topic Re: Deleting A Collection & Removing 1 Late Payment On An Otherwise Clean Credit Report - Will i in Rebuilding Your Credit

Deleting A Collection & Removing 1 Late Payment On An Otherwise Clean Credit Report - Will it help?

Anonymous — Tue, 18 Sep 2012 19:19:16 GMT

Will fixing these two things via a rapid rescore on my husband's otherwise very clean credit report have much of an impact on his score?

*DELETION* of a $55 collection from June 2010
30 day late payment changed to 0 for a car payment

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Background

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My husband is very fiscally conservative--he doesn't like using credit cards and unfortunately this seems to have had a disasterous affect on his credit score. We are trying to apply for a jumbo loan but when the first lender pulled his scores, his middle score was 698. Apparently he has to have a score over 720 to qualify for a jumbo loan. He had two negative things on his credit report: a late car payment and a $55 collection that we had no idea even existed. We called the car finance folks and they removed the late payments from his report (they were because his had automatic payments set up and his cc expired and he didn't know). The second one was a collection from a trip to an urgent care clinic in June 2010 and it was being reported as unpaid. This one was so frustrating because I made a payment to them in Sep 2010 but apparently the person I called did not tell me my entire balance. Then I actually made another payment in January 2011 and paid the whole thing off but it was never reported to the collection agency. I have since spoken with the collection agency and they have sent a request for DELETION on the the credit report and gave me a copy of the letter. The rest of his credit report is totally clean. No late payments and only one credit card with a balance of $800.

My husband makes great money and we have very little debt ($3000 total in credit cards between him and I, $1000/month in car leases, and $250 monthly student loan). We are trying to purchase a house and it would only be about 14% of my husband's gross pay (if that makes sense). The problem is even though we have more than enough money, we need to get his credit score up to qualify for the jumbo loan. SOOOO frustrating.

Anyway, our first lender told us that removing the late payment and deleting the collection from our account would NOT get him to 720. That it would make very little difference. The lender we are talking to right now is working with us to do a rapid rescore and he said he and the rapid rescorer think it will make a big difference. He said the car payment is already showing 0 late payments so he is working on the collections deletion.

Also, it seems in the last week my husband's score has actually gone DOWN even though the car payment was changed from 30 days late to 0 days late? Help! This is so frustrating. My husband is the most fiscally responsible person I know. It's crazy that his scores are so low.

Re: Deleting A Collection & Removing 1 Late Payment On An Otherwise Clean Credit Report - Will i

Shogun — Tue, 18 Sep 2012 18:05:44 GMT

I do expect there to be an increase of his score if this is the only negative on his report, how much of an increase I could not tell you. Does he have any revolving accounts at all? Revolving counts for 35% of your credit score.

Re: Deleting A Collection & Removing 1 Late Payment On An Otherwise Clean Credit Report - Will i

Anonymous — Tue, 18 Sep 2012 18:25:37 GMT

I am not sure what revolving means? Is that a credit card? He has one credit card and that has a balance of $800. The "funny thing" is when we applied for our car lease the finance guy told him that he needed to improve his score and told him to get a credit card. So he got one and has been trying to use it, but it's so against his nature. I ended up having to be a co-borrower because my credit is better... but I don't even work! We had no idea that his score could possibly be low. I guess we have been very naive.

Should he pay down his credit card at all? I know if this doesn't go through that maybe we should apply for a credit card. I could also add him to my credit card. But of course we need this score to go up ASAP and don't have time to do these long term things.

Re: Deleting A Collection & Removing 1 Late Payment On An Otherwise Clean Credit Report - Will i

Shogun — Tue, 18 Sep 2012 18:54:15 GMT

Depends on how much of a credit line is on that card. You basically want your util to be less than 9% of the available credit. Getting your util down is an excellent and quick way to boost scores.

Re: Deleting A Collection & Removing 1 Late Payment On An Otherwise Clean Credit Report - Will i

Anonymous — Tue, 18 Sep 2012 19:17:37 GMT

Thanks. It looks like we could make a payment and get it down to under 9%. I'll go ahead and do that too. That is is his only credit card. The balance is $5000 and his balance is actually around $700 right now. I'll pay it down to it is closer to $400 so that will be under 9%.

Re: Deleting A Collection & Removing 1 Late Payment On An Otherwise Clean Credit Report - Will i

RobertEG — Tue, 18 Sep 2012 19:34:34 GMT

The advice to obtain a credit card for FICO score improvement purposes was sound.

REvolving credit is defined as credit wherein the creditor does not provide the consumer a set amount of cash, such as in an installment account, but rather issues the consumer an approved credit limit to use at their discretiion. Both monthly balances and payments then "revolve" around the discretionary use of the credit approved up to its limit.

FICO is a risk analysis, and places much more weight upon a showing of prudent use of discretionary (revolving) credit. Without a credit card or other type of revolving account, such as an LOC, the ability to evaluate use of discretionary credit is lacking. The effects spill into at least two scoring categories.. util of credit, and mix of types of credit.

Re: Deleting A Collection & Removing 1 Late Payment On An Otherwise Clean Credit Report - Will i

Anonymous — Tue, 18 Sep 2012 19:46:53 GMT

Thanks! But if he applies for a credit card now, it will bring his score down more in the short term, right? We need to quickly increase his score (doesn't everyone?) so I don't want to do anything to bring it down even more in the short term. This is so nerve-wracking...

Re: Deleting A Collection & Removing 1 Late Payment On An Otherwise Clean Credit Report - Will i

Anonymous — Tue, 18 Sep 2012 20:14:49 GMT

I have one more question: if I add my husband as a joint owner to one of my accounts/credit cards, will that help his score? Will they have to do a hard pull on the account to add him?

Re: Deleting A Collection & Removing 1 Late Payment On An Otherwise Clean Credit Report - Will i

Anonymous — Tue, 18 Sep 2012 20:46:02 GMT

Adding him to an account with a long and positive history and low utilization should help his score overall. The immediate short term effects depend on how he's added though.

If you add him as an authorized user, they won't pull his credit. However, I believe some (possibly most or all?) mortgage lenders discount credit scores if there are authorized user accounts on the report, so it might not work. I'd ask your lender about that.

If you have him added as a joint owner, then his credit would probably be hard pulled, though maybe some creditors wouldn't. That would be a question for the credit card company. I'd expect a hard pull for that.