Have a 560 Experian score and would like to purchase a home within 4 months

[caedy12]

My current Experian score is 560 which is a 31 point increase since June. I am working with a credit counselor right now to remove old accounts and collections from my credit report. I have established a new secured credit card with a $200 limit (3 months ago) and a new credit builder loan at my local bank (3 months ago). I also have an installment loan with Citifinancial (loan with them for about the past 3 years) which I have been making current payments on now for about 2 months (I did fall behind in December, but I am now current again). I am currently leasing my grandparent's house through an estate and my lease is up in November. At the end of the lease, I would like to purchase the home. My debt to income ratio is really good and I have been at my current job for 10 years. I also have great rental history going back 10 years. I am just wondering if it even seems possible to get my score up to where it needs to be by then in order to apply for a mortgage. Any advise would be much appreciated.

Thanks,

Caedy

[llecs]

I'd save up to pay off Citifinancial. I would first send GW letters to them asking if they can remove the lates (assuming they are reporting). If they remove it from all 3, then I'd pay down/pay off the Citifinancial. That'll help your DTI if ever an issue. Also high-rate loans like Citifinancial are viewed as a negative by FICO. Unfortunately paying them off won't help in that department since it'll still report, but at least you'd save $$$ by paying it and that might help in the eyes of your lender.

I'd pay off the new loan ASAP.

Is that CC your only CC? If so pay it down to less than $20 a month prior to applying for the mortgage (or pay it down now if needed). Don't let $20 or more report but also don't let $0 report come mortgage app time.

What else is holding back your scores? Are you certain the 560 is a FICO score?

[caedy12]

Thanks for this advice. Citifinancial did report the lates, so i will definitely look into having those possibly removed. The new loan is a credit-builder loan, so the point is to pay each month and build the credit (since I have not had new credit in a while). If I paid it off really early, the loan would no longer help my score. The secured credit card that i have is the only one that I have. I have some old collections on my credit report and so I think that those are still what is hurting me plus the lack of new credit and the late payments with Citifinancial. The credit councelor that i am working with is helping me to get those removed if i can. The 560 score from Experian came from a credit report that I got from Quizzle.com which is an affiliate of Quicken loans. If Citifinancial removes the late payments from my credit report, will that impact my score at all?

[llecs]

On the credit builder loan, I'd argue that it isn't helping; it's hurting. Now paying it off wouldn't help since FICO largely ignores loan balances but the account is new and that's negatively impacting your FICO for up to the first year. FICO also ignores the "OKs" in your payment history. It looks for the lates. So even if paid off now, it'll still contibute to your length of history positively over time. In other words, I can't foresee any benefit from keeping it open but can see a benefit per closing it due to DTI. You can always wait and talk to your lender and get input then. You'd definitely would want to have less than 6 payments left come app-time or it would factor into your DTI.

Protect the secured CC.

Definitely work on the older baddies. Most can hurt for the full 7 yrs.

Quizzle offers a FAKO called a CE Score (Community-empowerment score I think it is officially). No lenders use that score. Your FICO could be anywhere. IMO definitely keep tabs on your FICO from somewhere prior to app-time just to judge and guage where your credit is at. Removing the Citifinancial lates would likely help, especially since they are newest.