What steps do i take to fix my credit so I can buy a house???

[Anonymous]

I would like to buy a house within a year, but my credit score is poor, mainly due to late payments. I do not have any credit cards, I have a car payment, student loans (in deferment) and am in the process of paying of 2 collection accounts. I had a redeemed repossession 2 years ago. What can I do to raise my credit score so that I may qualify for a mortgage?

[lesse]

I am going through the same thing as you. You want to try to get PFD's (pay for delete) for the collection agencys. There are some examples on how to do that. Collections hurt your credit. You also (depending on the lender) are going to want to have at least 3 revolving lines of credit so if you cant qualify for a unsecured.. you might want to try a secured credit card and pay on time and keep your util at appx 9% usage. Also see if you can do goodwill letters for the late payments. Again check around the forum for some good examples of good will letters ) I also want my house by next year .. but i was worse with collections and a few chargeoffs.. but good luck to you!!!

[guiness56]

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@Anonymous wrote:

I would like to buy a house within a year, but my credit score is poor, mainly due to late payments. I do not have any credit cards, I have a car payment, student loans (in deferment) and am in the process of paying of 2 collection accounts. I had a redeemed repossession 2 years ago. What can I do to raise my credit score so that I may qualify for a mortgage?

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Getting some type of a CC is going to help you a lot.

Make arrangements, if you can, with the CAs for a deletion upon payment to remove those collections.

Send out GW letters asking for removal of late payments.

[Ravensfan2001]

I got a secured Capital One before working on any of my collections. The only other thing I had was an auto loan with no lates. My score increased to around 600 within 3 months with just those 2 accounts and not getting rid of any collections. So getting a CC is a great idea. You need to build while you're trying to deal with the baddies.

[nmjacobs]

Here is what we have done (we will be buying around August).

1. We met with two mortgage lenders. We told them upfront we were not sure if we would qualify but wanted to find out straight from them where we were at.

2. The first lender pulled out credit scores. We were both just under 620, which they said is their min score requirement. They also require that all collections and judgements be paid off. We met with a second lender a month later who we like a lot more. They require a middle score of 640 for the statewide NIFA program (2.5 interest rate). They also require collections, judgements to be paid off. In addition, they wanted my husband to show two years of employment without layoffs (we will hit that in July). Finally, they calculate how much mortgage you qualify for based on a 43% debt to income ratio. You can calculate this by taking your monthly income X .43. Subtract your monthly debt payments and what is left of that is how much house payment you would qualify for.

So, credit scores are just part of the equation. Make sure you also work on paying off your debt because that will eat away how much house you can buy. My husband paid off all his collections and his score went up over 30 points. He will not have to get any credit cards.

[cwwatts1202]

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@Ravensfan2001 wrote:

I got a secured Capital One before working on any of my collections. The only other thing I had was an auto loan with no lates. My score increased to around 600 within 3 months with just those 2 accounts and not getting rid of any collections. So getting a CC is a great idea. You need to build while you're trying to deal with the baddies.

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Can I ask what your score was when you first got the cap one before it updated to 600? My husband just got approved for a cap one secured so this has me curious how big of a jump you got the first 3 months with the card

[Ravensfan2001]

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@cwwatts1202 wrote:

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@Ravensfan2001 wrote:

I got a secured Capital One before working on any of my collections. The only other thing I had was an auto loan with no lates. My score increased to around 600 within 3 months with just those 2 accounts and not getting rid of any collections. So getting a CC is a great idea. You need to build while you're trying to deal with the baddies.

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Can I ask what your score was when you first got the cap one before it updated to 600? My husband just got approved for a cap one secured so this has me curious how big of a jump you got the first 3 months with the card

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Starting Score (4/16/12 lender pull): TU 596 | EX 550 | EQ 576

By November 2012, my (TU?) score hung around 625 and I went on a major app spree (20+inquiries) and got 11 cards out of it. Not saying you should do it, but credit cards do help. You don't even need that many - 2 or 3 is probably fine to start with. Anyway, my credit is different from your credit, so we will have different results and different bumps. My advice - don't give up. Be patient. Work hard and you will see results. I didn't start actively doing anything about my collection accounts until recently (like this month). I stayed on this board and asked a lot of questions, but never acted until now. And now that I'm acting, I wish I had acted earlier.

Good luck and keep the board updated on your progress!