topic Re: SOS - Rebuilding Poor Credit for Home Purchase (within 1-2 years) in Rebuilding Your Credit

SOS - Rebuilding Poor Credit for Home Purchase (within 1-2 years)

Anonymous — Wed, 24 Jul 2019 21:47:50 GMT

I would like your assistance in providing feedback on how I can raise my credit score quickly to be approved for a VA home loan within the next year or two. My stats are listed below:

FICO Scores

571 - Equifax, 579 - Transunion, 550 - Experian

1. No collections thankfully

2. Revolving Utilization % = 113% - Equifax, 96% - Transunion, 113% - Experian

3. All of the degoratories are due to late payments from CCs and student loans (all the CC companies have closed the accounts)

4. I am in the process of paying the CCs completely off and making timely payments on my students loans

5. I plan to consolidate my student loans next month

6. I have one open credit card with a zero balance and $10,000 limit at Rooms To Go

7. No degoratories on my auto loan

Any feeback on how to raise my scores to VA home loan approval is greatly appreciated!

Re: SOS - Rebuilding Poor Credit for Home Purchase (within 1-2 years)

Anonymous — Wed, 24 Jul 2019 21:55:25 GMT

I forgot to add that I do have collateral. I inherited a paid off home from my aunt that sits on about 4-5 acres of land.

Re: SOS - Rebuilding Poor Credit for Home Purchase (within 1-2 years)

CramEiko — Wed, 24 Jul 2019 22:28:57 GMT

@Anonymous wrote:
I would like your assistance in providing feedback on how I can raise my credit score quickly to be approved for a VA home loan within the next year or two. My stats are listed below:
FICO Scores
571 - Equifax, 579 - Transunion, 550 - Experian
1. No collections thankfully - Good
2. Revolving Utilization % = 113% - Equifax, 96% - Transunion, 113% - Experian - Any way of paying this down to under 30%
3. All of the degoratories are due to late payments from CCs and student loans (all the CC companies have closed the accounts)
4. I am in the process of paying the CCs completely off and making timely payments on my students loans - What's your time line before applying for a home? Banks will look at bank records for at lest 2 months to verify what funds that are there are yours. And perhaps to see if you are ok as far as DTI.
5. I plan to consolidate my student loans next month - Not sure what to comment about this one.
6. I have one open credit card with a zero balance and $10,000 limit at Rooms To Go - Good
7. No degoratories on my auto loan - Good - you will need something showing at best 2 yrs or 24 mo of no late payments with any type of loans.

Any feeback on how to raise my scores to VA home loan approval is greatly appreciated! Unfortunately TIME is your best friend.

Even though you have another home gifted to you there are costs involved there too. If it's paid off, great. Rent that out. You can use 3/4 of the monthly rent as income. Assuming you are keeping the house that is.

Good Luck!

Re: SOS - Rebuilding Poor Credit for Home Purchase (within 1-2 years)

Anonymous — Wed, 24 Jul 2019 22:35:42 GMT

Thankfully the home is paid off. I'm in the process of determining whether I should sell or create residual income.

I plan on getting my utilization under 30% within the next two months.

A military financial counselor suggested I apply for a credit builder loan or secured card to assist with building my credit. What are your thoughts?

Re: SOS - Rebuilding Poor Credit for Home Purchase (within 1-2 years)

FireMedic1 — Wed, 24 Jul 2019 23:39:11 GMT

Welcome to the forums! Before you can drive a broken car. You got to fix it first. More credit doesn't build scores. Repairing whats hurting your scores comes first. The rest will follow as in score increases. One question though. Where are you getting the >100% util from with 1 credit card? Are those high util cards charged off and closed?

Re: SOS - Rebuilding Poor Credit for Home Purchase (within 1-2 years)

Anonymous — Wed, 24 Jul 2019 23:42:00 GMT

The > 100% are from accounts (4) that credit card companies have closed due to late payments.
I now only have one open account that was established in 2015 with a zero balance and 10,000 limit.

Re: SOS - Rebuilding Poor Credit for Home Purchase (within 1-2 years)

BallBounces — Wed, 24 Jul 2019 23:49:43 GMT

@FireMedic1 wrote:
Before you can drive a broken car. You got to fix it first. More credit doesn't build scores. Repairing whats hurting your scores comes first.

This right here, it can not be said enough. The most crucial and time relevat thing is to resolve delinquencies and ensure they are not continuing.

Re: SOS - Rebuilding Poor Credit for Home Purchase (within 1-2 years)

BallBounces — Wed, 24 Jul 2019 23:50:31 GMT

@Anonymous wrote:
The > 100% are from accounts (4) that credit card companies have closed due to late payments.
I now only have one open account that was established in 2015 with a zero balance and 10,000 limit.

Have the closed accounts been charged off, or are they just closed by grantor while you pay them?

Re: SOS - Rebuilding Poor Credit for Home Purchase (within 1-2 years)

Anonymous — Wed, 24 Jul 2019 23:54:29 GMT

One is charged off and the other 3 were closed by thr grantor. I am current with 2 of the accounts as of today. I plan on reaching out to the other two grantors tomorrow. I plan to get all of accounts up to date by the end of the month and fully paid off by the end of September.

Re: SOS - Rebuilding Poor Credit for Home Purchase (within 1-2 years)

FireMedic1 — Thu, 25 Jul 2019 00:07:28 GMT

If you could list out the accounts with credit line and balances. And the lates that go with it. The gang here can give you a plan on how to tackle these debts. If not. Once all those closed accounts quit affecting your util you will see some increases. The lates wont go away but will sting less as time moves on. Follow thru with your plan and keep us updated on your progress. Were more than happy to help you if you so desire. Just remember. FICO doesnt consider how high your credit line is. Its what is owed that they score you by percentage-wise. Good Luck! Dont hesitate to ask any question at any time.

Re: SOS - Rebuilding Poor Credit for Home Purchase (within 1-2 years)

Anonymous — Thu, 25 Jul 2019 00:18:07 GMT

How old/recent are the late payments with the student loans / credit cards?

Re: SOS - Rebuilding Poor Credit for Home Purchase (within 1-2 years)

calyx — Thu, 25 Jul 2019 01:29:54 GMT

Hi,

I'd like to ask more about the student loans - what kind of lates (30/60/90/120/150), how many, when, and what servicer?
Were these loans ever defaulted (and rehabbed)?
Why are you considering consolidation?

Re: SOS - Rebuilding Poor Credit for Home Purchase (within 1-2 years)

Anonymous — Thu, 25 Jul 2019 10:36:47 GMT

I can't thank you enough for your assistance with this process. I quite embarassed; especially since my credit was in the upper 700s a few years ago. I have listed all of my data below (all of data was obtained from the FICO Score 3B Report):

Closed CC by grantors

1. JcPenney (Synchrony Bank)

Account up to date as of 7/24
Credit balance = $1, 396
Credit Limit = $1,120
6 month delinquency
125% Utilization

2. BOA Mastercard

Account up to date as of 7/24
Credit balance = $561
Credit Limit = $600
6 month delinquency
94% Utilization

3. Best Buy - account listed as charged off by grantor

Account will be current as of 7/25
Credit balance = $833
Credit Limit = $650
6 month delinquency
128% Utilization

4. Dillards (Wells Fargo)

Account will be current as of 7/25
Credit balance = $5,44
Credit Limit = $4,930
6 month delinquency
111% Utilization

5. Student Loans (Navient)

My account is up to date
I have not defaulted on my student loans, just 180 day late payment history
29 Navient student loans - This is the reason I plan to consolidate them into one large loan
Variety of balances
6 month delinquency

Re: SOS - Rebuilding Poor Credit for Home Purchase (within 1-2 years)

calyx — Thu, 25 Jul 2019 13:44:42 GMT

@Anonymous wrote:
I can't thank you enough for your assistance with this process. I quite embarassed; especially since my credit was in the upper 700s a few years ago. I have listed all of my data below (all of data was obtained from the FICO Score 3B Report):
5. Student Loans (Navient)
My account is up to date
I have not defaulted on my student loans, just 180 day late payment history
29 Navient student loans - This is the reason I plan to consolidate them into one large loan
Variety of balances
6 month delinquency

How long ago was your 180d lates? If it wasn't too long ago, you could contact them requesting/asking about a retroactive forbearance and it could remove that string of lates.

I totally understand not wanting to keep up with 29 loans, but having a lot of positive/older tradelines does look pretty good in the long run. Do you send Navient one payment or have to keep up with 29? You can ask them if you can send them a single/lump payment that they disburse among the loans if that's a concern.

Consolidations will close the 29 loans (they and their lates will stay on your credit record for up to/approximately 10 years from their closed date, which is good for your average age of accounts) and you will start a new installment tradeline. But since you are working on getting a home loan in 1-2 years, that shouldn't be a hinderance (mortgage apps do not like 'new' accounts - which is one less than a year old). FYI: The new loan rate will be a weighted average of your current loan rates, so that shouldn't cause any significant change on your payback).

Since, I forgot to earlier - I want to commend you on taking charge of your credit 1-2 years ahead of your goal. I think you have a good chance of mkaing significant progress because you have a pretty reasonable timeline to work with. I always get a little dismayed when someone wants to change their credit score 'overnight' (say in a month) and they get frustrated with the lack of fast progress. Definitely stick around and people here will be happy to help. And don't be embarassed at your bad scores/credit history. Plenty of us have been there and done that; anyone can fall on hard/unexpected circumstances. What's important is that you are here and willing to do what you need to do to get back on track.

Re: SOS - Rebuilding Poor Credit for Home Purchase (within 1-2 years)

calyx — Thu, 25 Jul 2019 15:24:44 GMT

@Anonymous wrote:
Thankfully the home is paid off. I'm in the process of determining whether I should sell or create residual income.

I plan on getting my utilization under 30% within the next two months.

A military financial counselor suggested I apply for a credit builder loan or secured card to assist with building my credit. What are your thoughts?

I forgot to address this:
A credit builder loan won't help your score. The main benefit is adding an installment loan to the credit mix, but you already have installment loans in the form of your student loans.

A secured card couldn't hurt - if you put enough down as collateral, it could help your utilization % when using the card.
I wouldn't normally recommend going this route until you fix/are fixing everything else, but if you're looking at a home loan, then getting that account started and aging is more important than it would normally be.

If you get a secured card, you want one that graduates. You mention military - are you in with Navy Fed? I believe their secured card graduates, and they're a good bank to get in with.
Discover is also a really good one because it can graduate quickly, is generous with credit limit increases, and also gives you cash back - all with no annual fee. You can check their prequalification link on their website.

Optimal scoring seems to be with three credit cards, one ~~carrying~~ gah- REPORTING a small balance (below 9% - not carrying, sorry for any confusion, need more coffee). You don't want more than 1 out of 3 cards with an open balance, but you need at least one to show you can use credit. AZEO (all zero except one) is used by people to eke out a few extra points, particularly before applying for a mortgage.

Re: SOS - Rebuilding Poor Credit for Home Purchase (within 1-2 years)

Anonymous — Thu, 25 Jul 2019 15:08:15 GMT

Thanks for the advice! I'm going to pay off the current credit cards first and then apply for a secured card with Navy Federal. I hope to get all of this taken care of by the end of September.