Here is my accountability! My DH and I are hoping to purchase a home Jan 2015. We have a lot of bad debt and need to rebuild and here's our process. Any advise would be appreciated!
Okay....So here goes the fun task of trying to get rid of bad debts and rebuild so that we can purchase a home. Lender pull on 4/2012 showed us as follows
Me: EQ 590 EX 598 TU 555 MyFICO 598
Hubby: EQ 607 EX 644 TU 529 MyFICO ?
Our mid score is 607, VA wants 620
Goal: Pay off/PFD collections, Pay down cards,Build Savings PURCHASE A HOME IN 1/2015
I originally had 5 collections: One medical was PIF/PFD(off CR already) One comcast cable has agreed to PIF/PFD.
Therefore I have the negatives left on my credit report:
Creditor Name: AFNI
Original Creditor Name: AMP D MOBILE
Amount: 1044 set to fall off 6/2014
Creditor Name: LVNV FUNDING
Original Creditor Name: HSBC DIRECT MERCHANTS BANK
Amount: 1116 set to fall off 7/2014
Creditor Name: MIDLAND FUND
Original Creditor Name: CAPITAL ONE BANK USA N A
Amount: 1515 set to fall off 5/2015
2 charge offs Credit card accounts from HSBC(2004)set to fall off 7/2014 and CAP1(2003) set to fall off 5/2015 various 30,60,90,120 lates in 2007-before that good history
I had a car loan 6/2005-6/2010 with (9) 30 days late (3)2010 (5)2009 (1)2008 all positive before
I have one current installment loan current/never late as of 6/2011
Jcpenny(2001) 400/800 Never Late
CreditOneBank (2009) 400/750 Never Late
Best Buy MC (2011) 150/300 Never Late
Macys (2006) 250/NSP Never Late
I know my 60%+ credit card uti is killing my score! I realize this now and will pay down before cycle date.
SO here is the plan for me:
-Pay for delete Comcast or Midland asap
-Pay down CC
-Let collections fall off since they are unwilling to PFD
-Get CC limits increased
Now for my hubbies:
He originally had 6 negative/collection acts:
One SMUD utilities PIF/PFD which was set to expire 9/2015
One ATT settled agreed to report as PIF (would not delete/plan to GW letter) set to expire 9/2015
Creditor Name: LVNV FUNDING
Original Creditor Name: IDT-HSBCORCHARD PLATINUM
Amount: 700 set to fall off 1/2014
Creditor Name: EOS CCA
Original Creditor Name: AT&T MOBILITY
Amount: 660 set to fall off 11/2014
Creditor Name: ENHANCRCVRCO
Original Creditor Name: COMCAST CABLE COMMUNICATIONS
Amount: 528 set to fall off 8/2014
Creditor Name: MARATHON
Original Creditor Name: CALIFORNIA FAMILY FITNESS
Amount: 205 set to fall off 3/2014
Was co-signer on mortage loan paid 2001, fell off credit report 2012
Never had an installment loan
He had 3 positive CC, all closed 2008 (he closed them, silly )
No new CC, loans or line of credit since 2007
All lines of credit are closed or charged off
SO here is the plan for hubby:
Secured credit card/Authorized user on my account
Questions for my credit:
Should I do goodwill adjustment for my installment loan? Should I get it completely off my credit report if possible? Once my collections/charge offs fall off in 2014, this will be my only negatives and there are quite a few (9) as recent as 3/2010.
Should we just let the collections fall off since they all are asking PIF or SETTLEMENT with it indicating on our credit reports and are unwilling to delete.
Once most of the Collections and Chargeoff Credit cards fall off my and my hubbies credit report (1/2014 - 11/2014) and since they will be passed SOL, can a CA re-attach to my credit report? Will an underwritter be able to see these past debts if we wait until JAN 2015, making sure they are off our report?
Anything else that you think would help!!! Please let me know. I ideally would like our mid-score to be 700-720 by 1/2015. I think in 2015, our salaries will be higher, credit will be better with all collections/charge offs gone, higher credit limits, more savings for higher down payment.
Is this reasonable amount of time to fix? VA wants 620 asap since our score was 607 but I would like better rates and I am willing to wait and do it right rather than rush it and pay a lot more!
Yeah, I thought 607 sounded high to me too. It still shows as 607 on all the paperwork they sent me and on my online account. Either way we have a lot of work to do.
I'm not getting any luck with the PFD letters. Since they will fall off in 2 years, part of me wants to let it just fall off. Even if we paid all collections, then saved for our down payment and built our savings it would take us about 2 years to build up enough to secure 10%. Therefore, I'd rather save the $6,000 in collection debt and put it towards the down payment.
Personally, I am not a huge advocate of equating CR exclusion with absence of old, unpaid delinquent debt.
It's a bit of an ostrich approach. It's still out there, and particualry in a mortgage app process, could still become known to a mortgage broker even though not readily available by way of a normal pull of the consumer's credit report.
It's always better to have no unpaid delinquent debt. FICO is not the begin and end all of securing credit.
I've called and sent letters. All want full payment and will not delete. I've seen posts on this forum where CA's have deleted after payment. However, they are playing hardball since most can see the mortgage inquiry. Some have even mentioned it when I asked for PFD.
Currently, hubby and I are fine with renting for 2.5 years since we are living in a family owned rental home and this will give us time to save for the down payment. Plus, I just got a notice that I will be furloughed again by my employer. Less money in = less available monthly income to qualify for a home loan. This furlough lasts until 7/2013. So, we would have to wait until then anyways. So might as well wait 1.5 years.
In that time, we can rebuild my hubbies credit with new, save the needed 20,000 for down payment, beef up our 8 month emergency fund...etc
I just do not see the point in paying collections off that are out of SOL, will fall off in 2 years, right about the time when we would have the funds saved for the down payment. I know it's money we owed. I guess I'm less apt to pay because the three that are on my credit report never worked with me when I fell behind.
One was a cell company that had billing issues and ended up going bankrupt 3 months after I started service with them. I was dealing with the billing issues with their customer service reps and voila...one day my phone didn't work. Called customer service and their numbers didn't work. No warning and I had a useless phone I couldn't take to another service provider and I had to get a new number with a new wireless provider. My bill should have been around $285 for the three months and they charged a bunch of fees which totalled $1044. I'm guessing their is an ETF in there but I'll never know because I was never sent a detailed final bill. Just a bill stating that I owe $1044 and that they were filing bankrupcy. I guess I should have fought it more back when it first happened but honestly I was done. Almost four years later a collection attached to my credit report.
The other two are credit cards that didn't want to take partial payments and were rude. I wouldn't mind paying the $300 or $400 they charged off but now they are $1116 and $1515. Yeah, they will never see that much from me since in 24 months they will all drop off.
In that 24 months, I will pay the accounts that agree to delete and build our savings. We've already lived with the baddies for 5 years, 2 more won't kill us.
Can a new collection agency put info on our credit report after the 7.5 years? Will an underwritter be able to see those debts were not paid, even if they are not on our credit report?
Okay, RobertEG....I see your point. I guess when we get closer to being ready for a home loan I will look at a settle for PIF. Hopefully by then, they will be more willing to work with us.
I should have done the leg work before we applied for a mortgage. It might have looked better. I just wanted to see where we were at? I guess it was wishful thinking and I didn't realize my hubby had so many collection accts.
Its possible that the lendor could request your entire credit history, notwithstanding the normal exclusion of the collection.
The CR exclusion provisions of section 605(a) are not absolute. Section 605(b) provides the ability of a creditor to receive that information without exclusion if the consumer is seeking credit in a principal amount of $150K or more. While creditor requests for otherwise excluded information are rare, the right exists.
The information could also become known to them through other sources, such as an earlier pull of your CR, or by simply asking if you have any unpaid, delinquent debt.
It might be a bit less than honest to claim no unpaid, delinquent debt based merely on its current exclusion from your normal credit report.
Chances of their awareness may be small, but they are not non-existent.
Well, they do have a pull from 2012. The VA lender is asking us to settle all debts, which do not have to be PIF but need to be stating as such on the credit report. At this point, the agencies we've contacted will only list PIF if we actually PIF. We've paid some and had some removed. All the debts that will list into 2015 are paid with the exception to one of mine that I plan on working on.
I do not want to be dishonest to a lender, especially a VA lender, therefore I will pay try to get PFD's. I have 2.5 years to get them to agree. Hopefully they will!
Yeah, we got the BBB to remove both LVNV accounts from our credit reports! =o) We still have a lot of work to do but we are doing it. I cannot wait until 2015...everything will be gone and I will have all positive things on my credit report.