Understanding FICO® Scoring

[Naive]

I bought a vehicle one year ago and have 5 cc's and my credit score was 551. Now I recently had 2 surgeries that put me out of work for 12+ weeks. So needless to say my payments were behind. I now have a score of 498 and want to purchase a home. I know that score is impossible to be approved with, so I need to know should I pay off the car (which we owe 11,000 on), or put the money down on the home? Either way I now have a lump sum of money to pay off the car and cards, and am unsure of what to do. Also, unsure if my score jump to possible mid 600's (after paying everything off) or am I dreaming?

[cfstr1]

Pay your credit cards down to 1%-9% utilization. This should give you a nice bump as FICO does not like to see credit card utilization over 35%.

Also continue to make your payments on time. It would be a good idea to put a portion of the money in a high interest savings account. I have an account at Emigrant direct and earn 5.00% every month. I put $800.00 away three months ago and have already earned 13 dollars because the interest compounds daily and is credited monthly.

This helped me out quite a bit because I had an emergency bill and was able to take care of it straight away. I have also been receiving unemployment. This way, if you run into a little difficulty you have a cushion to fall back on. You do not have to put it in all the way. Start with $500-$1000 and add as you go.

I am confident that you will achieve your goals.

Good luck and keep us posted.

Cecilia

[Joe77]

Good advice.  If your delinquencies are worse than 30 days...you're probably looking at a good year before you can purchase, to be quite blunt.

As far as savings accounts, Emigrant is good.  HSBC and ING direct also have similar high-paying savings accounts.

[Naive]

Thank you two for your advice I am looking up the high interest savings now.

[Tmleverage]

Is your signifacant others scores as bad as yours as you could get the home

loan without you on it at first.?

[Naive]

His median score is 550(?) due to a divore and bk