Advice re: judgements, collections, and new loan

rinstarangel · ‎04-25-2011

(Warning: semi-long post)

I am currently trying to rebuild my credit after some issues about 10 years ago that I avoided and so now they are still haunting me. I am also trying to get a loan at the end of May/1st week of June for my first motorcycle. So I had a few questions on things that I would like some advice on.

Background info: 4-5 judgments from 2005-ish (2 CR's show 4 and 1 shows 5...?), 2 legitimate collections totalling under $400

Current:

--Equifax FICO: 661 as of 4/25/11

--Paid off a car loan early in December 2010 and obtained a new car loan at the same time; I did not qualify on my own for a loan and my mother co-signed and had to be put as the main person on the loan and me as the technical co-signer; paid on time

--4 school loans consolidated into 1 loan in January 2011, paid on time

--Credit cards: Cap One- CB: 883 CL:1000

Tribute- CB: 186 CL: 1000 (however, they closed this account, no by my doing, about a year ago and is reported on my CR that I closed it...?)

VS- CB: 851 CL: 1300

Target- CB: 391 CL:500

Orchard- CB: 254 CL: 300

PayPal- CB: 640 CL: 700

--I have a good job and make decent money, however, I stupidly have issues spending money (which I am working on). I am single and live on my own in an apartment. All of my other bills are paid on time.

--I recently turned 30 and am having an "I have done nothing in my life exciting or interesting and that changes this year!" moment fueled by me finally graduating with a degree in a field that I love-something that I never thought was possible. So one of my things has always been to have a motorcycle by the time I was 30 because it's something that is "not me"...and plus my dad says "You're too old to learn how to ride for a girl.", so I have this itch to prove him wrong.

So the situation is that my summer of change. Then I heard that Honda was introducing a new 250cc bike this spring and it's been all that I can think of. And yes, I know there are many who will say "You need to work on your credit and not try and make another large purchase until you have that improved." And I agree to an extent, however, the bike is $5600 after taxes and fees, etc and I've already put a $500 waitlist deposit on the bike and have signed up for my motorcycle safety classes for the 2nd week of June. The bike will be in at the end of May. According to the dealer, they would most likely be able to help me get a loan if my CS is at least $650 and if I'm putting about $1000 down. However, I am concerned, mostly because of the judgements, that it won't be that easy. And I definitely can't ask my mom to co-sign again because she already gave me the look of death when she realized how serious I was about getting a bike. I emailed the loan department of the small local bank (not a CU) that I have had a checking account at for about 10 years and asked if they gave any leeway on customers who may not have the best credit and have been a customer for awhile. Their response was that they do not look at the score, they look at the report. They said they process it as a personal loan with the bike as collateral with a 7.5% interest rate and 10% down. My question there is, how would I make myself look best to them so that they can give me a loan?

Another thing: One of the judgements that I have is marked as PAID (they garnished my wages years ago and got their money). Is there any way to have that removed off of my credit report earlier than when it is supposed to fall of in 6/2012?

Also: Is it possible for me to send PTD letters with payment to the 2 collection agencies and have it removed in time for a report pull for a loan? Or if I wouldn't have time, is it possible that if I had all documentation showing it was paid to the agencies and they were going to remove it, that it would help in getting a loan?

Any other tips?

(Sorry this is so long...thanks in advance!)

llecs · ‎04-26-2011

Score isn't that bad, but as a lender, I'd be more concerned about your DTI. Sounds like with the minimums on your CCs, the car, the SLs, housing, etc., there may be an issue of affordability. Also, lenders like to see $0 balances on open accounts.

If I had that, I would PIF all of my CCs first. You'd see a nice increase in FICOs into the low 700s, assuming your EQ FICO is at 661 now. Your DTI would drop making you look more favorable towards lenders. Judgments may or may not be an issue. Manufacturers come out with new bikes each year and if it were an issue, then you can always aim for then. Though 6 year old PRs may not be that bad. Send DVs to the CAs and then if they verify, send a PFD. If they agree in writing, then pay it and they'll delete. Some have had success in getting paid judgments removed. Search around. Seems like it involves getting in touch with the plaintiff's attorney and asking them to approach the court to get it removed. Not sure on the details.

rinstarangel · ‎04-26-2011

Thanks for your reply!

The sad thing is, for all of my debts (including the judgements), the total equals about 1/2 year of my total salary. So I know affordability would not be an issue (I am very strict with paying my bills on time; I just have the problem of deciding to spend almost everything that's left over in my paychecks), but I'm not sure how to show them that it wouldn't be an issue. I was thinking I would be much better off paying my CC's down before applying for the loan. If I stick to the current budget that I have for my next 2 paychecks, I could pay down about $1500 of my credit card debt, equalling about 50%. I also am in the process of selling a TON of my stuff on eBay and Craigslist, so I should get a couple hundred from that as well. But the question is, how much should I pay on each card?

As for the PFD's, do I need to send DV's to the CA's? I am pretty sure I got a letter from at least one of the CA's in the beginning of the year.

And yes, I know there are always new bikes, but each model doesn't have a new one each year. Plus this is my big goal by the official start of summer, so I have to do it! I'm tired of saying I am going to do things and then never doing them...fixing my credit and getting this bike are the two things that I have determined to accomplish!

rinstarangel · ‎04-26-2011

Another question: I know I will get a general answer but I'm just curious on how fast it works. So here's the newest thing churning in my head...

I have payment due dates for Orchard and Target, 5/3 and 5/5 respectively. I can pay about another $75 on each before they come due. Do CC's report to the CB's after each statement period for the customer, or are they at set times? Is it possible to contact them to ask that they update the CB's at the time of the loan application? I ask that because I could pay a good amount on the other CC's when I get paid again the first week in May, but those statement periods don't end until 5/15-5/20. I don't know how that would work if I apply for the loan at the end of May/1st week of June...