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Buying a house after chapter 7

Baylor_6
New Visitor

Buying a house after chapter 7

               My husband and I filed for bankruptcy and it was discharged around this time last year. Our current scores are in the mid 500's, (they were in the very low 400's when we filed) and we plan on buying using his VA home loan benefit which means we at minimum need to have our score around 620 would like to get it up to around 660 at least.

 

               Since bankruptcy we have gotten a secured loan with our credit union for 1000 it is halfway paid off already with perfect payment history. We have a truck loan with a starting balance of 10k it is currently down to a little under 7k again with a perfect payment history and we plan on paying that off next month in full (finance company is offering a extra 10% if paid off during tax season) and also buying a brand new crossover the same week we pay off the truck with a big down payment (Putting about 30% of the cost of the crossover as a down payment, I wanted my new payment to be close to the same as we are currently pay on our truck) . We also have two credit cards one with capital one ($700 limit) and the other is a military exchange star card ($5000 limit). Both of them have about 30% of their credit limit being used and paying 2-3 times the minimum payment required each month. And we both have student loans with perfect payment history.

 

              Trying to figure out if it would hurt us paying our one auto loan off in full during the same week as we are getting a new one. Does anyone know of anything else we could do to get our credit score up to around the 660 range in the next 12 months? We want to buy our dream home in Colorado so we need to make sure we can get our score up high enough. Any other advice you can give to help us make this happen would be great.

6 REPLIES 6
enjoimorenow
Frequent Contributor

Re: Buying a house after chapter 7

I think you will have to be 2 years post discharge to qualify for a mortgage.

 

You already have another installment account (bank loan), and would be starting another so it shouldn't lower your scores, but you will probably see a little dip due to new credit inquiries plus a new account is going to lower you AAoA, which could drop it a few points.

 

What I would do is focus on paying your cards off in full rather than carrying a balance.  This will look better on your report, and save you money from interest.

 

Ideally you would want to add one more card to your mix.  Make sure that 2 of them are paid in full BEFORE the statement cuts, and pay the other down to <10% of the credit limit before the statement cuts, then pay the remaining balance in full BEFORE the due date.

 

Also, are you both on the cards?  If not, add the other person as an AU to help both credit scores.

 

If you have any innacuracies or things on your credit report you should dispute them.  If you have old lates or COs that were paid, you can write GW letters to get them removed.

 

Good Luck! CO is awesome!!


BK 7 Scores (12/2016): EQ-528. TU-486. EX-530.
Current Scores (11/2017): EQ-671. TU-665. EX-669.
Goal for 2017: 650's. - made it!! next stop 680's. www.cartkingz.com
Message 2 of 7
Baylor_6
New Visitor

Re: Buying a house after chapter 7

Yeah we know we have to wait two years, thats why we don't want to buy until next year around this time becuase it will be our two year mark. And we want to save up a big down payment even though we don't have to have one with a VA home loan. 

 

Yeah I will defiently pay them off in full then each month. We were told to leave at least some kind of balance becuase it would help our score up go faster. I'll get them taken care of next month when I do the truck pay off. Yes we are both on each card. Yeah I just started working on the disbuites on our credit reports, was just notifed today that a few of the things were removed. Whats a GW letter? 

Message 3 of 7
enjoimorenow
Frequent Contributor

Re: Buying a house after chapter 7

A goodwill letter....

 

you can search on here for examples.

 

Basically lets say you had an account that had late payments and was charged off, but you paid it after it was charged off.

 

You can write a goodwill letter(s) to the creditor and explain your situation, apologize for being late, take responsibility, tell them you are looking to get a mortgage and would appreciate if they could remove the lates and/or account all together, and thank them for being helpful and allowing you to pay the charged off account in a time of crisis or whatever your situation was....

 

Be careful asking for accounts to be removed entirely if they are your oldest accounts it could remove them and lower your AAoA and drop your scores some, but in some instances it's easier to get a removal of the whole account vs removal of a lot of late payments.


BK 7 Scores (12/2016): EQ-528. TU-486. EX-530.
Current Scores (11/2017): EQ-671. TU-665. EX-669.
Goal for 2017: 650's. - made it!! next stop 680's. www.cartkingz.com
Message 4 of 7
Scupra
Super Contributor

Re: Buying a house after chapter 7

I would start playing the utilization "game" now so you know exactly where your scores are as you progress. For this you will want to have three revolvers, two reporting $0 and one reporting less than 10% util. Good luck, I think buying a house post BK was my biggest "mile stone".

Filed BK7: 7/2012 (start score EQ 560 / TU 529) Discharge 10/2012
759 EQ FICO 03/2021
754 TU FICO 03/2021
743 EX FICO 03/2021
$29k NFCU Platinum | $30k NFCU cashRewards Sig | $15k NavChek | $7.1k Cap1 Quicksilver | $10k Amazon Store | $19k Cap1 VentureOne | $16k Barclay Aviator | $5k Chase Freedom | $5k Chase Sapphire Preferred | $9k Costco Visa | $20k AMEX BCE | AMEX Gold
Message 5 of 7
Harmony143
New Visitor

Re: Buying a house after chapter 7

First of all, have you seen your credit report after you filed your bankruptcy? You will have to check all 3 of your credit report and dispute all the old accounts that are still there after the discharge of your bankruptcy. it takes 30 days to clear accounts that had been disputed. Clearing all old accounts showing late payments will help a lot in raising your scores up. Do not dispute accounts that are in good standing. If an old account was paid on time, do not dispute that. Leave it in your credit report. I would suggest that you do not dispute online. As I was told by a credit repair company, when disputing, you would be better off calling them or handwriting a dispute letter. Hope this helps.

Message 6 of 7
Scupra
Super Contributor

Re: Buying a house after chapter 7


@Harmony143 wrote:

First of all, have you seen your credit report after you filed your bankruptcy? You will have to check all 3 of your credit report and dispute all the old accounts that are still there after the discharge of your bankruptcy. it takes 30 days to clear accounts that had been disputed. Clearing all old accounts showing late payments will help a lot in raising your scores up. Do not dispute accounts that are in good standing. If an old account was paid on time, do not dispute that. Leave it in your credit report. I would suggest that you do not dispute online. As I was told by a credit repair company, when disputing, you would be better off calling them or handwriting a dispute letter. Hope this helps.


Welcome to myFICO! This post is about 7 months old and it looks like the OP hasn't come back.

Filed BK7: 7/2012 (start score EQ 560 / TU 529) Discharge 10/2012
759 EQ FICO 03/2021
754 TU FICO 03/2021
743 EX FICO 03/2021
$29k NFCU Platinum | $30k NFCU cashRewards Sig | $15k NavChek | $7.1k Cap1 Quicksilver | $10k Amazon Store | $19k Cap1 VentureOne | $16k Barclay Aviator | $5k Chase Freedom | $5k Chase Sapphire Preferred | $9k Costco Visa | $20k AMEX BCE | AMEX Gold
Message 7 of 7
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