Introduction (FICO Challenge)

[Ms_Sooz]

Hello everyone!

I'm a long time (2-3 year) lurker and just joined myFICO. When I was first married (1999) my husband became permanently disabled and we had to rely on credit cards to pay all our bills and buy basic things. I was able to get a job at minimum wage, but we ended up not paying the cards off because we didn't have the funds. 

Fast forward about 13 years, having no credit that whole time and I was finally able to get the old accounts taken off our credit reports. A couple years ago I was able to get a very expensive credit card with the yearly fee and monthly charges, high interest rate and a low balance of $250 unsecured. Since then I have been able to get more credit to rebuild my score. My husband on the other hand was unable to qualify for even a low balance card when he had no credit history (after the old debt was wiped). So I got him a secured credit card with a $300 deposit. That card started off with a $400 limit, which was raised to $500 2 months later. Needless to say, our credit scores have steady rose and dropped depending on what we applied for etc. 

Now, we are in a position where we must buy a house as soon as possible. We live with a family member, and their house has extreme mold issues (which they refuse to fix) and my husband's health cannot be around it too much longer. Our biggest hurdles are: credit score (amount of limit used), total income $2100 a month, and my husband's health requires me to only work part-time for the next 6 months (I am his home health aide).

My debt: $1139.00 (reported) $990 (actual) of $1450 in credit cards and $17525 in student loans (deferred until Fall of this year).

Walmart: $392/400

First Premier: $349/250 (paid $149 this month, it is over balance because of their insane yearly fees)

First Premier: $287/300 (30% APR is killing me)

Joint account: Care Credit: $111/500 (with this month's payment around $70 left)

So my utilization is very high right now. I also have a joint medical collection showing on my report for $149. I plan to pay off the old collection and hopefully get them to remove it with a letter. I also plan to pay $150 on my Walmart account and on the 30% APR FP account in the next month (in addition to regular payments). I haven't had any missed/late payments.

My husband's debt: $584 (reported) $884 (actual) of $ 2000 in credit cards. His credit history is only 11 months old.

Fingerhut: $0/500

Capital One: $473/500

Best Buy/Citibank: $0/500 (But the actual balance is about $350, it just hasn't been reported yet).

We plan to pay $150 on the CapOne/Citibank cards each.

I'm hoping that this will bring our scores up at least 20-30 points in the next 2-3 months. My current score is 646 (EQ) and his is 635 (EQ). We have only pulled the one score so far.

We are only looking for a modest loan (under 100k) for a small house. I'm hoping to get USDA or FHA financing, and we have $3500 for a down payment, so things are looking brighter at least! 

[CWESTL]

First make sure you evaluate your ability to afford buying a home. This is of particular importance when relying on one income and knowing you plan to work part time over the next 6 months. Additionally, your student loan will go into repayment later this year. Home ownership can be a great investment, but is a huge responsibiity. Make sure you account for the additional costs associated with home maintenance and ownership.

Once you've decided that purchasing a home is best for you, investigate first time home buyer programs to assist with your down payment. Then I would utilize part of the $3500 you mentioned having for a down payment to pay down your credit card debt to less than a 10% utilization rate. Paying down your credit card debt will likely raise you and your husband's credit scores more rapidly than anything you noted.

After purchasing your home, consider closing the high fee credit cards like the First Premier account you listed. It may also be helpful to adopt a new philosophy when managing your credit card use. Only purchasing what you can afford to pay in full each month helps you avoid becoming burdened with debt, eliminates finance charges (i.e. save money), and you will have the leverage to continue to build your credit. Lenders are far less likely to extend you credit under favorable terms or increase your credit limits when you have a high utilization rate and aren't making large payments toward your debts relative to the balance. 

[Ms_Sooz]

Cwestl,

Buying a home is the only option we have at this time. Other factors prevent us from renting, and in my area it is two to three times as expensive to rent a home of comparable size. I am certainly looking at DAP in my area, and other first-time homebuyer programs. The 3.5k is just being saved in the bank in case nothing comes thru on the DAP, or in case we need extra downpayment because of our credit scores being lower. I also plan on paying the balances to below 30% on each account within the next month. Although the balances are high and this makes it seem as though we have bad habits with our cards, the ability to use the credit has kept us from being homeless and without food - I use them in emergencies only.

Thank you for the advice, I've been researching what the best steps are for quite awhile and your response is on par for what I have found elsewhere

[Whitneyy]

Welcome to the forums! 

Congrats on your journey to begin starting to rebuild! 

My only advice at this moment, is that your balances NEED to get paid down in order for you to see any type of jump that you're looking for.