish he had just given me a list of things to take care of at once.  it seems that he gives me a project, when i get it done, he say..."ok, now you need to do this"....and so on and so on.

 

i just have a strange feeling that when I pay off the car, there will be something else and I have made my family suffer financially long enough....is there a prize at the end of this road im on...am i that far off?  I am really trying to keep my eyes on the prize, but I'm tired of the setbacks with yet another hoop to jump thru.

 

 

Message 1 of 5
4 REPLIES 4
gpeach
Regular Contributor

Re: Trying to Qualify.....Seems like when I take 2 steps forward...i'm kicked back 3

Yes DTI wise paying car off is important.

 

Hang in there. When you pay off or settle a collection without getting deleted it does report as new and that will drop your score more.Going back and paying in full won't change your score unless they delete.

 

If I had followed my mortgage loan brokers advice instead of the advice here I would have ruined my score.

 

So you have 7 loans and 2 credit cards?  I am unsure how the balance of a loan affects credit. I do know that if you can pay down credit cards to more than zero but less than 7% that is supposed to bump up your score alot. Ours went up 20 points when we did that. 

 

Someone else with more knowledge of loans will need to help you out on that one. This is just my opinion. Check back for sure advice. If you have 7 would be that instead of paying all down to half would be to pay off all small ones and have less reporting. As credit mix you actually only need one to maximize score. I wonder if having so many affect your score vs amount paid off. Would research loans more.

Message 2 of 5
Anonymous
Not applicable

Re: Trying to Qualify.....Seems like when I take 2 steps forward...i'm kicked back 3

Take a look at this thread, about paying you car off your score will take a hit, this has happened to alot of folks including me..

 

http://ficoforums.myfico.com/fico/board/message?message.uid=630936#U630936

Message Edited by MrDent on 02-22-2010 10:47 AM
Message 3 of 5
Anonymous
Not applicable

Re: Trying to Qualify.....Seems like when I take 2 steps forward...i'm kicked back 3

paying off the car loan will probably ding your score for the loss of the account.  It will help DTI though.

 

Paying off installment loans does not make any difference.  FICO does not score them on utilization, just on loan histry/payment history.  So that age of the account and the history of any late payment is what matters to them.  Not the balance.  Unless you pay it off (then you may take another ding for an account closing)

 

Paying down revolving debt is the quickest way to raise score, so pay down the CC instead of the personal loans....

 

Paying old collections does not make them show as new, but it updates the date of last activity.  This is the factor FICO uses to determine how much a collection should be held against you for scoring purposes.  FICO judges paid and unpaid collecitons the same.  They weigh collections based on when it was date of delinquency and date of last activity.  SO paying them never helps your score and can lower it.  Now getting them deleted obviously helps your score though.

 

Your lender has given you no goo dadvice if getting your FICO score up is the priority.  Pay down 15K in CC debt so you get down to something like 8% utlization or so and you will see some large FICO score jumps.  DO not app for anything else, and do not pay any collections off until closing unless they are PFD.  Get this doen and you will likely see 620 or so...

Message 4 of 5
Anonymous
Not applicable

Re: Trying to Qualify.....Seems like when I take 2 steps forward...i'm kicked back 3

Thank you all sooo very much.  You guys rock.....

 

Like I said in other post....I wished that I had found you guys months ago, as my scores would have been soaring by now with all the good advise. 

 

I will pay down the cards to less than 7% and only pay collections if they provide in writing that the account will be "deleted"

Message 5 of 5
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