What step(s) will get the most bang for the buck?

[Anonymous]

Hello All,

New to the site, wish I had found it a lot sooner.

As far as finances go, 2008 was not a good year. Several bad decisions and of course, hindsight is always 20/20. 

Bank says I need to find a quick 6 points or more to get approved for refi and rid myself of the crazy interest rate on my 2nd (13.5%).

Unfortunately, no one at the bank seems to know the secret formula to achieving that.

3 consecutive 30 day lates on 1st & 2nd mortgage's - Current and on time since 7/08

1 CC with a $4k limit - Never over, never late since opening it in '07 - balance is $200 HB was $2600.00

1 Car Loan with a balance of $21k from original $25k in March '08 - 3 consecutive Lates 

1 other loan for a trailer with a balance of $17k from original $24k in Feb '05 - 1 or 2 lates in '07 

Score was 625 in the spring, 683 mid summer and is now currently 674

I sold off a couple of collector cars to stay afloat long enough so I could show 12 clean months.

There is $10k left in my account and I figure I probably have one chance to get this right.

I would like to pay down the loan, or loans that would help get me the biggest bounce.

Do I pay down the 2nd?

One or some of both vehicle loans?

Do I increase limit on the credit card?

Something other than any of the above?

[IOBA]

Some suggestions...

3 consecutive 30 day lates on 1st & 2nd mortgage's - Current and on time since 7/08   <---- ask them to goodwill them since you are trying to refi and have them paid off in full.

1 CC with a $4k limit - Never over, never late since opening it in '07 - balance is $200 HB was $2600.00 <-----  pay it off, reduces your total utilization by a little

1 Car Loan with a balance of $21k from original $25k in March '08 - 3 consecutive Lates <----  ask them to goodwill the lates because you are trying to refi your house.

1 other loan for a trailer with a balance of $17k from original $24k in Feb '05 - 1 or 2 lates in '07 <----- ask them to goodwill the lates because you are trying to refi your house.

Score was 625 in the spring, 683 mid summer and is now currently 674

I sold off a couple of collector cars to stay afloat long enough so I could show 12 clean months.

There is $10k left in my account and I figure I probably have one chance to get this right.

I would like to pay down the loan, or loans that would help get me the biggest bounce.

Do I pay down the 2nd? <----- is this your highest interest rate?  If yes, then consider paying it down.

One or some of both vehicle loans?  <------- might help, but go for the higher interest rates first, and go to paying cash for everything.

Do I increase limit on the credit card? <------ not recommended because they will likely pull your credit and that will lower your score.

Something other than any of the above?

Some of the above suggestions might work.    Worth trying the goodwill letters. 

[AndySoCal]

Did the bank show you the credit report they pulled?  Keep in mind the bank most likely will use the middle of the three scores. This would be helpful to know which bureau is the middle score is coming from.  The strategies that can employed are raising the middle score bureau higher or raising the lowest score  to become the new middle score. You want to ignore the bureau that is reporting the highest score because it will not help.

[Anonymous]

Thanks for the responses,

Sounds like a good place to start.

Do letters go do a specific address or do I use the CS address?

Bank used middle score but I will have to ask which.

I had'nt thought of that angle

Thanks again

Message Edited by NothingButLint on 10-03-2009 10:08 AM

[RobertEG]

First, I am confused at how you could have three consecutive 30-day lates.  Are you sure it did not become a 30/60/90 late reporting?

Anyway, I would not concentrate on the installment loans.  If paid on time, you will get liitle or no score increase for paying them down,

Pay down the revolving accounts first, and dont worry now about the installment loans for immediate impact.

Askiing for an increase in CL may add a new inq. to your CR, and will most likely not be granted by the OC due to your relatively current derogs.  CLIs are tight now.  I would not press that front.

What is apparently killing your score are the numerous and major derogs (60+ lates). 

I would put my effort in attempts to GW away these derogs, and put any cash you can into getting your overall revolving % util to less than 10%, and less than 10% on each card, and less than half reporting any balance.

GW letters are not apt to get an immediate response.  Creditors get tens of thousands of FCRA disputes monthly that require immediate response, and response to GW letters are not at the top of their priority list.  In fact, they may choose to not even to respond.  If you do send a GW letter, by advice is not to emphasize only the need for GW for your benefit, but to show the benefit to them. 

What you have the most direct and immediate control over is paying down your revolving % util.

Message Edited by RobertEG on 10-03-2009 10:35 PM