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I went through hell in the last 7 years with my relationship, no excuses though.. So it was just a bad few years. Least to say, I have very bad credit. I will give you guys a quick snapshot...The dates are when they drop off my credit report..
Charge Offs
Auto $12,894 02/2024
CC $589 07/2020
CC $430 06/2020
LOAN $957 08/2023
CC $312 09/2020
Auto $18,823 06/2021
CC $281 07/2020
Collections
Verizon $546 02/2020
Eviction $7000 03/2025
Eviction $7400 04/2024
Utility $250 08/2020
CC $235 10/2023
Pretty brutal eh?
Well in the last year, I have opened up 4 credit cards and paid on time every month for a year. Two were secured and two were unsecured, I just got a credit increase in one to $1000
My FICO scores are Experian 622, Equifax 599, Transunion 601. Last year at this time, they were in the low 500's. I want to purchase a home next year and wonder what are my chances? I have evictions and repos that are probably going to kill my chances. I make about $100,000 a year with just 300 Credit card payments, own my car out right, and been saving up since I lived with my new girlfriend. I just need some guidance..I feel that maybe bankruptcy might be my best option? Any help would be helpful, thank you.
How much do you have saved for retirement?
How much do you have saved for down payment?
I have 100,000 in my 401k. And I will have 20,000 for DP. I'm also just 35 years old, so I got time to build on the retirement.
@avigeant83 wrote:I went through hell in the last 7 years with my relationship, no excuses though.. So it was just a bad few years. Least to say, I have very bad credit. I will give you guys a quick snapshot...The dates are when they drop off my credit report..
Charge Offs
Auto $12,894 02/2024
CC $589 07/2020
CC $430 06/2020
LOAN $957 08/2023
CC $312 09/2020
Auto $18,823 06/2021
CC $281 07/2020
Collections
Verizon $546 02/2020
Eviction $7000 03/2025
Eviction $7400 04/2024
Utility $250 08/2020
CC $235 10/2023
Pretty brutal eh?
Well in the last year, I have opened up 4 credit cards and paid on time every month for a year. Two were secured and two were unsecured, I just got a credit increase in one to $1000
My FICO scores are Experian 622, Equifax 599, Transunion 601. Last year at this time, they were in the low 500's. I want to purchase a home next year and wonder what are my chances? I have evictions and repos that are probably going to kill my chances. I make about $100,000 a year with just 300 Credit card payments, own my car out right, and been saving up since I lived with my new girlfriend. I just need some guidance..I feel that maybe bankruptcy might be my best option? Any help would be helpful, thank you.
IMHO, if I made a salary of $100K, I would pay these off. I was always told that you can't save money if you owe money. So, looking at it from that standpoint and the point that you want to purchase a home, it's time to clean up the credit. Here are my suggestions:
Chargeoffs:
Auto $12,894 02/2024 Work on Paying off or negotiate a payment for delete
CC $589 07/2020 Pay off immediately
CC $430 06/2020 Pay off immediately
LOAN $957 08/2023 Pay off immediately
CC $312 09/2020 Pay off immediately
Auto $18,823 06/2021 Work on Paying off or negotiate a payment for delete
CC $281 07/2020 Pay off immediately
Collections
Verizon $546 02/2020 Pay off immediately
Eviction $7000 03/2025 Request repayment plan or negotiate a payment for delete
Eviction $7400 04/2024 Request repayment plan or negotiate a payment for delete
Utility $250 08/2020 Pay off immediately
CC $235 10/2023 Pay off immediately
Now granted, some lenders don't worry about collections, but my concern is that you have so many that it shows a pattern of not paying bills. I think the evictions may present a real problem because lenders do want to see rent history. It gives them an idea whether you'll pay your mortgage. If it were me, I would call the landlord(s) and ask to set up a repayment plan. Also, do you have any judgments or liens, whether on your credit reports or not?
Now I'm not an expert--no way, no how--but just offering advice on what I would do if I were in your shoes and wanted to purchase a home.
I'm sure others will come along with maybe/hopefully more positive advice than mine.
GL2U
So if I make a payment plan and actively paying them off, a lender would be more willing to work with me? Also, doesn't this reset the age of the debt? I'm afraid of paying everything off and everything becoming current, then my credit score will plummet. It's a catch 22 it seems. The system is flawed IMO.
@avigeant83 wrote:
So if I make a payment plan and actively paying them off, a lender would be more willing to work with me? Also, doesn't this reset the age of the debt? I'm afraid of paying everything off and everything becoming current, then my credit score will plummet. It's a catch 22 it seems. The system is flawed IMO.
Bite the bullet and pay the piper......pay off all the little rinky dink collections and derogatory accounts.
The auto loans / creditors are likely to accept or negotiate with you some kind of payment plans. Do this ASAP if you can.
The evictions--likely have all kinds of "fluff" charges built into them that you might be able to negotiate away if you were able to make a lump sum payment on them--you might be able to negotiate and settle those quickly--otherwise, if they aren't willing, set up some type of steady payment plan (or save until you have the lump sum--a 401k loan might do the trick as well) and get started.
Obviously, you need to save your payment records and be prepared for each and every creditor to not report your payment to them so you'll have to police them yourself.
Now, more importantly, what type of credit accounts do you currently have open and active? You do realize you need 2-3 accounts open and actively reporting your on time payments in order to boost your score? It seems we haven't mentioned this yet, but that's the "catch 22" portion right there......the only way to boost your score is to replace your delinquent and derogatory data with positive data and distance.
Fast forward to a year from now and you'll be good to go as long as you stay on track.
I have 4 open credit cards at the moment with good payments for the last 10 months. I got secured credit cards and one of them was unsecured. I even got a credit increase on two of them just recently. So I've been showing a healthy track record of making payments. My score was in the high 400's to low 500's this time last year and I'm hovering around 600 just based on those credit cards. So if im making a payment plan on a few of the repos/evictions, I'll be elgible for a mortgage or would they need to be paid in full? That's a lot of cash to fork over in a years time but I'm more than willing to start making payments on them. I did call a few of them to do pay for delete and none of them said they're allowed to do that. I have a lot of charge offs that are going to expire in 2020, around the same time I plan on purchasing a home. I feel that I should just let them die off and focus on the newer ones. Thoughts?
@NC_Mtg_Loaner wrote:
@avigeant83 wrote:
So if I make a payment plan and actively paying them off, a lender would be more willing to work with me? Also, doesn't this reset the age of the debt? I'm afraid of paying everything off and everything becoming current, then my credit score will plummet. It's a catch 22 it seems. The system is flawed IMO.
Bite the bullet and pay the piper......pay off all the little rinky dink collections and derogatory accounts.
The auto loans / creditors are likely to accept or negotiate with you some kind of payment plans. Do this ASAP if you can.
The evictions--likely have all kinds of "fluff" charges built into them that you might be able to negotiate away if you were able to make a lump sum payment on them--you might be able to negotiate and settle those quickly--otherwise, if they aren't willing, set up some type of steady payment plan (or save until you have the lump sum--a 401k loan might do the trick as well) and get started.
Obviously, you need to save your payment records and be prepared for each and every creditor to not report your payment to them so you'll have to police them yourself.
Now, more importantly, what type of credit accounts do you currently have open and active? You do realize you need 2-3 accounts open and actively reporting your on time payments in order to boost your score? It seems we haven't mentioned this yet, but that's the "catch 22" portion right there......the only way to boost your score is to replace your delinquent and derogatory data with positive data and distance.
Fast forward to a year from now and you'll be good to go as long as you stay on track.
+100
@avigeant83 wrote:
So if I make a payment plan and actively paying them off, a lender would be more willing to work with me? Also, doesn't this reset the age of the debt? I'm afraid of paying everything off and everything becoming current, then my credit score will plummet. It's a catch 22 it seems. The system is flawed IMO.
The system is not flawed. Creditors just want their money.
Now, If the small balance are paid off, there’s no clock to reset. And the larger balances don’t fall off until between 2024-2025. Honestly, that’s like forever!
So, I guess the question you have to ask yourself is do you really want to wait 5-6 years to buy a house. And, if you do, that’s ok too.
But, keep in mind that these creditors could file judgments for nonpayment between now and 2025. IMHO, getting out in front of this is the best route and especially since you want to buy a house.
I re-read your first post and you had mentioned filing BK. I think because you make a reasonable salary, more than likely you would be advised to file Chapter 13, which is a 3-5 year repayment plan. And a BK remains on your credit reports for 7 years.
So it’s a lot to think about. One suggestion that NC_mtg made was to take out a loan from your 401K which is not a bad idea because you would be paying yourself back and at a lower interest rate.
Yep, a lot of stuff to consider.
GL2U