Seeking advice on the best way to clean up before mortgage application in 6 months (1st time buyer). Current FICO 8: EF- 670, TU - 632, EX - 657. Middle 5,4,2 is currently 602.
Multiple lates (30,60,90,120) 🙈 but 18 months ago. By the time I apply these will be over 2 years old - will that still have an impact? I'm reading most qualifications look for lates in the past year.
2 open collections - is it realistic to expect them to be removed once paid?
Utilization at 47% - working on dropping that to 10% before applying.
DP will be somewhere between 5-8% and will have extra for closing.
FHA is going to look at the last 24 months so it's a good thing you'll be 2 years out when you apply.
Here are the FHA guidelines:
Satisfactory Credit The underwriter may consider a Borrower to have an acceptable payment history if the Borrower has made all housing and installment debt payments on time for the previous 12 months and has no more than two 30-Day late Mortgage Payments or installment payments in the previous 24 months. The underwriter may approve the Borrower with an acceptable payment history if the Borrower has no major derogatory credit on Revolving Charge Accounts in the previous 12 months. Major derogatory credit on Revolving Charge Accounts must include any payments made more than 90 Days after the due date, or three or more payments more than 60 Days after the due date.
As far as the collection accounts go, you'll need to negotiate a pay for delete with the collection agencies upfront. If these accounts are reporting every month, they could counter all of the work you're doing to increase your scores.
As a lender I would run a credit simulator to see which options will give you the best results.
We had really good success with a credit repair company, which I was VERY reluctant to use after reading mixed reviews online. But our mortgage person swore by them, so we gave it a shot. We were in worse shape, it took longer. Brought up from the 500's to the 700's, and we were able to buy a home last year. Much of what they did, we could have done ourselves if we had the time and patience. It seemed to mainly be a lot of diligence with disputing items, and following up.