Need help raising score to get a mortgage....

[T50]

Ok here's my situation...  I have 10 accounts currently showing in collections....  I have 4 credit cards that are all over there limit right now...  I also have a secured loan with a 25% interest rate.  I am trying to get everything current and paid off.  Up until about a month ago I had gone 12 months with no late payments being reported, just the collection accounts.  However, I have always made my rent and my car payment on time.  Does that count for anything?  I am going to also see if collections on my account will go for the PFD letter I found on here.  If all that gets done, anyone have any idea how long it will take me to raise my score around 200pts? I really want to take advantage of this first time home buyer credit and purchase a home before 6/2010....

[llecs]

Anything is possible!

Start with the CCs. Utilization is a killer on scores, especially cards showing above 100% individual util. For max points, pay all but one down to 0% and pay the remaining CC down below 9% util. This is the fastest way to gain points and you might see 100-120 points if you do exactly that.

Pay off the loan ASAP. Loans have a very small impact on your scores. If you paid it off, your score could up or down, by single digits only. I paid off my last loan this year and actually saw a gain on one CR (EQ). And a secured loan for 25% is something you probably wouldn't want to do in the future. I'd pay it off and get the cash and save it for your future home or to further pay down debt. ....thinking: is the secured loan you are referring to the car?

Late payments, even 6+ years old, can have a huge negative impact on your score. Vow not to be late again. Most lenders would want to see a min. of 2-3 years of no lates.

Paying rent on time won't help your FICO score, but not paying rent on time will hurt your score due to collections or judgments being added. Paying on time may help if your lender requests info from your landlord.

Paying a car on time will prevent lates and add positive history.

For the collections, only tackle them if you have the $$$ to PIF, if you had to, or if SOL expired. If so, then send a DV letter. If they verify and you agree, then send a PFD. Offer 100% or a settlement. Your call.

Finally, don't rush into a home purchase. A tax credit won't help you much if you get stuck with a higher interest rate due to your credit. Progress at a steady pace and when you get to the crossroads in the spring, then re-evaluate.

[MarineVietVet]

Finally, don't rush into a home purchase. A tax credit won't help you much if you get stuck with a higher interest rate due to your credit.

I have to agree. Paying thousands more in interest because of a low score seems foolish to me. Work on the negatives and wait a year or two. Don't rush into this. You will possibly save lots of money.

Just my opinion of course.

[Anonymous]

Alright T50, while I profess to being an expert very rarely, I just might be an expert at rising out of a situation such as yours.  This is what worked for me.  It was hard, but possible. 

1) Line up all your credit cards.  Put the one with the lowest balance at the front of the line, and put the rest in order from lowest balance to highest balance, so the one with the highest balance is at the end of the line.

2) Get a second job.  Don't care if it's folding shirts at a retail store for minimum wage.  (that was my second job)

3) Put every penny from your second job into paying down that first card.  Once it's paid, put it is a ziplock bag full of water, then put it in the freezer.  Pretend like you don't own it anymore.

4) Repeat this process until you have paid down all credit cards.  Use the majority of your money from your first job to pay off the 25% loan, and whatever extra you can to credit cards.

5) Save money in absolutely rediculous ways like taping down the light switches so you aren't tempted to turn on the lights.  If you are able to reduce your utility bill by $5, put that extra 5 towards credit card bills.

Like I said, not easy.  It was easier to kick a 15 year habit of cigarettes than get my credit cards under control.  But I managed to do both... and put the cigarette money towards credit cards, too!  GOOD LUCK.

[T50]

Ok so here it goes;  I have found a way to pay off all of the collections in full.   Also I have found a way to pay all of my credit cards off.  Gotta love my parents for bailing me out here.  Questions that I have are as follows;  Anyone know SOL for OHIO?  Also, if I PIF all my collection accounts what are the chances of getting them PFD?  Or, if I just PIF for the collection accounts is that going to help my score?  If I PIF and don't get any of the collections or lates off my credit report about how much should I expect my score to go up?

[Anonymous]

i would not pay untill you send the pfd and get a response back

i wish i had heard about pfd.  i paid my husband collection and now they still say collection paid in full and a couple says for less then the amount owed and i thought I paid in full 

[MarineVietVet]

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@T50 wrote:
Ok so here it goes;  I have found a way to pay off all of the collections in full.   Also I have found a way to pay all of my credit cards off.  Gotta love my parents for bailing me out here.  Questions that I have are as follows;  Anyone know SOL for OHIO?  Also, if I PIF all my collection accounts what are the chances of getting them PFD?  Or, if I just PIF for the collection accounts is that going to help my score?  If I PIF and don't get any of the collections or lates off my credit report about how much should I expect my score to go up?

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Did your parents help you get into this mess? Why should they help you get out of it? You need to be an adult and be personally responsible and take care of your debts yourself.  IMHO

To the moderators: I'm trying to say this in a "Friendly, Supportive, and Respectful" manner.

[Anonymous]

I agree as well.  The reason why you should handle this debt for yourself is that you need the opportunity to learn from your mistakes.  If my parents had bailed me out, I wouldn't have followed the plan that I posted earlier.  But you see, it's remembering how HARD I hard to work to get out of trouble that keeps me from getting back into it again.  I feel badly for your parents, but also for you, if you rob yourself of this opportunity to learn.

[Anonymous]

Paying those collections will not help UNLESS you can get them to remove them.  Have you DV'd these collection accounts if they are CA's?  That is the first step.  Do not make any arrangements until you know that these CA's have the right to collect (sorry if you've already done that and I didn't read it closely      The chances of getting them to PFD will depend on the CA.  Some will and some wont.  Paying a collection does not change your score. The fico system looks at the fact that you have a collection and does not care if there is a balance or not. 

The biggest jump you will see will be from the cc's being paid down.  BUT you've got to make sure you don't pay late EVER.  Don't worry about the tax credit and do your homework, there is lots of information in these forums to read and you have to really be ready for that mortgage so do jump to soon.  Best of luck to you. 

[T50]

MARINEVIETVET.....  I did not ask for you to harrass me through this thread.  You should've not replied at all if you wanted to jump on me about my parents helping me out.  My parents want to help and allow me to purchase a house instead of paying over 50K that I have paid in rent.  I believe that I should be able to post a topic on here and not have to have this type of response.  IMHO  I have "learned" my lesson as far as what not to do.  I am a parent now myself and would love the opportunity to help my kids out if needed.  I did not put on here that I was paying my parents back the money.  They just are in a better financial situation to pay off all of my debts and get a lower interest rate than my current 20% credit cards and 25% loan.