Business is failing, can I still buy a house?

Anonymous · ‎12-25-2007

This probably belongs under multiple threads, but I'll start with the credit cards:

I need to increase my credit scores for buying a new home in less than a year. My average score is 719, with all bureaus having a discrepancy of less than 8 points from the average. Never had any late credit. I will have a new job to replace my self-employment.

Due to having a partially successful business for 4 years that was funded in part by my CC’s my CL’s are high. I have six CC’s remaining after closing one short-term account.

Citi $29,650; Bal: $2,050; Rate: 0.20% Fixed for 10 more mo.

Chase $25,900; Bal: $15,482; Rate: 5.75% Fixed

BofA $20,000; Bal: $0.00; Rate: 15.49%

1st Nat’l $14,200; Bal: $12,653; Rate: 5.25% Fixed

AAA $24,800; Bal: 0.00; Rate: 9.99% Fixed

Citi Premier $500; Bal: $0.00; Rate: 8% Fixed

All CC’s open > 10 years except Citi Premier open for less than 2 years. Business is failing so I’m selling to save credit. I can only pay off about $15,000 when I sell. Any suggestions?

Message Edited by TimeToStartOver-Again on 12-25-2007 10:45 AM

Anonymous · ‎12-25-2007

Are the credit cards business credit cards or are you personally liable for them? If you're not personally liable for the debt, then just default on it. If the business has a negative book value, there's no point doing anything for it anymore, just go bankrupt.

Anonymous · ‎12-25-2007

Okay the business is failing. Even if these are biz cards you are more than likely personally liable for them as most issuers you listed here require a PG. The best way to get your scores up (tho they look pretty good) is to pay down the higher balances that are currently reporting on your personal files. After that, look into paying off the biz debts or those biz cards that don't report to personal. Whatever you do, never be late as that is the point where the biz will start reporting to personal.

Creditaddict · ‎12-25-2007

as long as you continue to pay these cards that are in your name and your scores stay up there, wouldn't think it would be a problem to buy a house unless your new job just doesn't support the debt ratio with a new mortgage... but over 680 you could still go no doc and not have to prove income.

Anonymous · ‎12-26-2007

"Are the credit cards business credit cards or are you personally liable for them?"

Citi is, but has a PG on it.

Some banks (Well Fargo, Home Loan Center, Farm Credit Services, and Quicken) I've consulted, stated that my self-employment income is not going to help me get a loan since it's coming from a failing business. Also, since a new job will have less than 2 years employment behind it, I would need to raise my credit scores to at least 740.

I thought paying down my CC's from the sale of business assets might be the best way to raise the scores. I don't know if I should close more CC's. I could take a second against my real estate and pay off about $20k. I don't know how that would affect the scores since I would be repaying the CC's with another loan.

BTW no credit checks were done in consulting with the banks.

Anonymous · ‎12-26-2007

When I first started my business, my middle score was 820. Then I maxed out the cards 3 years ago and then again 1.5 years ago. My score dropped to 680. By paying off 75k one year ago, it has climbed back to 719. It would be nice to have that 820 again.

In hindsight the business shouldn't have been started. But I did learn a lot that couldn't be learned working for others.