First Time Home Buyer, Recent Late Payments

[Anonymous]

Hey guys, I need a little help...I've been reading the forums but I thought I'd post my family's specific situation to see if anyone has any advice.  

I recently opened a retail store in my little town (Nov '17).  The store is doing very well, and is going to be great income now and in the future but for a few months there i chose to put every bit of money when it was starting up (it needed it).  This meant I went 90 and even 120 days late on my cards/auto loan which severely killed my credit.  These late payments were December Through April 2017-18.

Well, my wife and I found the PERFECT house for our family.  It's $230K, has acreage for the kids, everything (originally started at 400K).  It's currently in foreclosure to Fannie Mae and believe it or not is being rented right now.

My current scores are 476, 507 and 488.  Because the retail store is doing great now, paying off any old balance is not a problem, but I need to find out how to do it the most effective way to raise my credit score before someone else buys the house.  I'm thinking about doing the mortgage through Carrington.  My tax return shows $51K for last year in income, and $80K for this year.

Is it going to be possible to get a loan in a few months from what you guys have experienced?  Do you have any tips on the best way for me to increase my credit score (I'll post my credit history/collections below).  Any help would be HUGE...my family would have the perfect home.

Thanks guys!!  

Credit Situation:

Open accounts:

• Capital One Auto Loan - $13K left of a $28K loan.  Was in chargeoff, got it back into current

• Capital One Spark Card - $150 left of $600 limit - currently restricted...which I believe means it will be closed if I pay it off.

A business partner just put me as a AU on a BOA card that has a $2K limit and has never been late in five years

Collections//

• AFNI - $994 (was an ATT collection, they messed up my order, wouldn't give me the discount they originally promised when signed up, disputable??)

• Target Red Card - $530

• WF Preferred - $730

• Diversified - $130 - PIF.  I paid it in full before realizing i should try a PFD.  Is paying it going to help my score even a little?

• Capital One Platinum - Portfolio Alliance Collections - $2900 

[Jnbmom]

Your scores are pretty low I believe for a mortgage approval.

Are those collections all paid?

Those recent lates are going to hold your score down for quite sometime

[Anonymous]

Oh no, so you think it's a lost cause?  Impossible to get to the 580 score I need?

The collections are not paid yet because I wanted to try to get them deleted before paid...because I believe paid is just as bad (score wise) as unpaid when it comes to collections?

[Jnbmom]

I am not implying it is a lost cause, but getting your scores up will take time. Lenders use your middle mortgage score to approve. Your interest rate will be based on that and at 230K that will be a high payment with low scores.

If you read these boards and do some research on the Web you may be able to tackle your collections and lates but this will all take time.

[VALoanMaster]

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@Anonymous wrote:

Hey guys, I need a little help...I've been reading the forums but I thought I'd post my family's specific situation to see if anyone has any advice.  

I recently opened a retail store in my little town (Nov '17).  The store is doing very well, and is going to be great income now and in the future but for a few months there i chose to put every bit of money when it was starting up (it needed it).  This meant I went 90 and even 120 days late on my cards/auto loan which severely killed my credit.  These late payments were December Through April 2017-18.

Well, my wife and I found the PERFECT house for our family.  It's $230K, has acreage for the kids, everything (originally started at 400K).  It's currently in foreclosure to Fannie Mae and believe it or not is being rented right now.

My current scores are 476, 507 and 488.  Because the retail store is doing great now, paying off any old balance is not a problem, but I need to find out how to do it the most effective way to raise my credit score before someone else buys the house.  I'm thinking about doing the mortgage through Carrington.  My tax return shows $51K for last year in income, and $80K for this year.

Is it going to be possible to get a loan in a few months from what you guys have experienced?  Do you have any tips on the best way for me to increase my credit score (I'll post my credit history/collections below).  Any help would be HUGE...my family would have the perfect home.

Thanks guys!!  

Credit Situation:

Open accounts:

• Capital One Auto Loan - $13K left of a $28K loan.  Was in chargeoff, got it back into current

• Capital One Spark Card - $150 left of $600 limit - currently restricted...which I believe means it will be closed if I pay it off.

A business partner just put me as a AU on a BOA card that has a $2K limit and has never been late in five years

Collections//

• AFNI - $994 (was an ATT collection, they messed up my order, wouldn't give me the discount they originally promised when signed up, disputable??)

• Target Red Card - $530

• WF Preferred - $730

• Diversified - $130 - PIF.  I paid it in full before realizing i should try a PFD.  Is paying it going to help my score even a little?

• Capital One Platinum - Portfolio Alliance Collections - $2900 

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Hi Mrbulletproof,

A couple of concerns.

1) How long have you been self employed?
2) How much money do you have for a down payment?

3) What type of mortgage will you be applying for, FHA, VA or USDA?

Even if you get your scores up, the recent late payments will more than likely kill any chance of getting approved for a traditional mortgage so you'll need to either wait until you have a clean 12 month history of on time payments or you can try & get the creditors to delete some of the late payments. Another possible option would be to do a non qm loan which will require 25% down payment.

[me12345]

Your issue is not only your late payments and score, Its also your Employment!

You are going to need a 2 year history of being self-employed and making money.

Unless your spouse has the income and work history and good credit...(Then you wouldn't need to worry about yours) Id say you are looking at at least 18 more months....at least that gives you time to work on your scores.

Sorry, for the bad news...

Also, being self-employed don't "Write-Off" everything...You still must show a profit to qualify.

Thanks,

[Anonymous]

1.  I have been self employed for about 7 years.  I have 80K net (after all deductions from both businesses) from 2017 and 51K net (after all deductions, etc) from 2016.  I also have self employment with profit from the previous years as well.  Think that'll be an issue?

2.  I have around 30K in the bank right now for a downpayment.  I could raise that up if needed.

3.  I'm a first time home buyer...which kind of loan would you recommend?  FHA?  I'm not a vet...

Good news!  I just contacted the CEO of Diversified and he said they'd delete the Collection!

So, do you think it's going to be impossible to reach a 580 score in three months or so?  And do you think 80K and 50K for two tax returns net income are not enough?  Other hurdles with owning businesses rather than being employed?

Thanks for the help guys!

Nick

[me12345]

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@Anonymous wrote:

1.  I have been self employed for about 7 years.  I have 80K net (after all deductions from both businesses) from 2017 and 51K net (after all deductions, etc) from 2016.  I also have self employment with profit from the previous years as well.  Think that'll be an issue?

2.  I have around 30K in the bank right now for a downpayment.  I could raise that up if needed.

3.  I'm a first time home buyer...which kind of loan would you recommend?  FHA?  I'm not a vet...

Good news!  I just contacted the CEO of Diversified and he said they'd delete the Collection!

So, do you think it's going to be impossible to reach a 580 score in three months or so?  And do you think 80K and 50K for two tax returns net income are not enough?  Other hurdles with owning businesses rather than being employed?

Thanks for the help guys!

Nick

You cant use both business  incomes in 2017 if you just started one of the business....What was the income for just the established business in 2017 & 2017?

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[Anonymous]

I believe from talking to my accountant that they don't take business income, but personal income.  He told me it's line 22 on your 1040 return form?  https://www.irs.gov/pub/irs-pdf/f1040.pdf

Is he wrong??

[Anonymous]

Quick question, would you guys recommend me getting a Secured CC to help raise my credit?  Since money itself isn't the issue, just the score?  Would getting a secured card help my score?