Trying to improve our scores! Any advice would be great...

[Purrfection]

Hi everyone! This is my first post, so take it easy on me

My DH and I are looking to purchase a home within the next year or so, hopefully sooner. Here are our situations:

First off: DH has NO credit score. A lender pulled our scores (just to see where we stood), and informed us that in fact, he has no scores. He has about 10 medical collections from when he was younger and unemployed, and recently, when he was laid off (October 2009), but other than that, he has no credit lines (TL or revolving). He is NOT a credit card user and hates them. 5 of the 10 medical collections falling off each month for the next five months.

My mid score is a 562. I have 6 collections (3 of which are paid and closed, and the other three set to fall off in the next 3-4 months), and 2 charge-offs which are pretty old (c/o'd in 2005 while I was unemployed in college).

The most recent collections I have are one from Midland Credit for $789 (which I plan to pay in full next month) and one from RJM for $87 which will also be paid off next month. RJM has already agreed to a PFD. I have not heard anything from Midland on my offer.

Positives I have are my installment student loans which are in deferrment until 2012. I don't have any revolving credit lines or any other credit cards (I think I did enough damage with those while in college!)

The advice we got from our mortgage lender was to NOT worry about the collections and charge-offs and build our credit by getting a credit card.

Taken into account all of the info our mortgage lender gave, and just some reading up I've been doing, my plan of action is to pay off the two most recent collections (Midland and RJM), hoping that would help, as well as get 1-2 secured cards and pay off monthly. Since my husband doesn't want to get any credit cards, I plan add him as an AU to both cards so that they would report on both our credit reports.

How does this sound?

We are hoping to get our scores up to at least a 640 by the summer so that we can go FHA. If we go this route, do you all think that goal would be accomplished?

Any advice would be great...

[llecs]

Welcome to the forums!

I'd suggest reading the following:

Common Abbreviations

Credit Scoring 101 - great for knowing what is in your credit score and to see how your score is impacted.

What Steps Do I Take - great for learning the repair process.

and Example letters - PFDs, GWs, DVs, etc.

Your DH - He may want to get a couple of CCs. He'd see a big boost in FICO scores, though the collections would hold him down pretty far. You can try the AU option, but check with the CCC to make sure they report AUs. A Secured CC is a must and that'll save both of you some inquiries and you control the CL. The CL level doesn't matter one bit and you guys can certainly rip up the cards once they report if you don't want anything to do with them.

He doesn't have a score because he needs open TLs and they have to report for 6 months before a FICO score is generated. So, if you got it now, the earliest he'd have a score is 6-7 months out because they wouldn't likely report until next month (YMMV based on the CCC).

For his paid CAs, send each a GW letter asking for deletion (or follow HIPAA if you guys paid the medical provider). For unpaid CAs, either follow the HIPAA process or send each a DV. If they verify and you agree, then send a PFD.

You - Ditto to the CCs. Again, if you opt for the AU route for your DH, make sure they even report AUs. I'd aim for 2 CCs.

For the paid CAs, send GWs asking for deletion. For any upaid CAs, send a DV and if they respond and you agree, then send a PFD. If these are COs, then tread carefully. The history may be helping you if old. You can always try on any of them with the exception of maybe the top one or two oldest and send GWs (if paid) asking for the removal of any lates, CO references, settled references, etc. In other words, do the youngest ones first.

For Midland, make sure you have a PFD agreement in writing from them before paying. Paying a CA will never ever help your FICO score. It doesn't matter if you owe $0 or $10,000, the damage to your FICO score is equal. RJM is always great with PFDs. If they agreed to it, then pay it ASAP. They will delete.

I disagree with your lender. both of your FICO scores will not hit 640 on adding the CCs alone. I doubt if it would break to much past 600. You really would want to tackle these baddies. Maybe yours will break 640 if RJM and MCM are removed, assuming they are the most recent, but your DH's will not.

[Karefree]

I am reading up on the HIPPA Process.  I wish I would have went this route instead of paying the CA's.  Looking into this it may help you.