Student Loan Default and Collections...

[sir0925]

So my wife and I are in the process of building a home. We've been prequalified but her credit scores are holding us back from a better interest rate. Right now she is about 681 score and we need to bring it up to a 700. 

The only things I've identified that can help her improve that score over the next 4-6 months is getting negatives off her reports which I imagine is difficult to do. 

4-5 years ago she defaulted on 4 separate fed student loans after her father passed away. It was just difficult on her and she lost focus. They all defaulted and went to collections. Her mother and her decided to pay off all 4 accounts and they did so 3 years ago while it was in collections. Thus she is showing 8 negative accounts (4 Fed, 4 collections). 

Anyone have any ideas on how to help in this situation?  I'm guessing she's only has two options: goodwill letters and wait the additional 2.5 years. 

if there was a way to add 20 points, we'd do it;however with 1-2% utilization there is no way to increase that score. 

[calyx]

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You are correct - Goodwill and/or waiting are your two options.     I would go ahead and focus on the goodwill portion - in your very humble letter/phone calls, you can mention that the debt is paid and ask them to delete the lines - it might work, it might not.    Check the rebuilding forum for the Saturation technique, as well.

I realize you have done what you can for your scores by keeping the utilization low - but just in case you weren't already doing it, make sure you don't just have low utilization, but are also practicing AZEO (All zero, except one) to maximize the mortgage scores.  

[tooleman694]

Oh yeah that is a tricky one because you cant rehab them. BTW why a 700 score? Are you going conventional on the new mortgage?

[sir0925]

Yes conventional as my Credit Score is hovering at 800. If we can't make changes to her, I'll just have to apply solo.