New Member - Please help- Need to raise credit sco... - myFICO® Forums

Anonymous · ‎01-15-2009

Real estate investor with all 1099 and K-1 income the past 10 years. Has become very tough to get credit cards, auto loans and mortgages the last 6 months. credit card balances are maxed out mostly because credit card companies that lowered credit limits. i have never been late and still rates are going from 0-10% to 19-29%. payments have tripled. my credit scores have dropped to 670-690 from 720-740 in the last 12 months.

I have about 100k in credit card debt that i have accumulated over the past 12 months while i have worked on the latest project. i also have a 30k unsecured line and a 28k car loan. again everything is current and never late. most of the debt is with b of a. I offered to switched all of the unsecured debt to secured with a b of a 1st mortgage and they said no thanks. (i think they like the 30% credit card interest rate) my monthly payments (always current) would go from $4500 to about $1000 and they said I couldn't afford it. I can afford $4500 but not $1000? this is all going on while the govt is handing them billions and billions of dollars to loan out but that's a discussion for another day.

I can't sell the real estate yet but i am putting a residential 1st mortgage on it and receiving 150k cash out on a 250k home. this will be considered a secondary home as i have my primary home and switched my secondary home to rental property. the car loan, unsecured loan and about half of the credit card debt shows up on my credit report. the other half of the credit card debt (bank of america, advanta, national city) is current but doesn't appear on any of the 3 credit reports.

i can pay off all of the debt and want to. the car loan will be closed. do i close any of the 6 credit cards or just pay them down to 0 and have the credit limits lowered to $5k (or lower) each from $20k each? i don't want to have balances any more at 30%. the credit card companies wont consider lowering the rates on the current cards for at least a year. although they may reconsider that once the balances are 0.

also i have a lot of inquiries due to my work and real estate investments. i invest in multifamily income property and the lenders are always running my credit report when we acquire a new property and need a new loan.

any guidance would be appreciated to raise my credit score. i'm going to concentrate on multifamily and I need my scores higher in todays economy.

thanks

Anonymous · ‎01-16-2009

Just curious, these are all personal? You don't run any of this through an LLC or anything?

Junejer · ‎01-16-2009

Ashbloom, I understand your pain. It's tough on the self-employed these days.

When you pay down your debt, keep those CCs open. This will keep your scores up. Going forward, if you can manage your cashflow that way, only allow 1-9% of your overall and individual CL to report on one card.

I just finished up a project myself after 5 months and have CC debt to pay down. I am keeping the cards open and will follow the advice above, as I had before starting this project.

From now on, I am using someone else's money for these RE projects.