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Fastest way to improve credit score for first time home purchase

amango
New Member

Fastest way to improve credit score for first time home purchase

Hi everyone, I am sure there are a million responses through these forums regarding my situation, which I will be reading through.. However, I am looking to purchase my first property. I am tired of paying $2k/month to a landlord and any advice to expidte the process is much appreciated.

 

Over the last 6 months I have moved in with mom, saved up 10k so far and will have about 15-20k come 2022.

 

I have 2 remaining items deliquent of what used to be 7-10, so I have been chipping away at these and only seen small increases in my credit. Of the two remaining, one is a small personall loan for about $7.5k, which has been in collections for a few years now. This is where I am assuming I should start but should I settle? Pay in full ? What is the best way to handle this ? I also have 1 credit card deliquent for 1k, I almost paid this off today but thought I'd post here first. I have had other accounts deliquent or late that have all been settled or paid off. I now how 1 credit card with a small $1k limit I pay off each month.

 

Please provide any guidance and suggestions !

Message 1 of 9
8 REPLIES 8
TGG_1976
Contributor

Re: Fastest way to improve credit score for first time home purchase

A little more info is needed. What are your current scores, what type of morgage are you planning to get, any other cards that you may have, inquiries on your report, any other outstanding loans that may impact your DTI?

Message 2 of 9
amango
New Member

Re: Fastest way to improve credit score for first time home purchase

601, 515, 505

 

There are no other credit cards that I am aware of. My report says late payments, deliquences, and thin file because all I have is that loan which is taking up all my availabe credit. But my DTI is actually pretty good I think... Gross annual is about 75k-95k.

Message 3 of 9
OmarGB9
Community Leader
Super Contributor

Re: Fastest way to improve credit score for first time home purchase


@amango wrote:

601, 515, 505

 

There are no other credit cards that I am aware of. My report says late payments, deliquences, and thin file because all I have is that loan which is taking up all my availabe credit. But my DTI is actually pretty good I think... Gross annual is about 75k-95k.


What are the delinquencies and late payments? Who owns your collections?


Last App: 04/05/2021
Penfed Signature Loan

Currently rebuilding as of 04/11/2019.

Starting FICO 8 Scores:




Current FICO 8 scores:


Message 4 of 9
amango
New Member

Re: Fastest way to improve credit score for first time home purchase

SO the $1k CC is being serviced by Midland Credit and the personal loan is showing up as the company I took the loan with, NetCredit; meaning it is just being reported as deliquent (27 late payments), not in collections. But it has been deliquent for years so I think this is impacting my credit in several ways by showing total credit availble being used, severe deliquencey, and a thin file because its one of two things but THE thing preventing me from getting additional credit.

Message 5 of 9
gdale6
Moderator

Re: Fastest way to improve credit score for first time home purchase

Settle with these 2 ASAP, OCs are not likely to give you the PFD but stopping the updating monthly is paramount. Settling for less is also an option open to you. You didnt say whether or not you have any open credit cards remaining so if not you need to get to a total of 3 open to drive Fico even if you have to go secured. Open Sky will approve without a credit check.

Message 6 of 9
ImTheDevil
Community Leader
Super Contributor

Re: Fastest way to improve credit score for first time home purchase

Settling with Midland will be beneficial - if it's two or more years old, they'll delete it from your reports completely. I'd wipe that out now, then deal with the loan.



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Message 7 of 9
amango
New Member

Re: Fastest way to improve credit score for first time home purchase

I have one valid CC via AMEX. I carry a 0 balance each month.

Message 8 of 9
8in2years
Regular Contributor

Re: Fastest way to improve credit score for first time home purchase

#1- Try to settlt any collections/ charge offs you  currently have

#2- You said you have an amex card reporting $0 each month. You do want to use the card and have a small balance reporting, it can even be as small as $1-$2.

#3- You file is currently "thin" . The only way to make it thick is to add more credit card accounts, preferably 4-5 more credit card accounts.

#4- Look up https://www.capitalone.com/credit-cards/preapprove/  and see if you qualify for any of these cards. If yes, select one with rewards and $0 annual fee. Capital one only let's you apply for 1 credit card every 6 months, just fyi.

#5- Also look into (1st)Discover secured, (2nd)Citi secured, (3rd)TD bank secured, (4th)Merrick secured, (5Th)Academy bank secured card, (6th)opensky and (7th)self secured card

#6- Adding new accounts will require a hard pull (usually 6 pts per inquiry), which will decrease your score , but your score will increase over time as the new accounts age. I say at the year mark you will see the difference.

#7- You do want to use these new credit cards, just remember to let small balances  ($1-$5) report each month per card.

#8- You also want to have an open (if you currently DO NOT have any open student loans reporting, open auto loan reporting or open personal loan reporting)  Savings Secure Loan /Secured Loan(24-48 months) from your local credit union. 

Just my two cents.

 

Message 9 of 9
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