lost in space and creidt report black hole

[Anonymous]

We are confused.  We had severe financial setbacks, beginning March 2006 (yes, a while back), and went through a certain "debt free plan" where we were encouraged to destroy all credit cards (we each had 3 or 4) and go cash only.  We were paying off said accounts until spouse's job was deleted. We tried to work with card holders to stop the late payment and over limit fees, as we were paying 50 each month and they were adding 75 to our debt.  (including Late, OL, and interest).  We finally gave up, they were charged off and sent to collections. 

SO...the collections have sold them numerous times, and with each resale, the clock starts over again. We now have debts on our report to companies that we never owed in the first place!

We were told to dispute all those debts as we honestly didn't know who they were originally.

NOW we are told that the disputes are clobbering us in regard to getting a home mortgage.

WHAT to do????

Our scores are in the low 600 ranges.

We don't know FICA from Fido.

We don't know how to fix or unfix the disputes.

We don't know if we should work with the current collections to settle, or to struggle to pay in full.

WE KNOW NOTHING ...except we can't get a home loan!!!

Advise is most greatly appreciated.

[Jaxavier]

With each "resale" the clock does not start over again. The compliance date remains the same, which is the date of first delinquency that ultimately led to the charge off.

First thing you need to do is get. Copies of your credit reports. Not a tri-merged, but one from each bureau. Disputing doesn't "clobber" you with respect to getting a mortgage, but those open collection and charge off accounts will. Once you have copies of your reports you need to try to match up the original creditors with the collection agencies that are reporting. Make sure the DofFDs are the same. If not this is what is known as re-aging and is illegal. March of 2006 is 7 years ago and accounts that went delinquent then should be coming off your report over the next 6 months. Chances are too that you're past the SOL for the creditors to go after you on these. Are you needing to purchase a home ASAP....or are you simply 'shopping' for now?

[Anonymous]

Thank you for clarifying the dispute concern.

We have had different information from different loan officers...one says to dispute everything, one says to get a pre-paid credit card and use it monthly, one says that the disputes will be a 'red flag' for the underwriters.

 There are many acronyms here... as in

"Chances are too that you're past the SOL for the creditors" --- what is the SOL?

We are in a rental now that we had hoped to buy 2 years ago ... hoping that our landlord doesn't decide that he needs/wants to sell before we are able to purchase.

[Jaxavier]

When they say pre-paid credit card, they are likely referring to a secured CC.  This is a card where you deposit x amount of dollars with the bank issuing the card and that deposit becomes your credit line (CL).  Some things to make sure of with this: Be sure the CC company reports to all 3 bureaus, check the fees! Some secured credit cards charge absurd fees like monthly and/or annual fees that could be close to or even exceeding $100 annual, interest rates as well (if you plan on carrying a balance, something I suggest you do not).  Getting a card or cards like this will help your scores, but not overnight.  

Disputing negative accounts may take those accounts out of the FICO scoring for the time-being its disputed, however all mortgage pulls are manual reviews and any underwriter is going to question any collections/charge-offs paid or open regardless if your FICO score at the time of the pull while the negative accounts are in dispute is factoring those accounts into the score.

SOL - Statute of limitations. You can find yours : http://www.creditinfocenter.com/rebuild/statuteLimitations.shtml

I would suggest working on your credit before going to various lenders looking for a loan. I think your scores need to be in mid-6's before anyone would even consider lending. If you have multiple reportings of the same account with different dates of first delinquincies, those are your first targets.  Read up on the FCRA and FDPCA, they're the tools you'll be using against the wrongly reporting data.

[guiness56]

Unfortunately, most lenders do not know the correct procedures and will have you disputing accurate information which you are not supposed to do.  When disputing an OC account, certain aspects of those accounts are taken out of scoring.  CA and PR are not removed from scoring.

Yes, a disputed TL is a red flag for the UW and most will want them off.

Read the sticky in my signature for abbreviations.

SOL - Statute of Limitations.  It is your states law for how long a creditor has to sue you regarding a debt.  Each kind of debt may have a different SOL.

Go to annualcreditreport.com and get a free report from each CRA.  You get one every 12 months.

You need to know the DoFD of each TL.  EQ uses the DoFD. TU and EX will give fall off dates.  You can also call the CRAs and get the DoFD from them.

Lenders will use your middle score.  What it needs to be depends on the type of loan you are applying for.

When a creditor charges off a debt he can either sell it or assign it to a CA.  If they sell it, the OC account will list a 0 balance and say transferred of sold.  If the CA reports they will show the entire balance.  If the debt is sold, you have to work with the CA.

If the debt is just assigned to the CA, both the OC and the CA can report the balance.  If assigned, if the OC will allow it, work with them instead of the CA.