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06-29-2010 03:55 PM
My husband and I heard back from the Pre-qualification for a USDA Direct Loan. They said they were unable to prequalify us because our Transunion scores were not 640. Here is our situation:
We have "Dave Ramsey'ed" for the last 2 years, paying everything on time, paying off all collections, and working hard to get our credit scores up.
We paid off our last collection 1 year and 5 months ago... we have NO late payments for the last two years... flawless rental history for the last 3 years... same job for 8 years... we do meet the income guidelines for the direct loan.
SO, should we go ahead and fill out the full application hoping that the underwriters will see all the progress we've made in the last two years and overlook our credit scores? From what we have been told from the Tri-County Housing lady is that our scores are me: Ex.659, TU: 622, EF: 615 and my husband Ex: 640, TU: 606, and EF: 600.
We're very disappointed!!
06-30-2010 03:20 AM
If they recently denied because your TU score wasn't a 640, and it's still not a 640... then it sounds like their answer will be the same. Feels like I am missing part of the story, or the the timeline of events. From the sounds of it though, as soon as you get the score they need, you should be good to qualify since you've had clean payment history for the past 2 years, no collections for 1 year and 5 months (perhaps longer as you didn't say when the last collection occurred).
06-30-2010 04:57 AM
Thank you, Shane. We are just unsure of how to get our credit scores higher... we have been monitoring them for about 6 months and they have gone up very little. Perhaps that is because we have paid off everything but our car loans, student loans, and one low cc ($500) that we use and pay off each month before it reports an increase in balance.
Here's our other issue... we have a TON in student loans. I recently started a consolidation loan for mine as I am done with school and due to our low income, we qualify for Income Based Repayment and a monthly payment of $0 (this is a new government repayment option on their direct consolidation loans). The USDA lady suggested that we do the same with my husbands student loans, but he is just starting his Masters program and his loans all show "in school deferment". Can we take them out of in school deferment and put them in a consolidation loan through Direct with this same Income option which will put his payment at $0, even though he's still in school? At that point, if we can get his into the consolidation program, perhaps we would qualify for an FHA loan versus the USDA.
We are mostly frustrated because no one seems to be able to tell us how to get our scores up. We have done everything that has been suggested and for the last year and a half they have SLOWLY creeped up, but only by a few mere points! Should our next plan be to pay off one of our car loans? Would that jump the score?
Thanks for your help!
06-30-2010 09:08 AM
Increasing scores is a steady process, other than being able to remove negative information just keep on making on time payments and you will see your score gradual increase. Paying off the car loan will actually slow your credit score increase progression as you would have 1 less payment posted on time each month. If you only have that one credit card, you may want to open another one to help with the diversity of the accounts on your credit report. There are other sections here like FICO Scoring and Other Credit Topics and Rebuilding Your Credit that credit score improvement is more readily discussed in.
For student loan advice there is a Student Loan section here that you should post in. USDA counts the payment on student loans in the debt ratio ratio whether they are deferred or not, whereas FHA will not include them in the debt ratio if they are deferred for at least 12 months from the closing date (need to get the repayment/end of deferment date in writing, can't just be "6 months after graduation" as that is not a date).