topic Re: Rebuilding-need 50 points for mortgage. Help! in Rebuilding Your Credit

Rebuilding-need 50 points for mortgage. Help!

Anonymous — Sat, 06 Jun 2020 00:53:32 GMT

Hi. Looking for some advice. My husband and I have been rebuilding our credit since December. Both our scores started in low 500s and now our mid scores are 606 and 591. We are trying to buy a new home using the VA loan. Because if COVID-19 lenders don't seem to want to touch us with less than a 640. The house we want to buy will be done in November so we are looking to apply in September. I have already opened new lines of credit, paid all current CCs off, and we've Managed to make decent progress in 6 months. I'm needing to make another 50 point bump in the next 2-3 months and I feel as if we have exhausted all options. We have disputed inaccuracies, and continued to be on time with payments. I even had my father add me to his CC as an authorized user which gave me a 15 point bump. There are a few outstanding collections from the last year that I can pay but I can't afford to pay all of it. How do I prioritize what to do pay? Will payment plans help my score? It's a little discouraging to feel like we have hit a brick wall.

Re: Rebuilding-need 50 points for mortgage. Help!

Ottley — Sat, 06 Jun 2020 03:48:34 GMT

Hello,

Don't feel discouraged. I am in the same boat. I want to utilize my VA loan, but need to get my credit score up. The best thing I can say is to see if you can settle the account for less than owed and have them delete. I had 3 collections and have paid 1 in full ($200) and settled the other 2, which were about 1600 or 800 for each one. In return, they agreed to delete the accounts. You can also do validation of the debt and see if you can dispute it, maybe, and have it removed? My newest hindrance is late payments on closed accounts paid in full. They make my payment history wonky, so I'm venturing out to see if they will 1. Remove the account altogether or 2. Delete the lates and update the status of the account. I'm still reading and researching this site, I've repaired my credit once using all the info on this board, and after a move and job loss, I'm starting again, this time with a plan. I hope everything works out.

Re: Rebuilding-need 50 points for mortgage. Help!

rckstrscott — Sat, 06 Jun 2020 05:27:00 GMT

@Anonymous wrote:
There are a few outstanding collections from the last year that I can pay but I can't afford to pay all of it. How do I prioritize what to do pay? Will payment plans help my score? It's a little discouraging to feel like we have hit a brick wall.

Well, it would only be a brick wall if there was nothing else you can do. You clearly have things you can do.

Payment plans on collections will not help your score. You took the score hit when they went to collections, and you will only recover the points once the collections are off the report. Not simply paid.

Don't get too discouraged though, you still have time to work on these. It would help if you listed which collection accounts you have, with which companies, and the dollar amounts. There are many ways to work on collections. You can PFD (pay for delete) to remove, you can pay in full and negotiate a removal in with a good will letter, you could settle for less than full balance and try the same thing (not as successful but still works sometimes)

Listing out your derogs would help us help you!

-scott

Re: Rebuilding-need 50 points for mortgage. Help!

FireMedic1 — Sat, 06 Jun 2020 07:38:52 GMT

Two things that stick out. No more apps for credit. That dings your score. And everything owed such as collections has to be paid. Whos the collections with? There may be some PFD agencies you owe. You wont get any point gains from paying off collectins. But the UW wont ask you to pay them if they are PFD'ed.

Re: Rebuilding-need 50 points for mortgage. Help!

Anonymous — Sat, 06 Jun 2020 10:36:02 GMT

I will get together a list. It's quite lengthy between my husband and I but a lot of it is old. My husband also has a foreclosure and repossessions that are a few years old that we can't do anything about. Should I focus on what's most recent, the last year? Or list out and look into paying everything? My research says to leave a lone the collections that are a few years old at this point because they aren't weighing as heavily and focus on anything new?

Re: Rebuilding-need 50 points for mortgage. Help!

FireMedic1 — Sat, 06 Jun 2020 12:29:50 GMT

Really doesnt matter the age. Mortgage UW's dont want to see any owed debts. Clean slate.

Re: Rebuilding-need 50 points for mortgage. Help!

rckstrscott — Sat, 06 Jun 2020 14:17:26 GMT

@Anonymous wrote:
I will get together a list. It's quite lengthy between my husband and I but a lot of it is old. My husband also has a foreclosure and repossessions that are a few years old that we can't do anything about. Should I focus on what's most recent, the last year? Or list out and look into paying everything? My research says to leave a lone the collections that are a few years old at this point because they aren't weighing as heavily and focus on anything new?

Well; if the collections are PAID perhaps in some situations, yes leave them alone if no other removal action can be taken. I closed on my mortgage just fine with two old derogs on my credit report. However, the collection and judgement that showed were paid.

But @FireMedic1 hit it right on the head. The age of the accounts is far less worrisome to an underwriter rather than outstanding debt. If you have large unpaid collections or judgements it will almost certainly disqualify you from being approved for a mortgage. There are some situations where if you were on a payment plan (such as the IRS) where the mortgage will simply factor that into the DTI but I don't think that will be the case for a collection account.

You need to pay those off before really considering a mortgage.

-scott

Re: Rebuilding-need 50 points for mortgage. Help!

Anonymous — Sat, 06 Jun 2020 16:00:00 GMT

Do my dilemma is that once I sell my house I will have enough money to wipe out and pay all my collections. Lender said I can get a approval with conditions that those items are paid at closing. We would close on sale of old house in the morning, pay those debts, then close on new house in the afternoon. But the kicker is I need to get the score up to do that. They want a 640 middle score right now for a VA loan. I'm going to pay some of the smaller collections that I can afford right now to hopefully get that bump. My middle score is a 606 right now and my husband's is a 591. In the end paying off the debt I can afford once the house sells but I need to hit that 640 before that. I'm not sure if paying the smaller collection will help, no one seems to have a for sure answer, even the lender

Re: Rebuilding-need 50 points for mortgage. Help!

rckstrscott — Sat, 06 Jun 2020 17:34:41 GMT

@Anonymous wrote:
Do my dilemma is that once I sell my house I will have enough money to wipe out and pay all my collections. Lender said I can get a approval with conditions that those items are paid at closing. We would close on sale of old house in the morning, pay those debts, then close on new house in the afternoon. But the kicker is I need to get the score up to do that. They want a 640 middle score right now for a VA loan. I'm going to pay some of the smaller collections that I can afford right now to hopefully get that bump. My middle score is a 606 right now and my husband's is a 591. In the end paying off the debt I can afford once the house sells but I need to hit that 640 before that. I'm not sure if paying the smaller collection will help, no one seems to have a for sure answer, even the lender

Oh for sure, the lender will often let you pay those off upon closing. But if you need score increases, you need to do something before that point.

Paying collections will give you minimal, and most like no score bump. Paid collections and unpaid collections factor exactly the same. You need to remove them. Paying them gives you a fighting chance of doing so, but the act of paying a collection account does not warrant score increases in the eyes of FICO - as mentioned previously, you take the point hit when a collection hits. They do not work the same as a revolving account where when the balance goes down you see point increases. They are not factored into any utilization. They are considered major dergoatories.

What companies are the collection accounts with? There are a handful that will do PFD and many of us have removed a LOT of accounts so we could give you some guidance.

-scott

Re: Rebuilding-need 50 points for mortgage. Help!

Anonymous — Sat, 06 Jun 2020 18:07:50 GMT

It's a bit embarrassing to put it all out there but we gotta start somewhere to fix it right? These are the companies, amounts, and dates of collections. I have about 1k I can spend right now. The rest will have to wait. I want to get the most out of that 1k.

Mine

AT&T-sequium - $120 03/20- I CALLED THEM THEY SAID THEY WONT PFD

Credit one - Lvnv funding- $1253 09/19

Credit one - lvnv funding-$746 09/19

Sprint - ic system - $992 08/19

Way fair - lvnv funding-$659 06/19

Progressive - recmgmt srvcs -$422 02/19

My husbands

T-Mobile - convergent outsourcing-$3025 12/19

Cox communications-convergent outsourcing-$87 01/18

Progressive-Caine weaver-paid 346 09/16 - THIS WAS SETTLED PAYMENT MADE 03/20

Comenity capital bank- portfolio recovery-$1771 08/16

Citibank -Portfolio recovery-$523 06/19

Re: Rebuilding-need 50 points for mortgage. Help!

rckstrscott — Sat, 06 Jun 2020 18:38:58 GMT

@Anonymous wrote:
It's a bit embarrassing to put it all out there but we gotta start somewhere to fix it right? These are the companies, amounts, and dates of collections. I have about 1k I can spend right now. The rest will have to wait. I want to get the most out of that 1k.

Mine
AT&T-sequium - $120 03/20- I CALLED THEM THEY SAID THEY WONT PFD
Credit one - Lvnv funding- $1253 09/19
Credit one - lvnv funding-$746 09/19
Sprint - ic system - $992 08/19
Way fair - lvnv funding-$659 06/19
Progressive - recmgmt srvcs -$422 02/19

My husbands
T-Mobile - convergent outsourcing-$3025 12/19
Cox communications-convergent outsourcing-$87 01/18
Progressive-Caine weaver-paid 346 09/16 - THIS WAS SETTLED PAYMENT MADE 03/20
Comenity capital bank- portfolio recovery-$1771 08/16
Citibank -Portfolio recovery-$523 06/19

Don't be embarrased! Look at most of our signatures. Many of us started in the same boat, with tons of issues. It is mangable and you will be able to do this. I was below 500 when I started, most of us were in similar boats. The best thing we can do as a forum community is to be honest with you.

The bad news is with 1k; I personally just don't see enough you can do to really see much scoring increases with your derogatories since your current cards are already paid off. You said you were added as an AU? What is the status of that card? Are their balances on that card? What does your total utilization look across all reporting cards? Those Citibank, Wayfair, Credit Ones.. Do those show are charge offs?

The good news? Nearly ALL those collection companies have many successes on this board. Portfolio Recovery will generally remove once you pay those. LVNV and Credit One are owned by the same parent company, and I had success removing LVNV with a PFD. Covergent, same deal. IC System removed for me with a GW letter. Looks like if you can just GET to the score you need, you will actually be able to really work on the credit report post close.

September is a bit away still. Covid shocked the lenders a bit, but it is starting to come back towards normal. If you don't have anything else hit and you keep your util down your scores will tick up.

-scott

Re: Rebuilding-need 50 points for mortgage. Help!

Anonymous — Sat, 06 Jun 2020 18:49:05 GMT

Unfortunately they are charge offs. The good news is I haven't had a single late payment on my current mortgage or auto loans. The AU card is a16k limit that my dad charges maybe $100/month to, so that helped. I keep my utilization rate on all my current cards 15% or less and leave maybe a $5 balance after being paid. Short of having the $$ to just sit down and pay off all the collections I feel like I've got to a stagnant point. My husband unfortunately didn't use credit at all after his foreclosure in 2016 so we just got him a secured and a regular card back in Jan. I cut up the cards, hooked up Netflix and Hulu to them and set it up on autopay. And it's been helping... Just slowly. The good news is if our financing falls through that we get our deposit back on the house which is why we did it because it was virtually no risk to us. We thought maybe by the grace of God we could get there by the fall. I'll keep plugging away at what I can but it really seems like time is what is going to help the most at this point. Before covid they would have done my VA wish a 580 😭😭😭

Re: Rebuilding-need 50 points for mortgage. Help!

rckstrscott — Sat, 06 Jun 2020 18:57:05 GMT

@Anonymous wrote:
Unfortunately they are charge offs. The good news is I haven't had a single late payment on my current mortgage or auto loans. The AU card is a16k limit that my dad charges maybe $100/month to, so that helped. I keep my utilization rate on all my current cards 15% or less and leave maybe a $5 balance after being paid. Short of having the $$ to just sit down and pay off all the collections I feel like I've got to a stagnant point. My husband unfortunately didn't use credit at all after his foreclosure in 2016 so we just got him a secured and a regular card back in Jan. I cut up the cards, hooked up Netflix and Hulu to them and set it up on autopay. And it's been helping... Just slowly. The good news is if our financing falls through that we get our deposit back on the house which is why we did it because it was virtually no risk to us. We thought maybe by the grace of God we could get there by the fall. I'll keep plugging away at what I can but it really seems like time is what is going to help the most at this point. Before covid they would have done my VA wish a 580 😭😭😭

Well, you might actually get a few points if you go AZEO, all cards reporting a 0 balance except one, and that card below (I believe) 8 percent utilization or something along those lines? If the AU card reports a low balance every month that could be the one card showing a balance.

Since you have charge offs, those are ALSO factoring into your overall util if they have balances. Do any of those charge offs show balances? That could be a place where you could get some points back if you paid off a charge off (if there was a balance) - The derog still hits but the gains in util drop could get you some points too.

You still might get there by fall. It's just June at this stage. Have you talked to any of the mortgage pros on the mortgage forum? I recommend talking to @ShanetheMortgageMan - he was very helpful to me both with my first purchase in 2011 and then again this year.

-scott

Re: Rebuilding-need 50 points for mortgage. Help!

Anonymous — Sun, 07 Jun 2020 23:53:07 GMT

@Anonymous I commend you for taking the first steps. In April, I started the process of paying off the 3 items I had in collections and once paid deleted my score has jumped 33 points. Since you only have 1k, I would suggest attack them from smallest to largest. You won't see any improvement until they are deleted and they won't be deleted until they are paid. Many of us have been where you are. My score was in the high 400s last summer, when hit bottom (truck repossession & student loan default on the way to a wage gernishment). There is hope for you.

Re: Rebuilding-need 50 points for mortgage. Help!

Anonymous — Mon, 08 Jun 2020 02:35:58 GMT

@rckstrscott wrote:
@Anonymous wrote:
Unfortunately they are charge offs. The good news is I haven't had a single late payment on my current mortgage or auto loans. The AU card is a16k limit that my dad charges maybe $100/month to, so that helped. I keep my utilization rate on all my current cards 15% or less and leave maybe a $5 balance after being paid. Short of having the $$ to just sit down and pay off all the collections I feel like I've got to a stagnant point. My husband unfortunately didn't use credit at all after his foreclosure in 2016 so we just got him a secured and a regular card back in Jan. I cut up the cards, hooked up Netflix and Hulu to them and set it up on autopay. And it's been helping... Just slowly. The good news is if our financing falls through that we get our deposit back on the house which is why we did it because it was virtually no risk to us. We thought maybe by the grace of God we could get there by the fall. I'll keep plugging away at what I can but it really seems like time is what is going to help the most at this point. Before covid they would have done my VA wish a 580 😭😭😭
Well, you might actually get a few points if you go AZEO, all cards reporting a 0 balance except one, and that card below (I believe) 8 percent utilization or something along those lines? If the AU card reports a low balance every month that could be the one card showing a balance.

Since you have charge offs, those are ALSO factoring into your overall util if they have balances. Do any of those charge offs show balances? That could be a place where you could get some points back if you paid off a charge off (if there was a balance) - The derog still hits but the gains in util drop could get you some points too.

You still might get there by fall. It's just June at this stage. Have you talked to any of the mortgage pros on the mortgage forum? I recommend talking to @ShanetheMortgageMan - he was very helpful to me both with my first purchase in 2011 and then again this year.

-scott

mortgage score love $0 balances on CCs, so I would do as Scott recommended and implement AZEO to gain some points.

When CAs get removed or/PIF, the score changes are often not immediate.

I see you said you dealt with Caine & Weiner. Did you get them to PFD? The absolutely do PFD, so I hope that one is going to drop from your CRs.

As others have said, most of those CAs will PFD. COs will likely stay. There has been success with Credit One do GW TL deletes, but the accounts need to be dealt with, they will not do it if there is still a balance.

Good luck!

Re: Rebuilding-need 50 points for mortgage. Help!

Anonymous — Fri, 12 Jun 2020 18:48:54 GMT

Can anyone give me tips or templates for goodwill letters? I have two collections that were paid. One was Caine and Weiner the other was Southwest Systems and i want to try to send a goodwill letter for deletion.

I have been scouring the internet trying to find resources and a way to fix my credit. How did you all do this? We just simply dont have the money. My husband is on disability and we have three young children. I can afford to pay a collection here and there which is what im doing but at this rate it will take FOREVER to pay things off, especially the larger 2-3k bills. We have alot of equity in our home and the plan was when we sell our home we can pay off pretty much all our debt BUT im nervous to sell our home before we are approved for our new mortgage- and we cant get approved for the new mortgage without the credit scores meeting the min requirement. Once we get that 640 everything else can be a conditon that its paid off at closing. I feel like im stuck between a rock and hard place. Even if this home falls through our credit STILL needs to be fixed. I dont think i have good enough credit to tap into our equity via a HELOC to pay everything off, and it would probably hurt taking out new credit anyway.

The internet is full of debt relief and consolidation loans that are likely scams and/or will cost me a fortune. If you dont make a lot of money how do you fix everything and get it paid off?

Re: Rebuilding-need 50 points for mortgage. Help!

Anonymous — Fri, 12 Jun 2020 20:00:02 GMT

@Anonymous wrote:
Can anyone give me tips or templates for goodwill letters? I have two collections that were paid. One was Caine and Weiner the other was Southwest Systems and i want to try to send a goodwill letter for deletion.

I have been scouring the internet trying to find resources and a way to fix my credit. How did you all do this? We just simply dont have the money. My husband is on disability and we have three young children. I can afford to pay a collection here and there which is what im doing but at this rate it will take FOREVER to pay things off, especially the larger 2-3k bills. We have alot of equity in our home and the plan was when we sell our home we can pay off pretty much all our debt BUT im nervous to sell our home before we are approved for our new mortgage- and we cant get approved for the new mortgage without the credit scores meeting the min requirement. Once we get that 640 everything else can be a conditon that its paid off at closing. I feel like im stuck between a rock and hard place. Even if this home falls through our credit STILL needs to be fixed. I dont think i have good enough credit to tap into our equity via a HELOC to pay everything off, and it would probably hurt taking out new credit anyway.

The internet is full of debt relief and consolidation loans that are likely scams and/or will cost me a fortune. If you dont make a lot of money how do you fix everything and get it paid off?

I didn't have money to fix my credit for years. My option was wait out nearly the 7 years for them to drop off. That is not a popular way to deal with it, but it was my only option, as I did not own a home to sell or tap into. I am fixing the last few things that will stick around longer than I'd like, but most everything else has or will drop off in exactly 1 year, paid or unpaid.

I did "credit repair" and it was an absolute scam. I waiste nearly 100/mo and had thing made worse for the 2-3 years I had them and could have actually put towards my debts.

The only other option is pay it off slowly. If the debts are new that will be your best bet. If they are older and you feel it will take forever and you cannot sell your home or tap into it, it just may be a wait it out situation while being good and maintaining your positive accounts so you have the age and history reporting for when all the baddies come off and while waiting work on items that will be around longer than the majority to shorten the wait a little bit.

The dates for the derogs you put are fairly new. 2016-2019, most in 2018/19. If that is going to take awhile, I would work on 2018-2019 stuff if you are outside the SOL for the 2019 debts. When you are done with the most recent items the others will either have dropped off or will be close and if not, then start working on those last.

Lnvn and portfolio def does pfd and credit one has been doing gw deletions of the TL at a much higher rate lately, it seems. Other have mentioned that those other CAs also do pfd. You just have to tackle it.

No need for a template for your gw letter. Just explain what went wrong, take accountability, and ask kindly for a removal. For the CA ask them for a GW because you paid it and insert reason why you would like it off and how it would help you greatly if they could help you out.

Good luck!

Re: Rebuilding-need 50 points for mortgage. Help!

Working-on-Credit1 — Fri, 12 Jun 2020 22:19:35 GMT

I have a similar issue I have 2 late payments for fingerhut from approximately 5 yrs ago. They will not remove it and this is such a hindrance on my cr.

Re: Rebuilding-need 50 points for mortgage. Help!

peter1974 — Sat, 13 Jun 2020 17:50:03 GMT

@rckstrscott wrote:
@Anonymous wrote:
I will get together a list. It's quite lengthy between my husband and I but a lot of it is old. My husband also has a foreclosure and repossessions that are a few years old that we can't do anything about. Should I focus on what's most recent, the last year? Or list out and look into paying everything? My research says to leave a lone the collections that are a few years old at this point because they aren't weighing as heavily and focus on anything new?
Well; if the collections are PAID perhaps in some situations, yes leave them alone if no other removal action can be taken. I closed on my mortgage just fine with two old derogs on my credit report. However, the collection and judgement that showed were paid.

But @FireMedic1 hit it right on the head. The age of the accounts is far less worrisome to an underwriter rather than outstanding debt. If you have large unpaid collections or judgements it will almost certainly disqualify you from being approved for a mortgage. There are some situations where if you were on a payment plan (such as the IRS) where the mortgage will simply factor that into the DTI but I don't think that will be the case for a collection account.

You need to pay those off before really considering a mortgage.

-scott

Is this even the case for FHA loans?