Personal loan and new credit

[Ambrosius]

I went thru a 3 year process to go from a 563 credit karma score ( I am presuming that was Transunion fico 8) to what was *until two months ago* fico 8 scores ranging from 739 to 781.  I gardened and was able to finally get the citi costco card with a credit limit of 8500 in April. I also had to buy a new car since my old one went kaput, 20k auto loan, both in April.

I was making 85k annually, this is the last month I can take the monthly salary. Due to the turbulent macro events, my salary has been cut temporarily to about 28k annually. I hope to be back to my 85k salary by September 1.

I am trying to buy an abandoned property. I managed to sock away 6k in savings before my salary was slashed. I will need a 20k personal loan to buy this property. Due to the court schedule, I anticipate that I must cough up the cash sometime between August and December of 2025.  I applied for a 15k loan two weeks ago with my credit union and was denied due to "recent credit" (auto loan, citi card). 

This will be my forever home, it is an excellent investment and I cannot lose the opportunity. The area is gentrifying and I cannot afford a finished home there even with a mortgage. The time frame for credit to age is 6 mos to a year. I am scouting Discover and other personal loan lenders that do not do hard credit hits, but would like to square away at least 15k in personal loans prior to August. Mitigating that of course is my recent credit, which dipped my rating now til 677, 689, and 720 fico 8 scores.

Thoughts and suggestions?  I would have coughed at difficulty in obtaining a 15k loan 2 months ago, but now am concerned.

[FlaDude]

I don't have any advice, but wanted to clarify that if you're getting scores from Credit Karma, they are not FICO scores. They are Vantage 3.0 scores. Very few lenders use Vantage scores. Some credit cards provide FICO scores, you can also get your EQ FICO 8 free at MyFICO, and your EX FICO 8 at experion.com.

[JoeRockhead]

I'd be curious to know why your Fico scores took such a tumble.  In particular the two of your fico 8 scores being sub 700.

Do you have derogatory information on your reports?  Late, payments, etc...

Do you have high reported revolving credit card utilization?

I understand that securing a loan on an abandoned property through a traditional mortgage lender can be next to impossible.  The bad part about an unsecured loan is the interest rates are generally unfavorable to begin with, and the lower your scores, the higher the rate is going to be.

The only SP personal loan approval I know of would be from American Express, but those loans are by invite only.  There are several lenders that offer the ability to pre-qualify and/or seeing what your rate might be based on the loan amount with a SP.  However, I'd be extra cautious in proceeding with any applications that don't specifically say you qualify for $X dollars at X%apr.   For example, they could say you qualify for X% apr,  you then proceed with the application, get hit with the HPs and they come back and tell you're approved for some amount far short of what you're looking for.

In addition to looking at other credit unions, you might consider seeing what the following lenders pre-qualifications come back with.  I'm sure others will have other recommendations.

Sofi

Discover

Wells Fargo 

Upstart

Upgrade

[SouthJamaica]

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I would try Lighstream. I once took out a loan with them and it was easy to deal with. Since it's run by Truist, which is a bank, it's not reported as a consumer finance account.

[Ambrosius]

Thanks for the referrals. I tried Sofi but my credit was too new, less than 2 months. My score took a tumble due to the new car loan plus credit card in the same month, plus I let my balance carry over at 28% on one of my cards (family emergency, had to fly to the states). I am not concerned about the interest rate. I will be paying this loan off in short order, and losing a few of hundred dollars in interest is well worth the equity I am building in automatically with the property purchase. Penny-wise, pound foolish.   I will def retry, but thinking I should wait until August, maybe September to reapply for a personal loan.

[Ambrosius]

Hm. Interesting, didn't know that about Lightstream

[credit8502020]

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@Ambrosius wrote:

I went thru a 3 year process to go from a 563 credit karma score ( I am presuming that was Transunion fico 8) to what was *until two months ago* fico 8 scores ranging from 739 to 781.  I gardened and was able to finally get the citi costco card with a credit limit of 8500 in April. I also had to buy a new car since my old one went kaput, 20k auto loan, both in April.

I was making 85k annually, this is the last month I can take the monthly salary. Due to the turbulent macro events, my salary has been cut temporarily to about 28k annually. I hope to be back to my 85k salary by September 1.

I am trying to buy an abandoned property. I managed to sock away 6k in savings before my salary was slashed. I will need a 20k personal loan to buy this property. Due to the court schedule, I anticipate that I must cough up the cash sometime between August and December of 2025.  I applied for a 15k loan two weeks ago with my credit union and was denied due to "recent credit" (auto loan, citi card). 

This will be my forever home, it is an excellent investment and I cannot lose the opportunity. The area is gentrifying and I cannot afford a finished home there even with a mortgage. The time frame for credit to age is 6 mos to a year. I am scouting Discover and other personal loan lenders that do not do hard credit hits, but would like to square away at least 15k in personal loans prior to August. Mitigating that of course is my recent credit, which dipped my rating now til 677, 689, and 720 fico 8 scores.

Thoughts and suggestions?  I would have coughed at difficulty in obtaining a 15k loan 2 months ago, but now am concerned.

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@Ambrosius Hi! I know you mentioned wanted to get a personal loan. Is this the only way you've considered to purchase this property? Have you considered getting a DSCR loan instead (depending on the total amount of the property). I could be wrong, but since it's abadoned, I imagine you may eventually have repairs to do, etc. 

I'm in the real estate financing space so here are a few of my thoughts. If I can help, just let me know. There may definitely be some alternative options there for especially since you aren't concerned about the interest rate and can pay it off quickly. Even with those scores, my main question is what is on your profile and what could be done to quickly get you a score increase to help support your desire to get a loan from a traditional lender or an alternative lender. 

Ownership & Title: Do you already have a signed agreement or access to the title for the abandoned property? If not, is it part of a tax lien sale, probate, or auction? Each of those has unique financing and timeline implications.

Your Long-Term Plan: Do you plan to renovate this property with future financing (like a renovation loan or HELOC), or are you planning to live in it as-is? That will affect the kind of financing options available — including some creative ones.

Current Debt-to-Income (DTI): Do you have a clear sense of your DTI ratio now that your income has dipped? 

Consider Non-QM or Asset-Based Lenders: These are lenders that don’t rely strictly on credit score or DTI. Instead, they underwrite based on the asset or your overall profile. Interest rates may be higher, but the flexibility might be worth it in your case.

[Ambrosius]

thanks for the input, perhaps I can use it for another purchase. Here, however, the program is run by the municipality. It is a straight up cash sale in advance of court proceedings. I will not know the amount until the property is appraised. I then have 5 days to cough up the cash. I do not get title until after the court proceedings, all funds are held in escrow in the interim. I think the personal loan is the best path right now, I am a bit more confident as things have progressed that 20-30k will be more than enough. I am approaching a good portion of that purely through savings, so probably will not even need a large personal loan. Thanks for the insight, all information is valuable.

[ptatohed]

Best of luck!  Let us know if you get the home!

[Yasselife]

@Ambrosius 

You’ve clearly put in a huge amount of work rebuilding your credit; going from the mid-500s to the high 700s is no small feat. The recent drop is understandable given the new Citi Costco card and auto loan; lenders often flag multiple new accounts in a short time; especially for large personal loan requests. Unfortunately, that “recent credit” factor is one of the hardest to overcome quickly; most lenders want to see 6–12 months of seasoning before approving another large unsecured loan.

Given your time frame; your best bet may be to target lenders known for being more flexible on new accounts (some online lenders, fintechs, or credit unions with looser underwriting) and be prepared for a higher rate. If you can; securing even part of the needed funds through savings, a smaller loan, or a combination of sources might strengthen your position. You could also consider offering collateral to convert it into a secured loan; which could bypass some of the “recent credit” hesitancy.

The property sounds like a once-in-a-lifetime opportunity; but I’d still weigh the risk of overextending during a period of reduced income. If September’s salary restoration is certain; that will help your DTI and make you more appealing to lenders; but if it’s not guaranteed, caution is key.