03-29-2009 11:14 AM
03-29-2009 11:40 AM
03-29-2009 12:02 PM - edited 03-29-2009 12:05 PM
First, contact your charge off and see about arranging a full paymnet of thebalance but only if they will change the status to paid in full. They may do this.
Second, Look through the repairing credit boards on the HIPPA process for medical bills. Again, you will have to pay them off, but they will be removed.
Third, at some point, you need to get the 300 credit card paid off and keep it down below a $30 balance (under 10% utilization....) Charge a tank of gas once per month and then pay it off a couple days later.
Fourth, DTI is a big issue. Underwriters already look questionably at files that have no skin in the game and if you are using down payment programs for all of your costs, they will be concerned. They will be unlikely to allow a exception to the standard 43% DTI ratio unless you have high FICO by then, or money in reserves.
Fifth, you need open positive trade lines. Open up a secured credit card and keep it paid down. They want to see 12 months of history on 3 different accounts taht are all paid on time/no lates.
This will be very difficult to do all of this and get a house purchased this year (if that is your goal). Judging by the fairly recent C/O and lack of down payment funds, I am assuming you do not have the cash avaialable to pay off all the debts mentioned above in full. Getting them off your credit or reporting paid in full instead of as delinquent is much easier when you can pay in full. If you have to make payment arrangements or settlements, they are less likely to be willing to change the status of the accoutns.
That said, if you get the charge off paid off, the medical collections removed through HIPPA and the ccc paid down, you will see a nice jump in credit score (the cc paid off will only help score if the status of it is changed to paid as agreed/paid in full) It might even get your midscore up to the 620 level along with some aging of the accounts.
One thing I would say is to do a serious gutcheck before you proceed. Realistically, if you do not have the ability to pay off 3K in medical bills and a 750 debt in the next say 2-3 months...you are probably not financially stable enough to be purchasing a house with zero money down and no reserves. Also, even if you got all of this done is a reasonable timeframe, you will have an uphill battle to get UW approval until the C/O ages a full year and you get some new positive creditlines developed. It is possible and you wil benefit from taking care of all of this even if it takes you awhile to get a house.
EDIT...I just noticed the repossesion.
Have you paid off the balance from this. If not, this may be an issue that will have to be dealt with as well. If there is no balance owed, it may not matter as much though. Either way, a repo in 07 and a C/O in 08 is going to seriously hurt you chance to get UW approval. They are going to want to see some time with some positive credit steps (beyond keeping a 300 credit card paid down) to show that you have reestablished yourself.
03-29-2009 03:09 PM
03-29-2009 03:26 PM
It will help if the repo is over 24 months old and the C/O is over 1 year old. You should be able to use the HIPPA process to get all medical collections paid and removed. As far as the other collections you should contact whoever has the accounts and arrange for a pay-for-delete for them if they will agree. Also, get the small cc paid down now if possible so you can develope a better realtionship with them and possibly get a limit increase when it hits a year old (which will help your score a little bit possibly). As far as the accounts counting as your tradelines, I believe that they have to be open. So if the car is paid off prior to buying, it will not count. I could be wrong on that.
In a nutshell, get all the medical collections removed and the cc paid down now and you will see a nice jump. Try to work with the repo and other collections or C/O to get paid as agreed or deletion. See where you are at when it all ages out past a year.
03-29-2009 03:55 PM
I was hoping by say Nov, I would have gotten the cc paid down to a 0-10% utilization, the car paid off, and the 1725 balance on the installment loan down to 805 taking my debt to income ratio from 57% to 37%. Also, Nov. will give me 2 years since the repo, one year since the BofA c/o which i will pay in hopes for a paid/paid in full status. Together with one year of good payments on the cc and the other two charge offs paid off. i honestly dont want to have to pay off the medical bills or the repo car balance which is 1845 unless i have to. i would much rather save that money for a down payment or a reserve. and since some most of the medical will fall off in the next year or two. i was hoping that the above stuff would be enough to get me to a 620?. what do you think? honestly? will the UW approve me if i have the only the medical balance of say 3000 and the repo car balance of 1845?
03-29-2009 04:20 PM
Honestly, it is highly unlikely.
Being so recent, an underwriter is going tobe concerned about the balance from the repo becoming a judgement and most likely will require them paid, better to do it now and arrange as favorable terms as possible.
Also, The only chance I see of getting the score up that fast is getting all those collections not just paid, but removed. HIPPA rules make this possible, but you have to pay them in full I believe. In the end, you can't ignore
all of that debt. Having the accounts age out a little bit will help a little bit on your score and will get you outside of the 12/24 months FHA rules as far as negative items, but will not raise your score the amount you need. You are looking at needing a 130 point jump in score. Paying off loans does not help your score at all so paying off the car and the installment may help DTI and show some credit awareness, but alot of times your score can actually drop a few points when you pay a loan off due to credit mix and credit buckets. Paying off the medical collections and getting them removed will probably give you a decent jump. That topped with getting the cc down to under 9%, the C/O changed to paid as agreed (that will be a tough sell, and I would not agree to pay it unless they change the status) and the repo paid and showing paid as agreed (same issue as they may not agree) will get you up to the magic number. But, just paying off car and paying down the cc will not get you more than 50 points and that is being hopeful with a recent C/O and repo.
being realistic (if you are truly serious about this), you need to pay at least the CC and the medical collections to even have a chance. Getting the collections removed will get you a small boost as well as paying down the CC. But, without addressing the balances on the C/O, the repo, and the collections, you are not likely going to see a large enough score jump adn you will still appear to be a high risk on your credit file. If you can get it all cleaned up, and have the $ down then you have a much higher chance. Keep in mind this is a tough sell no matter what. Alos, any score increase from the repo aging to over 2 years and the C/O hitting over a year may not hit your report until December or January.
Personally, I think you need to figuer all this debt out prior to buying a house. The mrotgage payment itslef is only about 2/3 the cost of owning a home over time. IF you have issues getting this debt paid off (if it is all your debt) and getting a down payment together, you may do yourself more damage by rushing to buy when not ready and not being able to afford the expense of the house once you get it. No offense meant, just some constructive advice.