Trying to repair my credit before buying a house

[Anonymous]

Hello, working with a 613 score via Credit Karma in both Equifax and Transunion.

I have about 5 charged off revolving accounts (totaling around $3500), and maybe 4 current revolving accounts that have high balances.  The SOL will be up in 3-4 year for all or them, so waiting them out is not an option.

Out of the 5 charged off accounts, only one is showing as a collection account on my CR, but I know one other is recently been acquired by Portfolio Recovery but is not showing on my CR yet (as of yesterday).

How should I go about repair my credit?  Should I lower the balances of the current/active accounts first?  Should I take care of the charged off accounts before they get sold to a CA and reported as collection accounts?  Should I handle the two already in collections first?

I also have questions about Portfolio Recovery.  I spoke with them last week (they called my mother's house and I just happened to be there) and asked them to send me proof of the debt and proof that they're the legal holders of the debt.  All they sent me was a letter telling me the balance and account number.  They're also calling me from local (Pennsylvania) numbers despite them not having a physical presence there.  Is this legal, or is this something I can use to my advantage?

[rmduhon]

DV must be in writing. Take care of the charge offs first before they become collections since that will add another derogatory account to your reports. What are the DoFDs on the derogatory accounts? You'll find that information on your actual credit reports, not ftom a monitoring site such as Credit Karma. Ignore the scores from Credit Karma, they use Vantage 3 scores which very few lenders use. Since you are wanting a mortgage get your scores from here since MyFico provides those scores.

[Anonymous]

1. Don't pay attention to your score on CreditKarma. That is a Vantage Score, and not a FICO score. FICO scores are what matter in your case, specifically your FICO mortgage scores. Yes, there are several different versions of scores. Your mortgage scores consists of Equifax Beacon Score 5 (FICO 05), Transunion FICO Score 04, and Experian FICO Score 02. If you get the Ultimate 3B membership that's offered here on myFICO, you will be able to see the scores. 

2. What year did each of the charge-off's occur? It would be helpful for you to list each account, the amount, and the year that the charge-off occured NOT the year that the account was opened. 

3. Are all of your revolving accounts closed? Again, it would be helpful to list each account, the amount, and the status(open or closed). 

[Anonymous]

Thanks for the responses.

My FICO TU score is actually a 622, so higher than CK's score.

Here are the accounts and the dates of charge-offs.  Currently I have 4 active revolving card accounts, 1 loan with OneMain, and a bunch of student loans in deferment.

Syncb/Amazon Plcc

$0

Paid or paying as agreed

Usaa Savings Bank

$1,505

Paid or paying as agreed

First Premier Bank (c/o Aug 2015)

$1,167

Charged off as bad debt

Credit One Bank

$928

Paid or paying as agreed

First Savings Credit Car (c/o Feb 2016)

$741

Charged off as bad debt

Merrick Bank

$698

Paid or paying as agreed

First Premier Bank  (c/o Aug 2015)

$683

Charged off as bad debt

Chase Card

$389

Paid or paying as agreed

Capital One Bank Usa Na (c/0 Feb 2016--sold April 2017 to Portfolio Recovery)

$0

Charged off as bad debt

Best Buy/Cbna

$0

Paid or paying as agreed

Capital One

$0

Paid or paying as agreed

Onemain

$5,981

Paid or paying as agreed

The Bureaus

Collection Account (was Capital One CC, sold to Bureaus in Jan 2016, amount $625)

Also, is it legal for Portfolio Recovery to be calling me from a spoofed number?  They called me from a PA number (my locality) and they don't have any locations in PA.

[Anonymous]

1. You mentioned your TU FICO score is 622. But is that your Transunion mortgage score? Lenders will take all three of your mortgage scores, and use the one in the middle as your score for their purposes. The only way to find out your mortgage scores is by getting the Ultimate 3B subscription with myFICO. 

2. The charged-off accounts definitely need to be paid especially since you are still within the statute of limitations to be sued. It would also be helpful if you could post your limit to see where you are with utilization. 

3. Yes, it's legal for the collection company to call you from a local number. It's apart of their tactic to mimic themselves using a local number. 

[Anonymous]

I'm actually a Loan Originator and will be doing an application tomorrow for an FHA loan, and since I'm an employee they'll give me my full credit report with my FICO scores and everything (including median scores).  My current score is good enough to get approved for an FHA, but our DTI might be high once we add a housing payment so I really am trying to figure out which accounts to tackle first.

So I should take care of the accounts that are charged off before they become collections and in the meantime ignore the one collection account I do have?

[Anonymous]

That's a question for the experts, but charge-off's are more damaging than collections. With you being a loan originator, are you familiar with how your office handles collections and charge-offs? Do you deal with mortgage loans? With you seeing profiles similar to yours, can you use that a comparison for what you need to do? Also, I'm sure with you being a loan originator, you know that score is not the only deciding factor, just the minimum to get you considered. 

If the collection is updating monthly on your reports, it may be worth a shot to offer a pay for delete. You pay the amount you owe in exchange for the collection agency removing the account from your credit report. 

[Anonymous]

Thanks--I know that for FHA loans that the guidelines for older negative debt aren't as much as an impact.  We'll know tomorrow.

I guess I just came here wondering what my best course of action is in reducing my debt and which items to tackle first.  I'm wondering if I should make an arrangement with Portfolio Recovery now before it turns from a charge-off to a collections account on my credit report, because as of now they're not yet reporting it.

[Anonymous]

Do you have your accounts set-up for auto-pay? Given your current credit profile, that is probably the most important step. Also, what is CL on the Chase card? Has Chase been sending you BT checks?

[jdxprs1]

I'd call all the charge offs and offer settlements. Pif for delete or settle for 50%.

You can get a nice score increase by lowering utilization but not sure how much with all those chargeoffs on reports.

Utilization will probably get you to the 650-670 range.