What do I need to do to raise my score quick enough to get approved for a VA Loan? Help!

[Anonymous]

My wife and I want to get pre-approval for a VA loan late this year or early next year to buy a home. Her credit is pretty much where it needs to be, but mine is not. My scores are: EQ 527, TU 569, and EXP 601. I have a 4 items in collections, two of which were never supposed to be in collections. I called both creditors on Monday and they both agreed to remove the items from my credit report. I also disputed them for good measure. The 2 remaining collections total about $600 and will be paid off in a week (do I need to ask the original creditor to remove these, or can I even do that?). I also have a vehicle repossession from a few years ago with a balance of about $3400. We are working as quickly as we can to pay that off since we can't go through the VA loan process until it's paid in full. I also have a personal loan and an auto loan, paid on time, no late payments, with my wife. I don't have any credit cards, and the fact that I don't I believe is hurting my score. So my wife added me as an authorized user on her card that we will have paid to below 20% of the credit limit within the next month. My hope is that the good payment history, balance, etc. will transfer to my credit report and boost my score. What else can I do at this point to raise my score so that the median is at least 620? I'm not sure if getting even a secured credit card is a good idea since we'd like to go through the pre-approval process in the next 6 months. Thank you for any advice. 

[StartingOver10]

Welcome to MyFICO!  We are glad you came to visit us and hope you stay a while

Have you visited the Rebuilding Your Credit subforum?  They will have some specific ideas for you.  Having no revolving credit cards is hurting you. Being an AU on your wifes card ought to help you enough so you can get a card on your own.

I think you need to get at least 2 credit cards, possibly 3,  to help increase your score. You don't need large limits at all as the magic of scoring is in utilization. You don't have to have balances. If you have 3 cards reporting, then only have one report a small balance of 1% to 9% of its credit limit. To see which starter card you should get, go to the credit card subforum. I suggest a cap one card. You could put a tank of gas on it and pay it off right away to show usage.  You don't want to have all three cards report a balance because that has a negative impact on your score. 

By the way, one of my customers (I'm a Realtor) was in your situation and added a couple of cards and was immediately able to increase his score with the first reporting date.

I am assuming you are quoting your mortgage scores and not your FICO 8 scores.  If you don't know you and your wifes mortgage scores, get them there under the product section. You can get the monthly or the one time pull. These are consumer (soft) pulls and will  not show up as a hard pull. Best to start with accurate knowledge. The mortgage lenders will use the lowest mid score of all the applicants on the mortgage loan (you and your wife). 

Have you decided who you are going to use for your VA loan?  I suggest not going to a big box bank.  Go to someone that only originates, underwrites and funds mortgage loans.  

[Anonymous]

Thank you for the advice! Yes, those are my mortgage scores. We'll look into adding another card to see if that helps. I just hope we have enough time for it to start reporting and raise my score enough. We haven't decided who to use for our VA loan yet, but thank you for that tip as well. We'd definitely prefer to go with a company that works frequently with veterans. We visited a small regional bank yesterday to get some information, and half of we were told regarding VA loans was incorrect. 

[Anonymous]

I agree with previous poster, get some cards! Paying those collections and having them deleted will also really help. For the repossessed car, ask them to settle. I paid cap one $600 on a $4900 charge off. I believe your scores will shoot up by about 100 points if you do all of this. 

[VALoanMaster]

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@Anonymous wrote:

My wife and I want to get pre-approval for a VA loan late this year or early next year to buy a home. Her credit is pretty much where it needs to be, but mine is not. My scores are: EQ 527, TU 569, and EXP 601. I have a 4 items in collections, two of which were never supposed to be in collections. I called both creditors on Monday and they both agreed to remove the items from my credit report. I also disputed them for good measure. The 2 remaining collections total about $600 and will be paid off in a week (do I need to ask the original creditor to remove these, or can I even do that?). I also have a vehicle repossession from a few years ago with a balance of about $3400. We are working as quickly as we can to pay that off since we can't go through the VA loan process until it's paid in full. I also have a personal loan and an auto loan, paid on time, no late payments, with my wife. I don't have any credit cards, and the fact that I don't I believe is hurting my score. So my wife added me as an authorized user on her card that we will have paid to below 20% of the credit limit within the next month. My hope is that the good payment history, balance, etc. will transfer to my credit report and boost my score. What else can I do at this point to raise my score so that the median is at least 620? I'm not sure if getting even a secured credit card is a good idea since we'd like to go through the pre-approval process in the next 6 months. Thank you for any advice. 

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Hi Nwood2214,

Do not pay off anything until you have a lender review your credit. If the remaining collection accounts have not "reported" in the past 12 months or more you could end up hurting your scores.

You do not have to pay off the old repo to be eligible for a VA mortgage. How does the repo report? Is it showing as a charge off? Do not pay it off until a lender has reviewed your credit.

Depending on how recently the collections were reported you could see a pretty significant boost to your scores once the 2 are deleted.

You really should have a lender review your credit before you do anything else. I would run a score sim to see how opening a new credit card will affect your scores as well as checking out the effects to your scores once the collections are deleted.

[Anonymous]

Thanks for the advice! The collections are being reported monthly as far as I can see. The repo is classified (at least on my Equifax credit report) as a Charge Off, and the balance is reported monthly under the Account History section. The collections that are being removed were also being reported monthly, so I definitely hope that once those are completely removed, my score will improve. 

We have been working with a mortgage broker who was suggested to us by my cousin, who is also a vet. She helped them get some credit issues resolved quickly so they could get a VA loan. We haven't heard back from her yet with a plan of action, but my wife said she wanted to refer us to someone she works with that can help repair our credit by getting old, paid collections of mine deleted. I'm not sure how a credit repair service could do that legally, since they were valid debts and they have been paid in full. and they aren't more than 7 years old. She also wants him to attempt to get two 30 day late payments removed from my wife's credit reports and a judgment from a tax debt we recently paid off removed. My wife tried doing getting the late payments removed on her own, but the lender refused. I am kind of leery of "credit repair companies" since if we can't legally get items removed, I'm not sure how they can. The mortgage broker also suggested getting a credit card with my wife and I as joint borrowers, but the company she suggested (Credit One) only allows 1 person to apply, then add a second as an authorized user. So I'm not really sure what to do there. 

This whole process is frustrating, since we seem to get differing advice everywhere we look, but I'm hopeful we can get things figured out. Any other advice you all have is appreciated very much. 

[VALoanMaster]

So I need to rephrase my statement: have another lender review your credit. Credit repairs companies typically rely on the FCRA to get old debts deleted. They send debt validation letters out & if the creditor can't/doesn't validate the debt in 30 days they have to delete it. You generally want to leave old stuff alone & focus on the stuff that's currently reporting since that's going have the most impact on your scores. The good news is the repo doesn't have to be addressed because it's reporting as a charge off BUT you could see a bump in your scores if you get it updated to show paid. The reason why is a charge off is a derogatory status so if change that status it has positive effect on your scores. A collection account on the other hand is derogatory account so no matter what the status is it's always going to have a negative effect on your scores. The only way to improve your score with a collection account is to get it deleted.

[Anonymous]

That makes sense. I'm all for having a different lender look at our credit reports. The only thing I'm worried about is that she pulled our credit yesterday, so we have new inquiries on our reports now. One of my wife's Fico 8 scores dropped 12 points just from that. If we go to someone else, they'll pull it again and we'll have another inquiry. Would another lender look over our credit reports that we pulled ourselves? Or would they require doing it on their own? Thank you so much for your help. Definitely appreciate your perspective. 

[Anonymous]

Also - when you say the only way to improve my score with a collection account is to have it deleted, do you mean showing as paid in full, or actually deleted off the report entirely? From everything I've researched, deleting a collection account once it's paid can't be done since it stays on my report for 7 years. If I wanted to negotiate getting it removed in exchange for payment in full, would I need to do that with the original creditor or collection company? Both? The repo status is charge off, but we make auto payments on it every month. So even though we're making regular payments, it still shows as a charge off. Would you be willing to PM me your info if this is something you could help us with? We really want someone who knows what they're doing and can get back with us quickly and help us get this resolved fast. 

[VALoanMaster]

As long as the mortgage inquiries occur within 30 days they all count as one so it shouldn't lower your scores. I've tried helping clients in the past by reviewing the credit reports they've pulled and it never works out. The main reason why is the reports a lender pulls provides more info & it allows me to run different simulations to see how different things will affect the scores. That allows me to really focus in on what's going to give us the fastest improvement.