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05-01-2016 11:29 AM - edited 05-01-2016 11:31 AM
So I recently settled a large account to improve my Revolving utilization ratio, which was terrible... I'm still in the process of disputing this settlement as the creditors have done nothing but fight this... despite getting a contract from them, and doing a full settlement, they would not report it as 0 balance, and Ive been fighting them through the CRAs, I expect it will in fact be reporting as 0 balance in the next couple months. Anyway it's left a bit of a bad taste in my mouth about settling, since they really gave me the run around in reporting it properly, but it is what it is... My utilization ratio has dropped to about 60-70% from 90%, and my scores have improved, although my mortgage scores on 2 bureaus are still lagging... so I have a question.
I have a collection account, for 2400, this is my most recent negative account, it's only about 18 months old. It is reporting on 2 bureau's, but not a third, that third Bureau has a Mortgage score for me of 633, the other 2 where it's reporting are 570'ish, very frustrating. So I'm somewhat inclined to try to settle this account as I believe it's what's draging those 2 scores down...
That said, I also have a $9,400 charge-ff CC, this is less-new. it's approaching 4 years old and the SOL in the state where the contract was signed ( but I have moved to a state now that has 6 year SOL, not sure if the creditor is aware of this, and this creates complications with Tolling SOL's etc... )
So I'm considering settling one of these accounts, but I'm not sur which would yield the best result, the $9,000 account would do better things for my Utilization ratio, but the 2400 account is newer, and seems to be correlating with my depressed mortgage scores on 2 bureaus.
Should be noted, the Bureau which shows a 50 point higher mortgage score Also has a lower utilization ratio, 60% , vs. 70 & 72% on the other 2 bureas. So I'm not sure if the difference is largely from the difference in amount of debt here, or the age of the debt, both I'm sure, but which factor is more influential here is what I'm wondering.
Since I moved states before the SOL passed on most of these accounts, & I would like to purchase a home in less than the 6 year SOL for my new state, I'm aware this opens me to being sued, I'm not sure how diligent these crditors are, whether theyre even aware I live in a new state, and if they would in fact pursue me across state lines. But it's in my mnd that I may need to settle most or all of these accounts eventually before applying for a mortgage or I may lose my negotiating leerage ( theyll see I want to buy a home ) or I may be sued before the 6 year SOL runs in my new state.
But I still have about 9 months until I'll be looking to apply for a mortgage and I would like to take this 1 acount at a time and see how my score rises, I don't want to pay anything unnecesarily. In a few months some of these debts will pass the original 4 year SOL from my previous state, at which point I think they'll be more pliable on settlement terms, I've been using mail-forwarding from my other state and still keep a phone number from that state, too, so I'm not sure they know I've moved & that the SOL has been tolled, this may give me a better negotiating position if they think the debt has passed SOL and is dead.
Any advice on the best course of action here regarding which of those 2 accounts might be more beneficial to settle, or insights on the SOL issue I gace would be much appreciated, thank you.
Also, I'm wondering, I have a couple secured credit cards with low limits, 300, 500 etc. I'm wondering if dumping $5,000 into one of these to raise the limit & increase my credit limit & utilized ratio is a viable strategy to improve score...? anyone done something like this?
I also just got a $3000 limit increase on one of my non-secured credit cards, so I'll be excited to see what effect that has on my score, should bring my utilization ratio close to 50-58% across all 3 bureaus.
Scores currently are 640'ish/625/630 , Mortgage scores 633, 577, 573 . I'm hoping to reach 640 or 660 for better mortgage rates in the next 9 months, but anything above 620 should qualify me for the home purchase without FHA.
Looking to get a 15 Year loan with 20% down, on 300-400k. My income level & employment history are solid.
05-01-2016 01:03 PM
05-01-2016 02:59 PM - edited 05-01-2016 03:03 PM
I've heard different things regarding this... some people say it doesn't matter, others say they'll adjust the DTI ratio to take the debts under consideration, and some people say you need to resolve them. Most people seem to think the charge-offs don't matter, especially if they've passed statute of limitations. The charge offs will pass statute of limitations in 3-4 months, at least, for the state the contract was signed in ( california ) . But now I live in a state with a 6 year statute of limitations, I have not been able to get a concrete answer on how exacty this works... I read ALOT into it, and was still left confused, some stuff I read said the statute of lmitations is tolled indefinately if you leave the state, others say your new states staute of limitations apply, others have said it's the state the contract was signed and executed in, others say it's the state where the credit card company is headquartered. It's all very confusing & despite hours and hours of reading I am still not 100% what the statute of limitations on these are.
I have tried to talk to a mortgage broker, but they will not really give me advice, they just want to immediately run my credit... Well once a mortgage hard inquiry is on my credit, any creditor I try to deal with is going to see that and know they have me over a barrel & not work with me on a fair settlement.
So I do not want to work with a mortgage broker or bank until I have resolved the accounts I'm considering settling, and no lenders will give me advice, they just want to run my credit to lock me in.
05-01-2016 04:05 PM
So I was looking for a mortgage company as well to work with us. I had to make over 50 phone calls till I came across a few companies who would give me some advice over the phone. Almost all of them told me straight out to pay everything off. Even the mortgage company I am working with now will only allow maybe two collections they have to be less than 2k each. I have been told by many mortgage companies anything over 2k must be paid off including charge offs. I have also had three companies tell me do not settle an account in less the CA will delete or state Paid in full.
Also the collections we do have are past SOL as well.
My advice is you should be looking for a mortgage company who will work with you and credit counsel you. Do not let them run your credit. Maybe meet with them in person and print out your scores and credit report.
I personally would proably see what you can do with the CO first. Once you are making payments you will see your credit go up from it.
Do you have an acoount with myfico?
If you do use the simulator! I have had very good luck so far and it has been correct everytime!
That is how I have been deciding what to pay off.
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