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What to do with charge offs to get a mortgage

lambomoonboy
Established Member

What to do with charge offs to get a mortgage

Hello this is posted from another sub, but was told to ask here since my objection is a mortgage. First time home buyer, going to need my credit to pull through as my income is stated/self employed. 

 

In advance, I really appreciate anyone giving some advice, it is imperative to me I make the right choice after coming so far. I think at one point my credit was 50x!

 

The road to rebuilding my credit has been pretty good but I need advice on what to do going forward now, as my Equifax is decent (hit 725 recently), but the other two are low. I want to have a good chance of getting a mortgage soon, once I have good income to show, and I don't think just Equifax will cut it. The reason being, my dispute efforts were most succesful with EQ. They removed all the bad accounts tarnished with lates and deliquencies, and all the open accounts are in good standing/no lates (except the BoA). I used that as a segway to open 8 new accounts, in the last 2 months and a total of :

 

Discovery 200 NEW

Capital One 300 NEW

Reflex credit 750 NEW

Self Credit card 200 NEW

First Digital 300

Applied Bank 200

---other products---

Cred AI 1500 NEW

Grow credit  NEW

Grain credit 600 NEW

One financial NEW

Self reporting 200

BoA 43,000 balance (5 years old, current, but many lates)

 

I've gotten two big car loans (70k+30k at once, 128k at once) and they are paid off in full (128k is the one owing now 43k). I have lots of inquiries since I opened lots of new accounts and tried to trade the car in to have a new fresh loan (I got really bad approvals).

 

The glory from all the new accounts should boost me nicely, as I'm using them and PIF. However TU has 7 charged off accounts, and EXP has a total of 9. Exp is $16,500 total on the charge offs and TU is $8600. The charge off accounts are still about 80% on time, despite being closed when I lost my job and stopped servicing them (I kept my car). In a perfect world I would pay off the 16,500 (which if I run into money in the future and it makes sense I would). As a matter of what is most efficient in raising the lacking scores quickly, do the charge offs matter so much at this point, they show as "low impact" ? It's been over 3 years on most of them, but a couple are "affordable" to me, if I feel its worth it (One is $530 that is on both T+Exp for example). Or would you use my limited funds to increase Discovery and first digital upto 2-5k limit over the next few months? Which of the 2, or mix of the 2 options would take me to 700+ for all 3?

I think I've explained myself, but please feel free to ask for additional information. I paid off a $35 charge off on Exp today, and I'm hoping that demonstrates what kind of impact it would have but you guys seem to be loaded with XP points. Thanks again!

 

Message 1 of 7
6 REPLIES 6
VALoanMaster
Valued Contributor

Re: What to do with charge offs to get a mortgage


@lambomoonboy wrote:

Hello this is posted from another sub, but was told to ask here since my objection is a mortgage. First time home buyer, going to need my credit to pull through as my income is stated/self employed. 

 

In advance, I really appreciate anyone giving some advice, it is imperative to me I make the right choice after coming so far. I think at one point my credit was 50x!

 

The road to rebuilding my credit has been pretty good but I need advice on what to do going forward now, as my Equifax is decent (hit 725 recently), but the other two are low. I want to have a good chance of getting a mortgage soon, once I have good income to show, and I don't think just Equifax will cut it. The reason being, my dispute efforts were most succesful with EQ. They removed all the bad accounts tarnished with lates and deliquencies, and all the open accounts are in good standing/no lates (except the BoA). I used that as a segway to open 8 new accounts, in the last 2 months and a total of :

 

Discovery 200 NEW

Capital One 300 NEW

Reflex credit 750 NEW

Self Credit card 200 NEW

First Digital 300

Applied Bank 200

---other products---

Cred AI 1500 NEW

Grow credit  NEW

Grain credit 600 NEW

One financial NEW

Self reporting 200

BoA 43,000 balance (5 years old, current, but many lates)

 

I've gotten two big car loans (70k+30k at once, 128k at once) and they are paid off in full (128k is the one owing now 43k). I have lots of inquiries since I opened lots of new accounts and tried to trade the car in to have a new fresh loan (I got really bad approvals).

 

The glory from all the new accounts should boost me nicely, as I'm using them and PIF. However TU has 7 charged off accounts, and EXP has a total of 9. Exp is $16,500 total on the charge offs and TU is $8600. The charge off accounts are still about 80% on time, despite being closed when I lost my job and stopped servicing them (I kept my car). In a perfect world I would pay off the 16,500 (which if I run into money in the future and it makes sense I would). As a matter of what is most efficient in raising the lacking scores quickly, do the charge offs matter so much at this point, they show as "low impact" ? It's been over 3 years on most of them, but a couple are "affordable" to me, if I feel its worth it (One is $530 that is on both T+Exp for example). Or would you use my limited funds to increase Discovery and first digital upto 2-5k limit over the next few months? Which of the 2, or mix of the 2 options would take me to 700+ for all 3?

I think I've explained myself, but please feel free to ask for additional information. I paid off a $35 charge off on Exp today, and I'm hoping that demonstrates what kind of impact it would have but you guys seem to be loaded with XP points. Thanks again!

 


If the charge offs are reporting every month, settling them should improve your scores. The great thing about charge off accounts is you can generally settle them for pennies on the dollar.

The best thing you can do is apply with a lender and have them run a credit simulator to see what options you have to raise your scores.

VA Mortgage Expert. Mortgage Banker lending in All 50 States.
VA, FHA, USDA. Jumbo, Conventional.
CAIVRS Expert.
Message 2 of 7
SouthernCredit
Frequent Contributor

Re: What to do with charge offs to get a mortgage

Make sure, when you are paying off the charge-offs, that you negotiate a pay for delete, to have them removed from your report. It won't happen automatically. 



Message 3 of 7
VALoanMaster
Valued Contributor

Re: What to do with charge offs to get a mortgage


@SouthernCredit wrote:

Make sure, when you are paying off the charge-offs, that you negotiate a pay for delete, to have them removed from your report. It won't happen automatically. 


I'm pretty sure pay for deletes only work on collection accounts.

VA Mortgage Expert. Mortgage Banker lending in All 50 States.
VA, FHA, USDA. Jumbo, Conventional.
CAIVRS Expert.
Message 4 of 7
SouthernCredit
Frequent Contributor

Re: What to do with charge offs to get a mortgage


@VALoanMaster wrote:

@SouthernCredit wrote:

Make sure, when you are paying off the charge-offs, that you negotiate a pay for delete, to have them removed from your report. It won't happen automatically. 


I'm pretty sure pay for deletes only work on collection accounts.


I don't know why I read charge-off and thought collections. <Please insert facepalm emoji here>



Message 5 of 7
Revelate
Moderator Emeritus

Re: What to do with charge offs to get a mortgage


@VALoanMaster wrote:

@SouthernCredit wrote:

Make sure, when you are paying off the charge-offs, that you negotiate a pay for delete, to have them removed from your report. It won't happen automatically. 


I'm pretty sure pay for deletes only work on collection accounts.


Not necessarily, while PFD is usually termed in CAs to your point, some COs if paid can get removed too.

 

I have a stupid utility one, done with my credit test on it so going to give them a call to pay it and they have a stated policy (gotten in writing) that they will delete after it's paid.

 

Never hurts to ask, open and recent CO is 100 points or thereabouts even on mortgage scores.




        
Message 6 of 7
lambomoonboy
Established Member

Re: What to do with charge offs to get a mortgage

Thanks guys time to negotiate 

Message 7 of 7
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