Credit Repair, Score Discrepancies, and Good Intentions...oh, my!

[Zizou615]

After using this site as a resource for some time, I'm now posting.  It all started when, four years after filing for divorce from my ex-wife, I was ready to buy a home with my new wife and my two daughters.  I'd been using Creditkarma for monitoring my progress, and when my score updated and showed at 684 (from 100 points lower nearly a year ago), I felt confident.  Lenders apparently felt otherwise and I learned all about the difference in lender scores and consumer reports.  123 points lower, I'm staring at a 561 credit score.

So here is where I am at.  I chose to file for a divorce.  At that time, I gave away the farm, settled out of court for an amount of child support and alimony my lawyer said was crazy.  I share 50% custody of my kids, pay for everything for them, but didn't want their mother--despite our differences--to struggle.  Fast forward a year later and I graduate with my MBA from a top tier business school, and a global MBA from one of the premier international business schools in the world, and I'm met by a layoff a month later.  During that time, I couldn't get a bite anywhere.  I was borrowing my way to surviving, still paying child support, not earning income for 6 months, and being shot down for half a year for being over-qualified.  I finally got a bite, and worked a job I couldn't stand for far less money than my performance brought in for the owners, until the market shifted.

Now I'm in a spot I'm happy in, professionally speaking.  Unfortunately because of the wording in my contract and the way my paychecks come in, I make too much for a USDA 0% down loan, and I don't make enough for an FHA 3.5% mortgage--this is due to only the salary component ($75k) counting towards my income for two years, so the fixed commissions which bring my annual compensation to a minimum $121k being non-existent in the eyes of lenders.  So, it's a waiting game.

Reading the forums, I know I could do a lot of this on my own, although it would be very time consuming.  I've already started taking the necessary steps, and I've opened an unsecured low limit cc to use minimally but regularly, among other things.  Here are the other items I have:

• $4,800 on a Chase credit card
  • Fortunately, it's not showing in collections on my report, though it IS in collections and verified with Chase.
  • I have this negotiated to under $800 to settle--not a pfd as it's not been reported to the CRA's as such--and Chase will move to a $0 balance (with written verification).  This will be done in the next 10 days.
• Portfolio Recovery Associates
  • Comenity Capital - $757
  • GE Captial - $1,485
    • Both of these accounts are being double reported, each as a Factoring Company and also as a Collection Account
• Stellar Recovery
  • Dish Network - $751
    • This is from 4-5 years ago, during the divorce, and I knew I had my final month to pay, but this amount includes the equipment which was returned, but I have no documentation to support this.
• Diversified Consultant
  • AT&T Mobility - $702
  • AT&T DirecTV - $391
• Medical Payment Data 
  • Medical Payment Data - $618
• Account Rcvy Service
  • Medical Payment Data - $172
    • Both of these are things I have never seen any bills for.  I pay out of pocket for my daughters' medical expenses (post insurance), and I am one of those guys who will never go to the doctor.  My assumption--probably a safe one--is that these are for medical things my ex-wife would have done with my daughters without my knowledge.  That doesn't go to say I would argue they're not mine, just the situation I'm in isn't one with positive communications.  I will pay the bills, or settle them, but I have no idea who to call for the one at $618.

So this is the portion where I was going to say "that's all I've got" followed by an awkward laughter.  It is what it is and life happens, and here I am.  So I have a hair under $3k in bad debts here I need to handle.  The conundrum in this is that I am leaning towards using a credit repair company (NOT a massive one, rather a local family owned place that is highly regarding [I'm in the Phoenix area])--it's a small investment, in my opinion, to have a company handle this on my behalf.  Note, there are also some old paid collections that they'll work to remove as well, so in total there are 14 lines on my credit reports that they will focus on.  

With all that said, appreciate the shared knowledge on the boards and I'm open to suggestions, tips, etc based on where I'm at.  Oh, and if anybody has the magic bullet to eliminating student loans, I'm all ears.  Kidding. (Not kidding).

[tufa4311]

Well you're going to have to first make the decision on the track you are going to take - credit repair company or you. Yes, if you do it work will need to be done, perhaps a lot of it. I've not heard much, if any, positivity on credit repair co's but that's just online chatter. You're not going to get out of all of this without paying a lot of debts and, if you choose, paying for services for credit repair.

So, what's it going to be, time and effort by you or hire a company?

[Zizou615]

You're absolutely right, and I agree.  Frankly if I didn't have a personal and trustworthy connection using the company I'm going with, I wouldn't consider it... it's just too easy to get fluff reviews online for products and services these days.  I think a big issue from my reading is that often times people pay a company to clean their credit, and anticipate that's all it is--send a paycheck and magic happens. If you're not still super hands-on, results can't be optimal...  That said, appreciate the feedback.

[Zizou615]

Been a while and progress has certainly been made, though it's been a lot of work.  I decided to do the lion's share on my own with advice from the forums, and I'm getting closer and have a few big dark stains appear that are being cleaned up.  At this point, almost a year to the day from the original post, I'm at a middle score of 657 and expect a few bumps in the near future.  Almost 100 point climb, with a ways to go...but I'll take it.

So this one was crazy.  I received a letter in the mail stating that I owed a large sum of child support arrears.  I was shocked when I read this, and frankly a little pissed off.  I have always met my child support obligations, no...matter...what.  Since I filed for divorce six years ago, there were two periods of unemployment several years ago totaling 6-7 months during which time I had no income and was struggling.  Even then, I was doing everything I could to pay my ex.  Long story short, I continued paying her directly with personal checks well-notated on the memo line for "child support" and whatever month it was for.  She claimed I never gave her those checks.

Fast forward to a court hearing and a little bit of redemption.  The judge read through cleared checks from my month-end bank statements one by one, slowly, and with each one he asked if she ever received those checks which were deposited and cleared into her personal checking account.  With each one (the first 9 or 10), she said "No. I never received those. He's never paid me anything."  After the tenth check, he removed his glasses, looked up at the ceiling and said "Mrs. XXXXXXX, did you never receive these checks?  Or is it possible that you don't recall receiving all of these checks but he did give them to you?"  She insisted that she is too well organized and would have had copies of them.  Oy vey.

Point of this is simple:  I've heard plenty of stories of not getting credit for "direct payments," and while I'll never ever ever ever ever even consider paying her directly for anything ever again, 6 weeks later in the mail I did receive the confirmation that I was being credited for all 5-figures worth of payments... now I'm dealing with all of the interest accrued on those because the Dept. of Child Support says it's impossible to calculate what interest has accrued (Wow.  Really?  My 8th grade math thinks otherwise, and my MBA is furious!).

So at this point I'm feeling better about this again, and ready to focus on some of the other areas. I've got my wife (remarried for 2.5 years) on board with working diligently together on things, and it's exciting stuff!  Slow and steady...