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I guess after reading some of the forums I may have hurt myself more than helped. I am trying to purchase a home that is a part of my grandmother's estate. I knew that I had a few things that needed cleared up but I applied anyhow to see what the bank would say. My FICO came in at 611 and they wanted a minimum of 620. I worked with my credit union and they approved me for a consolidation loan in which I paid off those old collection accounts. The only "debt" I have at this point is that loan ($2500). I am shocked to find out that my score went down to 550. How could it drop that much in one month? I was trying to improve by 9 points so the bank could approve me for a mortgage. How long can I expect my score to increase by 70 points? Im worried the esate will not wait for me to obtain a mortgage for the property. I honestly thought the steps I took would give me 9 points. What did I do to make it go the other way?
It sounds to me that you were dinged in a couple ways. First, when you applied for the loan they pulled your credit. This hard pull hurts your score, and the effects will last for one year (even though it gets less as time goes by).
Second, the loan is a new account, which also hurts your credit score. When I just bought a new car my score went down 30 points because of this.
Last, and I am not totally sure on this, but paying off some of the charged-off accounts might have altered the date within FICO to make it appear that the baddies are more recent. That would suck if it did happen, but I think I have read on here somewhere that it can (and does) happen.
If I were you, I would send GW letters for the CO accounts and get them removed. This would help your score out.
Good luck
+1 The loan will have to age a little bit and you got hit with an inquiry. Start the GW process quickly and see if you can get some off. This will be your best bet at getting your score up.