Rebuilding to apply for mortgage

[Anonymous]

Hello,

I'm trying to decide a credit rebuilding plan that would put me in the best position to get a mortgage in about 24 months (FICO score and DTI %).  I'm using myfico to track my progress and have seen my scores go up from just getting my accounts below 100% usage in the past couple months (low 500s to 560-585). I orginally planned to pay my credit cards first, lower balances to higher, but I keep second guessing my strategy. I have about $36,500 in credit cards; $25,000 ($713 monthly) for a credit place that is slowly paying off 10 charge offs; $32,600 for two car loans; and $75,600 for credit cards in my parents name which I pay monthly.  Last late payment was November, 30 days for mortgage (charge offs are 1 year ago). So the plan now is pay my credit cards off, in December start paying off the charge off card service, in Aug 2019, pay off car loans and in April 2020 (when I plan to apply for a mortgage), start paying off parents credit cards.  By then I'd just have that payment of around $1500 a month as debt (as my current home will be sold).  I include paying cards in parents name because I figure an underwriter would ask about those payments when reviewing my ban statements.

I can have everything paid off, except my parents credit cards ($1500 a month), in 24 months.  I'm wondering if i should instead pay off the service paying the charge offs first so the overlimits will be reduced and, more importantly, it would give provide more distance between payoff and mortgage application when I apply (not sure if time since payoff of charge offs paid matters or not though).

I'm sorry this is so wordy!  But I really would appreciate any and all advice and inputs

Thanks!

[Anonymous]

I would not worry about the cards in your PARENTS name. if they are listed under your parent they wont affect you getting a mortgage. I would focus on getting those cards (which i am assuming are all current) to FIRST be under 50 percent utilization.. then 30 percent.. I would look at each card and calculate what that would be for each on.. This will boost your score and help tremendously (its 30 percent of your score). Some you may only need 300 dollars and some you will need more.. HOWEVER if they are ALL under 30 percent than your good, then just make min payments to them to keep them current (35 percent of your score is paying your bills on time) . Then i would work on paying more for those charge offs and getting them to either remove themselves or show paid in full. This will eliminate the negatives and jump your score more. As far as the car loans I would leave them for last.. unless they are past due. So your parents cards and your car loans i would not touch until you get your lower utilzation and derogs off.. they are the biggest contributors to your score.

[Anonymous]

Thanks so much for your advise, makes complete sense to me! I think that's a good course to follow. So you're saying the credit cards I pay that are in my parents name won't affect my DTI ratio when I apply?  I figured if an underwriter saw these payments being made each month (from my bank statement) s/he would put that against my DTI.  Again, I was just assuming . Also, for the unpaid collections, just to make sure I understand, as long as they are all paid by the time I apply for a mortgage, the amount of time past since they've paid won't really change anything as far applying and my FICO score?  Thanks again for you time, I really appreciate it.