Please help this newbie!

[Anonymous]

I am new to the credit thing, having survived a 5 year battle with cancer during which I sold my home. I am currently renting and would like to purchase, but here is the thing- a FICO score of 577 with 18 medical collections, all ranging from 39.00 to 1525.00 in amounts, some unpaid but most listed as "paid". I have no idea how to improve this situation, I have two credit cards with zero balances (just paid them both off) and a car loan with good payment history. How the heck do I turn this into a good situation, I have plenty of cash for a downpayment but so far no one will touch me for a home loan with this credit history. HELP ME PLEASE!!!!

Message Edited by blondambition_homeless on 04-03-2007 08:20 PM

Message Edited by blondambition_homeless on 04-03-2007 08:20 PM

[Anonymous]

You are best off to try and save to buy with cash. As far as when you will be eligible for a mortgage, if your FICO is currently below 580 or so, you will not be allowed to get the credit cards and other accounts you need to dilute the impact of the negatives on your score. You can take the date of the last medical collection, add seven to ten years to it, and that is when your credit score will increase.

So if the last medical bill went into collections two years ago, it will be sometime between 2012 and 2015 before they drop off your credit report. At that time, you will be able to begin to repair your credit. Allowing three to five years for FICO to rise, you should be eligible for a decent mortgage sometime between 2015 and 2020 (again this assumes the last charge-off or collection was in 2005--adjust my timetable appropriately if the last collection was earlier or later.

[Anonymous]

The above reply is very very pessimistic/negative outlook. You can get results quicker, just depends how mcuh effort you're willing to put in. But yeah, don't expect to get a house mortgage quickly, especially if at decent rates.

SOme points to start may be disputing all those negative items. On those accounts this doesn't produce improvements send validation letters to the CA's that have the accounts. Catch them on violations of FDCPA and other relevant laws as extra leverage. Potentially try to negotiate a payment in full in exchange for the information being deleted from your report, etc. A great resource for finding sample letters, other experiences, etc is this. Just spend some time reading it.

[MM1234]

I think there is hope to help you get a rise in score kinda quick. You mentioned you have Cash for a DownPayment.......so maybe consider to use some of that to pay off as many of the smaller bills/collection just to help your score.....Just the ones that are NOT gonna drop off soon. In a month your score may go up. Make sure to contact the collections or banks and tell them your situation and if they will remove these items. Hopefully they will work with you.

But dont use all your Cash for bills till you see a good pattern cause we dont want you with No Cash and a Bad score. So do it little by little. You may need to sign up and join the SCORE WATCH and they will email you when/if your score goes up.

Keep in mind that if your Score goes way UP, you may can try to qualify for a No Down Payment Loan. This may be a higher rate but it allows you to use your cash now for past due items and not for a down payment. But then you will have less buying power for the type of house you want.

[Anonymous]

Bear in mind that FICO DOES NOT CARE ONE IOTA if you pay charge-offs, so if anything on your CR is charged off, don't waste a penny on it. They'll just take your money and say "thanks, chump." In fact, your FICO may actually go DOWN and not go back up anytime soon if you do that.

Now, if you have high utilization levels (say, you've got $4,232 charged on a $5,000 card), or you've got some bills in the 30 to 60 day past-due category that a cash infusion could bring current, that's a horse of a different color. That would likely be worth your while, and would generate a fairly rapid (by FICO standards, meaning several months) improvement in your score.

[Nuggy]

Firstly, where have you been looking? I recently refi'd (a little different than a new purchase, admittedly) but had a lower score than yours, and was able to secure an 8.5% 30yr conventional at 95% LTV, with minimal effort / searching. Not the greatest rate, but pretty good for a score in the mid-5's. PM me if you want a referral, or check around some more...

You say you have a couple credit cards that you "just paid off". The two questions here are, how close to the limits were they, and have those zero balances been reported to the bureaus yet (and thus factored into your 577 score)? I recently paid off my cards too, after being close to max, and the jump in my score just from doing that was pretty amazing.

Best case scenario, you had a high utilization %, and they have not yet reported. In this case, just be patient for a few months, let those balances and your score update, and you should then be close to 600 or better, at which point you shouldn't have any trouble getting financing (ableit at an increased rate).

If not, some of the other advice makes sense... take some of your savings and pay off the most recent collections. Those are the ones that are having the biggest impact on your score, and what those lenders could be eyeing as potential issues, which is likely, since even with a 577, it should be relatively easy to find a sub-prime lender (just be REAL careful of the terms, avoid ARMs at all costs, and all that.)

And congrats on conquering the cancer. I work for an organization that deals with cancer research and treatment, so it's good to see someone overcoming it

[Anonymous]

I'm very proud of you for fighting cancer!

Fighting bad credit also takes dogged determination, time spent organizing and keeping track of things, and so on.

Here's what I'd recommend:

1) Get all your reports if you haven't already.

2) Go through each one and put all the collections on a spreadsheet complete with amounts owing. Some may report only to one or two credit bureaus.

3) Create a folder for each negative. In the front of the folder, write what credit reporting agencies that tradeline's reporting on, print off a copy of how that one's reporting for each, and put it in the folder. If you have the original bill for each of these, put it in there too. If not, that's one of the things that'll help.

3) Were any of those amounts paid by insurance -- and shouldn't have been sent to collections? Make a list of those, because you'll need to write letters to the care provider and make them yank the account back from the collection agency.

4) Make sure you write down all the info you have about items you paid, including when paid. If you have the checks or credit card bills you paid with, so much the better. Put all that in a folder.

5) For those items paid by you or by insurance, are they reporting as paid collections? Verify that they are reporting correctly and consistently across your three reports.

That's a place to start.

Also: how many currently-open tradelines do you have? In other words, do you have open credit? If not, it's never too early to start rebuilding.

[Anonymous]

Okay, first of all, my scores are currently NOT reflecting any of the cards as paid down even though they all have a nearly zero balance as of last month, so maybe my score needs to catch up. I HAVE paid nearly all of the unpaid accounts, and most are already listed as "paid", it's just the sheer number of little (under 200.00) ones that are the most annoying. Not even sure how that got by me. I would rather NOT hear from the "New World" guy who said to pay cash for our home any more, that kind of information is useless to me. I DO have a rather large settlement award from my doctors who nearly killed me, however I need to use that for what I thought would be a sizeable down payment, not a wholly cash transaction (?). Not sure who could afford to do that anyhow, I live in Orlando Florida and our cost of housing is very high. If there is any decent advice to be taken from this, it is this... DONT GET SICK. Really. It will destroy your sense of security, it will erode your self esteem when you see how little you matter in this world of "credit" that America has created for us, and you will be sick to death of having more cash than anyone you know but having so **bleep** little to show for it. As far as the "mortagage game", I guess we will keep renting, take fabulous trips and see eveything I always wanted to see in the world, and continue to live in this neighborhood where everyone else spends their weekends taking care of their lawns while we, the only renters on the block, mow once a week and forget it. Bitter? Not me, I am a survivor. Just a little naiive maybe. Or I WAS.

Message Edited by blondambition_homeless on 04-03-2007 08:19 PM