@CreditBuilding wrote:I have been working to rebuild my credit profile after going through financial difficulties that occurred in 2019/2020. I've seen some score improvements over the last 2 years so I'm happy with my progress. My goal now is to purchase a home in the next year or two but I want to get the best possible interest rate given how high they are these days.
I still have 3 baddies reporting to all three CUs. One account that was charged off but paid and zero balance, one account with a string of late payments (30, 30, 60, 90, 60) good for a few months then another string of late payments (60, 90, 30, 60, 30), one account with 3 late payments of 30, 30 and 60 days. They occurred during the same period between June and November of 2019. That said, it feels like I'm at the worst possible place in my credit recovery journey since these won't completely fall off until 2027 if I'm reading things correctly. I'm not quite at the EE date for any so this will be the longest 2 years of my entire life! I have had a stable history since 2021 and have done everything possible to bring my scores up and recover from that disastrous 1.5 year period of unemployment.
I have two inquiries from this year for 1 credit card and an auto loan. No plans to request any new credit between now and the next two years. In addition to these two recent accounts, I have 2 student loan accounts, 1 personal loan, and 1 other credit account all in good standing. Util is very low on the two credit accounts and the personal loan will be paid off by June 2025 (approx. $450 remaining). Any tried and true strategies to get these darn lates removed? Or is this just a waiting game at this point? I have tried multiple times to request the removal of the lates but the creditors have denied each of my requests.
Scores as of today:
FICO 8TU: 722
Exp: 727
Eq: 730
FICO 5, 4, & 2
TU: 711
Exp: 711
Eq: 706
Mortgage scores heavily penalize COs paid, or unpaid, and while score penalties from late payments will sting the entire time they are on reports, the presence of the 90 day lates carry heavier penalties for a longer period of time than say a 30 day late. Generally anything 60 days late, or worse would put you on a dirty scorecard. Being these occurrences were several years ago and provided you've been derogatory free since then, you've moved back to a clean scorecard.
Your scores aren't bad. They certainly wouldn't prevent you from qualifying for a mortgage right now. Being the derogatories are so old the only impact they might have on you getting a mortgage is the interest rates you might be offered because of the suppressed scores. Unless you're in need of buying a home right now or in the immediate future, I'd recommend you wait it out until these lates/accounts fall off your reports. Once they do it will give your scores a significant boost and likely put into the best interest rate tier (or a lot closer to it).
Considering this will start to happen in about 18 months with EE from TU, you might want to consider adding a third card now if you're wanting to use AZE0 to optimize your scores. For optimum AZE0 you'd use three revolving credit cards, not charge cards, or store only cards. Reason being, there's a slight score penalty (5 to 10 points) for 50% or more of your revolving accounts reporting a balance (doesn't matter how low the balances are). There's also the all zero penalty which can be more significant (15 to 25 points). With 2 cards, you're sort of in revolving account purgatory, so just something to think about.
No need to repost in the mortgage board. Perhaps @ShanetheMortgageMan will chime in with his extensive knowledge of the mortgage industry, similarly as @Thomas_Thumb always demonstrates his unique understanding (and the memory of an elephant) when it comes to Fico scoring.
I agree with what others have said, if you are going to open additional revolving credit the time to do it is now so they're old enough not to have a negative impact on the loan application.
You mentioned you are trying to qualify for the "best possible interest rate", so with that goal in mind you'll want to aim to get at least 2 bureau's credit scores up to a 780, as that is the top credit score tier for Fannie Mae & Freddie Mac financing when it comes to determining the interest rate. The next tier goes down to a 760 and each tier after that goes down another 20 points. There is a penalty for having scores below the 780 level. The penalty is the amount of points it'd cost to get the same rate as someone with a 780+ score who isn't paying points. 1 point = 1% of the loan amount you are financing. Below is a chart that shows you the difference in points between credit score tiers and the LTV (loan-to-value, which is the ratio between the mortgage amount and appraised value/sales price (whichever is less)). You can see at a 95% LTV (5% down) the difference between a 780 score and a 720 score equates to costing .625 points, or .625% of the loan amount.
VA, FHA and USDA rates are usually lower than Fannie Mae & Freddie Mac interest rates, but each has their own eligibility requirements to meet.