FICO Mortgage Scores

[Anonymous]

I need advice! We have been renting our home for 6 years and the owners contacted us 6 months ago about wanting to see their house. They will put it on the market in March if we can’t hey financing by then. They gave us heads up which we much appreciate. Here is our finance and credit picture. We have about 35K in savings - My husband is a business owner but cannot apply for traditional financing because he hasn’t filed his 2018 tax returns. He will file back taxes this year. His Median FICO score is 663 but in order to do a bank statement only loan it has to be 680 to qualify for 10% down..

Me on the other hand, I have the worse scores. I am a W2 employee making about 55K a year and thought my median FICO was a 693 until the mortgage company ran my credit and told me it’s 564!!!!! I thought we would be able to by this home but now I’m getting discouraged that our family of 5 may have to move and possibly move out of our school district. We have one month to try to find a Lender in GA to qualify one of us. What are the main components that make up the mortgage score and why are they over 100 points lower? I need to get to 620 in 30 days and I’m literally freaking out.

[Nomad3]

Do you have any credit cards? The All Zero Except One method helps mortgage scores. Report $0 on every card except one, and only report $5-25 on one card.

Do you have any derogatories? Lates, collections, etc. If you do getting these removed will help. Disputing false accounts or trying to goodwill lates off your record.

Really need more information to give better advice. 30 days is not enough time to really get it up by 100pts usually, but it might be possible to get your husband's score up some.

Did your mortgage lender give any advice? Have you pulled both of your credit reports to check everything? Have you pulled your own scores to see the notes that explain what's holding it back?

Have you checked with a credit union, they can usually work with you more than traditional banks. You mentioned a conventional 90 loan, the score requirements for FHA loans are more lax

[Anonymous]

Thank you for your reply. I have 4 active credit cards all with 0 balance. I have 2 charged off credit cards each with an $11K balance with NFCU- they were charged off in 2018. NFCU OFFERED TO settle for $3500 each but I’m scared to pay because I heard my scores will drop more. 2 student loans in deferment with balances of 2500 & 700. I pay 100 each month while in deferment just to pay down the balance. I have 1 auto loan that I pay on time each month with the exception of a 120 late pay from 2018 due to being on unpaid maternity leave. That’s when my credit really took a hit.

My husband has two collections totaling 5000 and that’s it. One car loan just paid off never late and one car loan he got about 6 months ago. He has 3 cc $0 balance as well.

[glockrunner]

Having all credit cards at $0 will hurt your scores. Have 1 major card reporting a small balance. Above 1% but below 8.9%.
And honestly, I dont believe you are ready for a mortgage with all that unpaid debt that is very recent. I don't believe there is anyone that will give you a loan.

[CreditInspired]

Oh my, this does not look good. But I do have a suggestion since you have $35K. Ask your Landlord if they would consider Seller financing.

Here are some example of things you can consider offering to Seller that would hopefully be enticing:

*offer a $30K downpayment

*Request a 3-year balloon mortgage (this will give both of you time to get your credit in order and file taxes)

*Do a interest-only loan with balloon payment due at end of 3 years--then you can refinance with a lender.  
*Offer 10% interest

Of course, none of these is in your favor but at this time, unfortunately, you need them. And this is just my 2cents. 

GL2U

[Anonymous]

If you have the means I suggest paying the settlement offers on the CC loans. It's not as good as paying in full but if they are paid it is better than nothing. No one will give you a loan with 22k in unpaid charge offs. As for your husband. He would have to get those paid too. Is the charge off in collections or just reporting by the original creditor? Also making sure a small amount reports on one of your major bank cards each month. 

I have to say that I don't know if you will be ready to apply in a month but you should consult with a loan officer about what he thinks the best actions should be. See if he will be able to get you approved if you settle on the charge offs. 

Good luck!

[Anonymous]

Definitely talk to a few lenders. I wonder would it help to use some of your savings to pay off debt and negotiate deletions?

Try Wescom cu, I’ve heard good things. Being ready for a mortgage is a personal decision, but if it’s close to your current rent then i don’t see the difference. Just keep trying you never know! Gl

[Anonymous]

Thanks for all of the input. The collections on my husbands report are 2 medical bills. We currently pay 1800 in rent and a mortgage would be a little lower than the current rent price. I will ask them about owner financing. I haven’t talked to any other lender because I was literally shocked at the mortgage score. The lender I spoke with told me not to pay the charge offs because they can just include monthly payments in my DTI. They just needed the credit score to increase at least 20 points but it would be ideal if it was a 620. I may just have to pay my cc debt before I apply anywhere else and hope it doesn’t lower my scores more. If all else fails I can borrow from my 401K as a down payment. Our financial situation wasn’t always this bad. It began about 2 years ago when our business was barely paying for itself and I was put in bed rest due to complications with a pregnancy. 14 months living off of credit cards and savings and paying $800/month for health insurance will definitely ruin a credit score. No excuses - just life and frustrated that we didn’t manage our situation better.

Also, thanks for telling me about leaving a small balance on one cc. I didn’t know that was a thing. I just paid one of my cc today and left an $80 balance (CL $1000). It reports on the 7th, so we shall see!

[Anonymous]

Life happens and no one is here to judge you for the adversity you’ve been through. Sometimes post may come across as a bit insensitive but it’s probably just their straightforward talk and not being judgy. From your current focus, it seems things are stable with you, hubby and baby- which is what really matters. Many of us aren’t where we want or need to be yet, we’re progressing.