A Few Questions

[Anonymous]

So first a little background. We lost our income about 3 years ago and the mtg. was ONLY in my husband's name. Along with most everything credit related. The month after we foreclosed in 2011 we got hit with THREE tax liens. They were paid with our refund and show as paid, but I have submitted the forms to have them removed through the IRS (fingers crossed that bumps our score back up!). We have not really done anything credit-wise because we spent the last three years just kind of hanging on, trying to pay bills and just be still for a minute.  We HOPE to buy again in a year. So, I started the rebuilding with the car loan last year and got KILLED on the interest (18.99). I have some stuff on my credit that is GOOD from all the way back 12-13 years ago.  We have very little medical debt- most got written off after we lost the house. Some are in collections (like 4-5 under $150 total the newest one being from 2012). I tried paying 2 off ($30 co-pays from 2011) and they will ONLY report as paid, I'm guessing that will drop my score a little? I feel like I screwed that up! But I am learning! I did have an old collection that has been paid since 2010 removed early with just a phone call.  I have $40K in student loans but they are in defferment at the moment. Repay starts in a month or two.

Anyhow, my credit score was 610 back in March. I transferred my car loan to my credit union and dropped the interest to 15.99 and added a credit card through them- $1K limit. Been paying on it on time, etc. It upped my score to 628 as of this month. BUT!!! The credit union ONLY reports to experian and there's an annual fee. Should I close it??? The balance is less than $100.

Also, this month I refi'ed my car loan again and dropped my interest rate to 7.99. This was super duper exciting. Then I started reading these boards and decided to add credit cards to my portfolio to try and increase my score. I have applied for three in the last week. Kohls (approved- $300 limit). Capital One Quicksilver  (approved $1K limit) and last night I went for my last one- Chase Disney- I about fell over when it came back approved for $5K limit!!!!!!!

So now what? How can I best manage what I have to help my score and up my chances of us rebuying a home- I'm hoping by next summer but we can wait another year if we have to- I just hate the amount of money we are blowing in rent!

Thank you- if you hung in there long enough to read it all!

[EW800]

Hello and welcome!

I will leave some of your questions up to people that know far more than I do, as I am not an expert in this area.  I will share with you that there IS life after a foreclosure!  MY wife and I hit very hard times about three years ago, and as a result about two years ago we lost our home as well.  We also had to settle on one credit card debt.  As a result, our scores went from the 750 range all the way down to the 520 or so range!  As soon as the foreclosure was complete and we did the one settlement, we made a commitment that with a lot of hard work we would turn everything around.  We made sure that everything else was paid on time, and we tightened our belts BIG TIME, then sending as much money as we could to all the other credit card companies.  Within about a year and half we were able to get our Util to under 1%.  This, along with then paying everything on time for about 18 months, got our scores close to 700.  Now at about the two year mark, you can see our scores below.  They are basically in the 725 range!  I am actually surprised that we are this high, with the foreclosure being so recent, however with hard work it is possible!!  

You may want to post your questions about the lien removals and other stuff in the Rebuilding section of the forum.  There is a lot of good advice there!  

Best wishes!  You will get things turned around!  

[bada_bing]

If you are planning to apply for a mortgage within a year:

Stop applying for any more credit cards.

Don't do anything that will generate any more hard pulls.

Do not refinance your auto any more. In other words let your accounts age.

Designate an account to accumulate your down payment savings. Don't move it around. You will be documenting the sources of your down

Pay everything on time and as much extra above minimum as you can afford. Don't be late, ever.

Work on your credit report with PFD, goodwill, etc.

Try to remain stable with employment, Don't change jobs unless necessary.

A couple months before you start house shopping in earnest, see a mortgage broker with a reputation for success approving borderline applications. It isn't just getting approved but getting the best terms that they can help with.

[SpiceIslander]

---

@bada_bing wrote:

If you are planning to apply for a mortgage within a year:

Stop applying for any more credit cards.

Don't do anything that will generate any more hard pulls.

Do not refinance your auto any more. In other words let your accounts age.

Designate an account to accumulate your down payment savings. Don't move it around. You will be documenting the sources of your down

Pay everything on time and as much extra above minimum as you can afford. Don't be late, ever.

Work on your credit report with PFD, goodwill, etc.

Try to remain stable with employment, Don't change jobs unless necessary.

A couple months before you start house shopping in earnest, see a mortgage broker with a reputation for success approving borderline applications. It isn't just getting approved but getting the best terms that they can help with.

---

Perfect advice! Good luck OP. I especially like your user ID. Stay positive!

[Anonymous]

---

@SpiceIslander wrote:

---

@bada_bing wrote:

If you are planning to apply for a mortgage within a year:

Stop applying for any more credit cards.

Don't do anything that will generate any more hard pulls.

Do not refinance your auto any more. In other words let your accounts age.

Designate an account to accumulate your down payment savings. Don't move it around. You will be documenting the sources of your down

Pay everything on time and as much extra above minimum as you can afford. Don't be late, ever.

Work on your credit report with PFD, goodwill, etc.

Try to remain stable with employment, Don't change jobs unless necessary.

A couple months before you start house shopping in earnest, see a mortgage broker with a reputation for success approving borderline applications. It isn't just getting approved but getting the best terms that they can help with.

---

Perfect advice! Good luck OP. I especially like your user ID. Stay positive!

---

I would only disagree with "Do not refinance your auto any more. In other words let your accounts age."      A key factor in mortgage approval, apart from score, is

DTI concerns.   So a "too big" monthly auto payment may disqualify OP from a particular mortgage.    So, depending what is available, it might be worth the inq and the new account, going from 18% to 7% almost certainly was.

[Anonymous]

Thank you, Thank you, Thank you! I appreciate all who have spoken so far. My biggest question in terms of the credit card thing- the one from the credit union- should I close it now that we have the others that are going to have better terms, larger LOC, and report to Exp, EQ, and TU? The credit union ONLY reports to EQ and it seems that is my lowest score at the moment. The card has an AF. *Edited to add* We have spent the last few years saving with the downpayment and have far more than enough to cover that. Life for us financially is far different than it was three years ago. It's that on the credit front- we have cleaning up to do.