01-21-2013 10:04 AM
Thank you very much for the information! I am more clear now, and I think the best thing for me to do at this point is get the EQ FICO sold here. Yes, I am in need of finding a new lender to take one of my loans. I have an SBA loan, and they have no problem continuing to service the loan. The HELOC is backed by a CD in the bank, so no issue there either. My issue is that a mortgage loan (converted from a construction loan years ago) for just under 1 million will come due next year and that bank has told me that they will not renew the loan. We are current and have never missed a payment, so their issue is strictly due to the new lending regulations. Our business cash flow is around 1.0, and they require a 1.5 cash flow. It is so asinine because we are current, but the facts are the facts, and they are dropping us next year. So, now I am faced with multiple problems, all involving getting a new bank to give me a loan. My personal credit score is awful because I put some major business expenses on credit cards and maxed out my HELOC to keep my business running during these difficult times. The business is stronger now, but on paper, I am a high risk borrower. I MUST increase my score and so I want to make every effort to do so. Complicating matters is that I settled two Bank of America cards last year at their offer (I paid 40%), and they made no mention of how damaging this would be to my score. I feel somewhat lost and rather certain that I have no hope of any meaningful score improvement, but I must try anyway of course.
01-21-2013 01:50 PM
I just bout my EQ and TU reports from this site. I would say that the news is worse than I thought. My EQ is 624 and my TU is 622. They both show the HELOC of $ 885,000 as revolving credit, though they do have a notation that shows it is secured credit. I have 7 delinquent reports from credit cards. Some date back two years. The most recent 2 date back about 8 months. This was a time when I was unable to keep current, and in some cases did so intentionally to try and get a reduced interest rate or a settlement. In reading the reports over, it sounds like this VERY negatively affects me still, and will continue doing so for years and years to come. Ignorance is no excuse, and I accept this as a disastrous learning experience. Having said this, and now having more fully painted the picture of my credit situation, I am wondering if paying down my credit cards could even potentially help improve my score, or am I basically looking at a score in the 620's for the foreseeable future?
01-22-2013 06:46 AM - edited 01-22-2013 06:49 AM
Sounds like the HELOC being backed by a CD instead of Real Estate may be the issue of Revolving vs Mortgage. I'm not familiar with that but it seems that means is isn't a HELOC.
I know it says revolving in the details of that loan BUT look at the totals on page 6 of your EQ FICO Report: There is a section that says: "total balance of". Is the HELOC in the total for "Your revolving accounts"?
Also, look at page 2 and 3. What are the factors hurting your score? What are the factors helping your score. List #1, #2, etc. If it is truely calculated in Revolving, then #1 Hurting is likely "Ratio of your revolving balances to your credit limits".
In order to help your score, you need to work on the factors hurting your score, preferably starting at #1.
I assumed you had no negatives on your reports, or at least very little, to qualify for a $900K HELOC in the first place. I am assuming the settled accounts are the real killer. Are there any lates worse than 60-day late?
Edited to add: Are there any small BUSINESS Banks in your area?
01-22-2013 09:21 AM
My HELOC is backed by my house, not a CD. The CD-backed LOC is at another bank. Eight years ago when I borrowed the money, I had excellent credit, likely in the 800's. I never had a late payment, and I never carried a balance. The issues for me came with the bad economy and the loss of real estate value.
The HELOC shows up as revolving on page 6; it is included in that total. How it factors into the algorithm used to calculate the score have no idea, but I assume as revolving despite the fact that it is backed by my house. The #1 factor hurting my score is "You have a collection and a serious delinquency on your credit report". The delinquency is a $800 medical bill of my wife's that we disputed in 2008. I am not delinquent on any accounts, so I assume the delinquency refers to a Capital One CC that I was 120 days late on for about half a year. I have been current on all CC's for the past 8 months however. Since this is the #1 negative factor and I cannot do anything to change that, I do not know how I can improve my score. #2 is "You have made heavy use of your available revolving credit". I can pay down the CC's as time goes on, but I have a number of closed accounts, so paying those down and off will not help. And, if the HELOC is truly revolving, then even paying off all CC's will still leave me with over 90% utilization because of how large the HELOC is. So, I seem to have no way to improve the #2 factor either. #3 is "You recently missed a payment or had a derogatory indicator". The most recent missed payment shows as 8 months ago. This is correct. I cannot change this, and I do not know how long I will need to go before this stops hurting me. (Any ideas??). #4 shows "You have multiple accounts showing missed payments". This is true; they show 7 accounts. But, I am in the same boat here as I am on #3.
In short, while I truly believe that the business has weathered the storm and is in much better shape now than a few years ago, and even though I have never missed a bank payment, I feel that on paper I look absolutely awful. In my opinion, and based on what I have seen on my credit report, and based on what the negative factors are that are causing me to have such a low score, I see NO way to improve my score. It looks like no amount of CC payments will help. Can this be true? Is the only way to improve my score to simply wait 7 years for the late payments to fall off??? Can I expect NO improvement even though I am current now and paying down debt every month?
01-22-2013 06:14 PM
I believe any delinquency over 60-day late is a "serious delinqency". The collection and the serious delinquency are hurting your score the most. I guess that is obvious since they are #1 on the list of items hurting your score. I don't know if you can do anything to get a goodwill or pay for delete on the collection. If you can, it would really help. I don't even want to guess about your chances of getting a GW on the CapOne 120-day lates. It is worth a lot of effort if you can get that accomplished.
The way to help #2 is to get the HELOC classed as a Mortgage. My $30K is enough to hit the Mortgage catagory on FICO 04 with EQ and TU. It takes a bit more for EX, I believe $35K. There are a few versions of FICO that required the HELOC to be $50K. Obviously, you are WAY over that. You might want to post a separate item here and see if anyone has ever seen a HELOC over $50K catagorized as Revolving on a FICO report. If they are always considered to be a Mortgage, it could be worth insisting that the lender or the CRA makes sure it is classed as such. I know that would not by easy.
The recent late on #3 may get better when it hits 12 months. This could be very minor compared to the others.
Bleak, but maybe not as bad as it seems. I can easily understand you being really unhappy about this.
01-22-2013 08:32 PM
Thanks Greg. I truly appreciate all your time and help in explaining things to me.
In short, I have tried exhautively to get things removed, updated, etc. on my report for the past year, and I have gotten no where. I am sure it is a matter of talking to the right person, but Capital One in my opinion is the worst company out there. They are heartless, uncaring, and in fact liars. I have been promissed call backs, interest rate reductions, etc, and always nothing happens. At this point I feel it is a lost cause.