Mortgage Fico Score Improvement help

[ALUMINEX]

Would anyone be willing to review my strategy for improving my credit for a home loan? My current "middle" Fico score for mortgage is 573. My Fico8 score is mid-600's. I've been told that I need to get my Fico score in the 620-640 range to get approval for FHA loan.

Good things:
My debt/income ratio is good
I make decent money
I'm willing to work hard to improve my score


Bad things:
I have 5 revolving accounts that are near max
I have serveral late payments in an existing mortgage from two years ago.
I have several medical collections.
For some reason, my student loans are reporting over the max amount of credit allowed for 3 different loans

Strategy
Pay each credit account down to 30% of available credit line
Talk to loan servicer to see why their reporting is misleading. I'm on-time for all student loan payments.
Mail a certified disputed letter for each collection
Dispute each collection for every bureau

Retry in 120 days


Any tips or suggestions are appreciated - I apologize for any formatting or spelling mistakes as I'm doing this from my phone.

[Anonymous]

Congrats on your mortage journey!

I am also in the process of raising my mortage scores because we have a contract on a new construction home. I also started out with SEVERAL collections and we are also going FHA but hoping we can switch to conventional if the terms fit. 

First, it would be helpful if you could list the amounts and limits of your credit cards. The same for your medical collections. 

Mortgage scores rely heavily on credit card utilization. The optimal scoring comes when you pay ALL cards down to a zero balance EXCEPT for one. The one that you leave a balance on should report no more than 9% of the credit limit. So if you have a card with a $1000 limit, it should carry a balance of $90 or less. 

With your collections, it's also helpful to know how old they are. My collections are all from 2011, so some I've been able to get removed early due to age without paying them. This could be true for you as well. 

Your student loans are most likely reporting over the original balance because of the interest that is accruing. Are your student loans currently in deferment or forbearance? 

[ALUMINEX]

Thanks so much for your reply.  Below is the information you reqested.

Credit Cards

1. Credit Card #1
   $2221  /  $4,000 limit
2. Credit Card #2
   $2,214 / $2,500 limit
3. Credit Card #3
   $4,000 / $5,000 limit
4. Credit Card #4
   $653  / $1,200 limit

Medical Collections:

1. $722  Aug 2015

2. $270 Jan 2012

3. $162  Aug 2015

4. 114 Sept 2011

5. $42 Nov 2014

[DollyLama]

How much money are you able to pay now on the revolvers, you stated 5, I only see 4 unless you are counting the student loans. 

Is your time period 1 month with X amount of dollars, or 2 months, etc. at X amount of dollars each month. 

Before you debt verify on the collections especially the 2 for 2015 (the most current), google example Portfolio Recovery Pay for Delete - it most likely will direct you to some posts in this forum over the years, but some collection agencies are leinent on this, which will remove them from your reports as if they never existed, being that you do have the cash and written agreement with them to remove.

Don't dispute  a debt verification if you already know they are yours. There are other ways to handle these.

What you can control is the utilization first and we can see the amounts you can pay, and tell you how to spread it out, list the APRs of each.

Check the statute of limitations in your state on medical bills,1 or 2 could be close to aging off or removed.

Can you name the credit cards, ie Discover, Bank of America, Amazon, etc, some creditors if you have been in good standing on payments, and open over a year, may increase your credit limit but ONLY if done by a SOFT pull inquiry. Hard inquires will ding your scores and be another year before they fall off or scoreable.  It this is possilble only under these terms, and granted, it will help your overall utilization so long as you dare not charge against the accounts. 

Let us know. 

[ALUMINEX]

I apologize - I forgot about Old Navy, but it's a small amount.  Also, I've added a couple more that have zero balance.  This should be everything.  My goal coming into this was to pay all of these down to 30% in the next 3 months, but that may not be the only/best option based on what I'm reading. 

In reference to the collections, would the statue of limitations be based on residence, or the state where you received medical care?  Also, I will look at the Portfolio Recovery Pay for Delete.  I am fairly positive all of the collections are mine - however, not certain all of them are accurate.  The ability to wade the waters of insurance and medical accounts for a family of 5 can be a daunting task - one that I haven't been very dilligent in keeping track of.

Also, should I dispute some of the collections in hopes they will be removed prior to PFD letters? 

Thanks for your help!

BestBuy

Limit: $4,000

Owed: $2,221

APR: 25.99% (Deferred) (I need to pay $370 within the next 5 days to avoid interest charge for a 6 month interest free deal)

Barclay Card (Apple)

Limit: $2,000

Owed: $0.00

APR: 27.74%

Barclay Card (Frontier)

Limit: $2,500

Owed: $2,214

APR: 25.74%

Chase
Limit: $5,000

Owed: $4,000

APR: 23.74%

Discover
Limit: $1,200

Owed: $653

APR: 23.74%

Old Navy / SYNCB

Limit: $800

Owed: $407

APR: 25.74%

Wells Fargo

Limit: $2,700

Owed: $0.00

[DollyLama]

Definitely pay the interest free balance now, so you will not be charged back interest. 

You want to pay the highest interest rate cards first if possible, and not have more than half of all cards reporting a balance if possible. Each month, how much extra are you planning to pay ie, $1200, $1500? 

I only gave Portfolio Recovery as an example, there are hundreds of collection agencies out there, you might have 2 charge offs with 1 agency and the other 3 could be with 3 other ones. You just need to google the names of the collection agency that holds these medical bills and see if they are ones that do work with a pay for delete. IE, XYZ company pay for delete, to get results, most of which probably would lead somewhere back to the forums here. Or enter the collection agency in the search bar up at the top right, under the banner of credit cards, and use drop down menu and select community. 

It is up to you if you wish to dispute the medical debts, it takes 30 days for them to verify the debt and report back to the credit bureaus, if they don't remove them ( I would try the oldest 2 first), then you will no doubt start receiving phone calls, letters. They have been awaken that you are working on your credit. 

[ALUMINEX]

Thanks DollyLama!

Yeah, I figure our what you meant once I started Googling PFD letters.  I plan on spending aroudn $2,000 per month to knock down this debt.  That will vary based on needs, but I think thats a goal that I can make.  So, I wanted to begin with PFD for the lowest amounts first.  I have a $49 collection that was originally with Recovery Revenue Corp, but they have merged with Wakefield and Associates.  Based on what I'm reading, this CA is terrible. I'm not certain what my chances are of having the $42 charge removed.

I found this PFD that is pretty good - it seems a little informal, but at least one member had some success with it.

-----------

Collection Agency Name 

Collection Agency Address 

Collection Agency City, State Zip

Account #: xxxxxx (your account number) as stated on credit report 

Amount: $___________ (amount you owe)

 To Collection Manager:

This letter is to inform you that the validity of this debt is disputed. I am unaware of this account and have no verification this debt is mine. I only know of this account based on it being reported in my credit report(s). As we both know, I have the right to dispute this account, request for verification, and/or request for validation of this debt. However, in order to quickly resolve this account, I am willing to pay $________, if you agree to delete this account from any and all credit reporting agencies. Please do not quote to me that you are unable to do this, I am aware of both your rights as well as my own. We both know you are the source reporting this account and have the absolute right to report it, not report it, or delete it from all reporting agencies. The purpose of this settlement is merely to have this item removed from all reporting agencies. We are both aware that paying this unverified debt is no benefit to me unless we can agree on the terms. I am sure you are aware that paying a collection account does not bode well on a credit report and that merely having a collection on a credit report will have a negative impact whether paid or unpaid.

Please Note: This is not an acknowledgment of liability for this debt in any way or form. If there is any confusion about my position on this alleged debt, please refer back to the first paragraph of this letter in which I state: "I am unaware of this account..." That being said, let me be clear, this is NOT: a promise to pay, a renewal, admittance to this debt, or in any way me agreeing this debt is mine. This is a restricted offer only.

If you agree to the terms and accept this agreement, I will send you certified funds immediately after I receive this signed agreement. The funds will be sent only if in exchange for it, you are agreeing to the terms set forth in this agreement and will be deleting this account from all reporting agencies (Equifax, Experian, TransUnion). This debt will be considered satisfied, there will be nothing more owed, nothing further to collect, and you will consider this a closed, satisfied account. Again, ALL references regarding this account must be deleted from ALL reporting agencies. Since certified funds will be used for payment, ALL information about this account WILL be removed from all reporting agencies within 15 calendar days of receiving the funds.

(Collection Agency Name) agrees to delete ALL information regarding this account from ALL credit reporting agencies WITHIN FIFTEEN (15) CALENDAR DAYS following receipt of payment as specified above and will not discuss the terms of this settlement with anyone, for any reason, excluding your client on this account. If contacted by any third party, including credit reporting agencies, (Collection Agency Name) will not acknowledge that any settlement offer was made, accepted, offered, or executed and will deny knowledge of any such account.

If you agree to the above terms, please sign (by an authorized representative of (Collection Agency Name) this agreement below, print (clearly) the name of that signature, and provide the position held by the one signing this agreement. It will be implied that this letter shall constitute a legally binding contract, enforceable under federal, state, and local laws. Please also include with this signed agreement a company letterhead stating you received and agree to this restricted offer and the terms set forth within it. 

Your response must be postmarked no later than 15 Days from your receipt of this settlement/agreement offer OR this offer will be withdrawn and I will request full validation of this alleged debt, as allowed by the Fair Debt Collection Practices Act. If you decide to decline this offer, and begin calling about this alleged debt, expect the next letter from me to be a Cease and Desist letter, attached with it, a request for Full Validation. Thank you for your time.
 

______________________________ 

Signature

 ______________________________

Print Name of the above signature

______________________________

Date

Please send this agreement, your company letterhead agreement and all other correspondence regarding this account to: 

Your Name

Your Address

 -------

[ALUMINEX]

Credit Card Update

BestBuy

Limit: $4,000

Owed: $2,221 (55% utilization)

Owed Today: $1,850 (46% utilization)

APR: 25.99% (Deferred)

• 6/18 - Paid $371 to avoid interests charges

Barclay Card (Apple)

Limit: $2,000

Owed: $0.00 (0% utilization)

APR: 27.74%

Barclay Card (Frontier)

Limit: $2,500

Owed: $2,214 (89% utilization)

APR: 25.74%

Chase
Limit: $5,000

Owed: $4,000 (80% utilization)

APR: 23.74%

Discover
Limit: $1,200

Owed: $653 (54% utilization)

Owed Today: $601 (50% utilization)

APR: 23.74%

•  6/18 - Paid $52 due to leftover budgeted funds for card payments

Old Navy / SYNCB

Limit: $800

Owed: $407 (51% utilization)

Owed Today: $0.00 (0% utilization)

APR: 25.74%

• 6/18 - Paid $407 to get to 0% utilization
• 6/18 - Disabled autopay of $35.00 per month

Wells Fargo

Limit: $2,700

Owed: $0.00 (0.00% utilization)

[medicgrrl]

Great job on bringing down the utilization!

[ALUMINEX]

Thanks Medicgrrl - I still have a lot of work to do.