HELOC Recommendations

[RHLSU]

I recently applied and was denied a HELOC with a credit union. My most recently updated FICO 5,4&2 scores are 644, 609 and 628. However the Equifax score they used was 686. I have a number of accounts from 2020 that reported late payments following a divorce 2 years prior. Several were charged off and all except for 2 have been paid in full or settled. One of the two is in a payment arrangement and the other belongs to ex-spouse (I was co-signer on a loan). Both of these accounts are reporting every month as a CO even though they were charged off in 2020. According to loan officer on the loan, the recent reporting of these 2 accounts is the reason for the denial. All of the negative accounts are scheduled to fall off report in 2026. I'm wondering if anyone has receommendations on lenders or suggestions for actions I may be able to take to improve credit or get approved. I have been unsuccessful at obtaining any goodwill adjustments and have requested some EE from TU, but not yet received response. Thanks in advance for any advice.

[ShanetheMortgageMan]

Sounds like they used your Equifax version 8 score.

The loan officer you spoke with is probably correct about the charge-offs reporting late each month is dragging your scores down.

How much is the balance on each of the owing charge-offs?

[RHLSU]

One of them is a Bank of America credit card that I am in a payment arrangment for and have about $12k left to pay. The other is a loan (belongs to ex but I am co-signer) with $3k balance.

[ShanetheMortgageMan]

Are you on good enough terms with your ex that you could pay off the $3k charge-off to stop the bleeding and they would pay you back?

I'm also going to tag @Thomas_Thumb as he possesses amazing knowledge about what impacts your FICO scores.

[RHLSU]

Unfortunately, I don't think paying it is a realistic option for me, and I doubt my ex will pay it without legal action. Is there some sort of documentation that a lender may accept for an account that was charged off several years ago that would show that it is not in fact a recent late payment? 

[ShanetheMortgageMan]

When it comes to a charge off, the lender should understand that charge offs often report late payments after they've been charged off, so the post-charge off late payments should be ignored, but they are still a part of your credit score calculation since that is a credit agency decision.

As far as HELOC's go, a 686 score usually is high enough to qualify for most.  Did the CU say the reason for getting denied was due to your credit score or were there other reasons?

[RHLSU]

The loan officer stated that the denial was because of the charge-offs, but I havent received an official letter yet. DTI, credit score and loan to value were all acceptable. They said that if I was able to get a letter from Bank of America describing the payment arrangement they could use that for that account. The ex-spouse loan still needs to be paid off though. I am going to attempt to get that loan taken care of by my ex and I already have the documentation from BofA for the payment arrangement. Any recs for other lenders after I do that? Looking for about $70k. I owe $150k and most recent appraised value is around $270k.