10-11-2010 10:17 AM
I went through a nasty divorce back in 2006 and my credit cards took a big hit (in that I couldn't pay them). I settled with almost all of them to get them to stop calling me. Question #1: when will these finally come off my credit report? Is it 7 years or 10?
A few years ago, I set out to start re-establishing good credit while I waited for those charge-offs to drop off my report. During this time, I've paid everything on time. Earlier this year, while preparing for my second marriage, I started to freak out about expenses and how much debt I was carrying (about $8,000 in credit cards and another $7,500 on a car note and $4,500 on a signature loan). I promised myself that after the wedding, I'd make a plan to pay down the debt and rebuild my credit so DH and I can purchase a home next year when our lease on our apartment is up (in June).
I started paying off debt like a madwoman. I cut all entertainment out of my budget as well as meals out. I stopped taking weekend trips to see family and all in, I "found" $1,000/month to throw towards my debt. At the end of August, I ran my credit report and according to TU it was 660 and on Experien it was 657. I ran my TU again last night and found that it jumped to 673. Our mortgage broker told us we'd qualify for a 5% down loan if I could get my credit to 680+.
Today, I signed up for Experien's Score Watch, figuring it would be helpful to keep an eye on it since DH and I want to apply for a mortgage in late February/early March and discovered that my score went from 657 to 593. The only thing on here that's not on the TU report are my credit union loans - car loan, signature loan and one credit card. I noticed that my credit union was reporting I was 90 days past due on my signature loan. But I've paid them!
I called them and found out that because the loan is variable, my payment increased 14 cents. I didn't know this, so I became 42 cents past due over the course of three months. They reported to Experien that I was 90 days past due on one month's full amount. Question 2: Can they DO that?
I had them take the 42 cent payment from my savings account with them and sent an email to their loan servicing department asking them to fix their reporting to the credit bureaus since this was an oversight and not a willful lack of payment. Question 3: What do you think the chances are that they'll fix this? Can they fix what they've already reported?
Questions 4-5: Other than paying down debt at an insane rate for the next 3-5 months, is there anything else I can do to help improve my score? We have to get the scores to 680 in order to qualify for the lower down payment, but ideally, I'd like them to be 700+. Is this totally unrealistic at this point?
10-12-2010 09:10 AM
Welcome to the forums!
I'd suggest reading the following:
Credit Scoring 101 - great for knowing what is in your credit score and to see how your score is impacted.
What Steps Do I Take - great for learning the repair process.
and Example letters - PFDs, GWs, DVs, etc.
Negative accounts remain for 7 years, at which point they'll delete. Positive accounts remain for 10 from when they were closed. Sometimes negative accounts can turn into positive accounts and report for the additional 3 yrs.
Congrats on the debt paydown! Awesome stuff!
ScoreWatch uses Equifax (EQ) and not Experian (EX). In fact, it is impossible to purchase your EX FICO from anywhere (though your lender can get it for you).
I know this isn't a question, but when applying for a mortgage, your lender will pull all 3 FICO scores for both you and spouse if applying together. The lender will look at your set of scores and take the middle one as a basis and will do the same for spouse. The lender will then use the lowest of the two mid scores as the base point for calculating interest, discounts, etc. I bring this up because since we cannot see our EX FICO, we have to assume that our mid scores will be at least at the level of our EQ or TU FICO scores. Unfortunately, most lenders now use a TU FICO version not available to us mere mortals. MyFICO uses TU98 version for TU. Most lenders use a newer version called TU04. So, if you pulled your TU FICO via myFICO today as does your lender from their sources, the two TU FICO may not match. For most, their TU FICO from myFICO is higher than the TU FICO from a lender. I'd personally aim TU FICO for 30 points higher than your org. goal, or 710. That'll get you in a better position.
For the CU credit, check with your CU. Not every creditor reports to all 3 CRAs.
For the 90 day late comment on the loan, pull your CR directly from the CRA (you can do for free once a year via annualcreditreport.com). Look in the full 7-year history that your accounts report and look to see if that loan was ever 90 days late. If so, that is your culprit. Your FICO reports will report the worst late, which doesn't show in the 2-yr history if it was older than 2 yrs ago.
Can they do that? I don't know. You'd have to check your loan agreement. Be nice to them and they'll likely remove the lates over 42 cents. And yes, they can remove the lates if they want to.
Ideally, for max points at mortgage time, get all of your CCs to report $0 with the exception of one. Get that one to report less than 9%.