Newbie! Looking for Recommendations

[Anonymous]

Hello Fico Community!

I've been following and reading several topic threads in this forum, but am looking for more of a personalized suggestion board.

ISSUE: My wife and I are looking to purchase our first home, but my credit score is what's holding us down.

My current scores are: 587 FICO / 647 TU / 678 Vantage

Bad: 4 Accounts in Collections / 1 State Tax Lien - Paid in FULL

Although I don't know why my scores are so split in difference, I understand I have an issue and need some help with the repair.

QUESTIONS:

1. I recently paid the state tax lien in full, but have read numerous people try to get it deleted from their CR's but no luck. Is there a most effective way for deletion?

2. I need to get my score up enough to qualify for a mortgage within 3-6 months, would paying off my collections and disputing them raise my score enough?

3. To those who have been in "my shoes" what are your success stories on raising your scores in short time?

I know that there is no way to raise my score quickly but I don't see how my score can be this low. Is the tax lien weighing in that much?

I'm only asking for suggestions/recommendations on where to start, and what will give me the most bang for my buck.

Thank you in advance, it's much appreciated!

[Anonymous]

You may have luck on the mortgage board also - just a thought.

Most lending companies will require that you pay off all collections prior to beginning a mortgage application (or during the mortgage process). You will see a decent score bump if you are able to work out a PFD (pay for delete) with the collection companies.  Although it won't increase your score, even reporting a paid status will look better during a manual review/mortgage application.

And while I'm not at all knowledgable about liens, have you had any communication with the state regarding this since it was paid? It may only require a phone call and a form or two.  I'm sure others will be along to help you out on that front.

[Anonymous]

Thanks for the reply!

I'm going to pay off all of my collections, but didn't know if I could see a decent bump from that. The underlying issue was that I was young and didn't pay anything off, but now I have a very well paying job and can afford most. I'm just trying to raise that score to purchase a home. I've been contacting the State RS via email, but no response yet. 

Thanks again for the info.

[RTOrockstar]

How old is the tax lien? State tax liens are nearly impossible to remove(I've seen very few success stories on here) but like everything else, their affect diminishes with time and good payment history. The collections can be handled(in most cases) by PDFs or GW'ing them until they give you what you want. How is your positive tradelines? Do you have any open credit cards? Normally I'd say you need to get some going, but depending on how soon you plan to apply for the mortgage, that may not be the best plan as I'm told that lenders don't like to see new activity(inquiries or new accts) within the last 6 months before applying.

[Anonymous]

Hi RTO - Thanks

The tax lien was from 2009 and was paid off about 60 days ago, so the effect is probably starting to come around...at least I hope.

I will definitely work for a PD when working with the collections agencies, hoping that I can at least remove 3 of the 4. Question: If I cannot get a PD when working with them but pay in full when closing them, is it a good idea to "dispute" them with the CRAs within 30-60 days later? I've heard that after they are paid, the agencies rarely report back to the CRAs when an account is disputed?.

I currently have (2) credit cards - 1 is a $400 limit and zero balance (5 months old) / 1 - is a $3000 limit with $2000 balance (2.5 years old). I can pay it all off, but I heard it's better to keep a balance. Should I pay it down to like $200?

I have a perfect on time payment for all of my revolving credit, no debt other than my collections and credit cards (ironic I know). I'm going to pay off everything, but I just wanted some help and suggestions as to what to pay off and how involved I should be. I would like to apply for a loan within 4 months from now but would need at least a 640+ score. I plan on refinancing when made available.

Thanks again for your response!

[RTOrockstar]

Yea, you need to pay that cc balance down, that is gonna boost your score the quickest. As far as keeping a small balance on your cards, that's fine, just remember that your best results will come from having less than 10% utilization. There is some debate on if carrying a balance at all is a good thing but the bottom line is you don't want to have to pay any interest you don't have to.

Disputing the paid collections is not going to make them go away(normally). You're gonna need to send some goodwill letters. You can find example GW and PDF letters around the forums here. 

Good luck to you

[750orbust]

Disputing the paid collections won't do a bit of good since there is not an issue of inaccurate reporting. As long as the information is accurate there is nothing for you to really dispute. Try PFD or GWing. Also, some lenders do not like to see active disputes on your CR so doing so would be a gamble. Like I said though, disputing accurate information is pointless anyways since they're under no obligation to delete accurate information.

[TimeToRecover]

Also note that tax liens age from the day they are paid not the day they were filed.  So if you only just paid the tax lien 60 days ago it will report for 7 more years.

[Anonymous]

UPDATE:

So I have some wonderful news, pending they actually do it and I don't have to contact them again, but I had 3 of the 4 collection agencies agree to a "PFD". As always I had them send me a hard copy via snail mail and email, but they agreed that if I paid in full the derrogatory marks would be deleted from all 3 credit bureus. They let me know that it would take the 30-90 days to process but it all seemed like a job well done.

QUESTION:

Now that i have closed all of my collections accounts yet 1 is not going to be deleted (still working on it) and having my state tax lien closed, will my score increase by 60 pts? I have about a 3-6 month window until we are hoping to buy a home, but I am very much aware that credit takes a while.

Thanks again for all the help everyone, this forum is amazing!