Understanding FICO® Scoring

[nate2710]

I am searching for a mortgage and am in trouble.  I pulled my credit report and was middle score 579.  I spoke to a rep at countrywide and said my score was too low for any type of loan b/c my score was 505. I was late 7 days with my car payment.  I had 2k total within 3 charge off account.  I paid those accounts in full on 08/30/07.  What can I do to raise my score enough in order to shop for a mortgage loan.

[fused]

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nate2710 wrote:

I am searching for a mortgage and am in trouble.  I pulled my credit report and was middle score 579.  I spoke to a rep at countrywide and said my score was too low for any type of loan b/c my score was 505. I was late 7 days with my car payment.  I had 2k total within 3 charge off account.  I paid those accounts in full on 08/30/07.  What can I do to raise my score enough in order to shop for a mortgage loan.

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Unfortunately FICO scoring does not reward you for paying off charge-offs. I know it stinks! FICO scoring wise, charge-offs and collections rather paid or unpaid tank your scores especially if they are less than two years old. Do you have any credit cards? If yes, what are the credit limits and balances on each of them? Do you have any other bad stuff on your reports?

Back to the paid charge-offs, probably the only thing you can hope for is the creditor deleting them. Here is a link to write GW (goodwill) letters. There is no guarantee when writing these but it's certainly worth a shot. Many times they fail after the first few attempts. Just keep writing them and hopefully it land in the hands of someone who is sympathetic to your situation. Remember to personalize your letter to your situation. GL

http://ficoforums.myfico.com/fico/board/message?board.id=generalcredit&message.id=2661

[TheNewWorldMan]

Nate, my recommendation would be a strategic withdrawal from the mortgage battlefield...for now. You need time to recover your FICO score. The housing market is not going to rebound anytime soon anyway. Save your money, get some positive tradelines, and bide your time.

[Brammy]

I second NWM post.  With the mortgage industry today anything you are likely to get in the back alley in the dead of night would be unaffordable and do further damage.  With a little persisitance and work, you can get yur scores up itno lending range within 18 mos (a timeline guess on my part).

[nate2710]

I do not have any CC's.  I am afraid that if I apply and get denied that another inquire will negatively affect my score.  Is that safe to assume.  Or should I try to obtain a CC to rebuild some good payment history?

[fused]

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nate2710 wrote:

I do not have any CC's.  I am afraid that if I apply and get denied that another inquire will negatively affect my score.  Is that safe to assume.  Or should I try to obtain a CC to rebuild some good payment history?

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I think a couple of CCs will help improve your credit over time. Do you know all three of your FICO scores?