Delete Tradeline...or not?

[Anonymous]

This post was move to the Mortgage section however I reposted here as it is really a question about credit scoring and not a question about refinancing.

Hoping for some advice. I unfortunately completed a deed in lieu on a property back in April of 2010. The property was purchased in 2007. I went through a divorce and now due to that divorce I am forced to refinance a seperate property I have owned since 2009. Fannie Mae has a 2 year waiting period on DIL's and Short Sales and I found a lender with no overlays that would refinance at the 2 year mark but Fannie Mae's Desktop Underwriter is rejecting the loan because the home that had the deed in lieu was mistakenly re-reported by GMAC in May of 2012 . The "close date" still shows as  April 2010 but the "date reported" shows as 2012 and Fannie Mae's DU to my surprise ONLY uses the "date reported" not the "close date". This was confirmed with Fannie Mae. So Fannie Mae tells me I need to have GMAC correct the issue, however i was informed by equifax that the "date reported" can not be back dated. So this puts me out another 2 years before I can refinance. With this said GMAC has given me the option to delete the entire tradeline. this would be a plus as the negative 120 days late and deed in lieu would no longer exists BUT the credit history on the account from 2007 including 3 years of good payments would also be gone. Equifax has advised removing the tradeline may lower my score due to credit history. My middle score is now a 707. If it drops a lot It may mess up my loan or prevent it all together. I have no other negatives at all. The new lender that is attempting the refinance has told me the opposite ..they think the score will actually raise. So my question is...given the above info do any of you have any opinions or experinces with how low or high my score may be affected if i go ahead and delete the entire tradeline?

Thanks

JP

[Revelate]

It's hard for me to imagine that airstriking a 120 day late within the last 5 years wouldn't be neutral or a benefit from a credit score perspective.  If you have multiple derogatories, then that might be the case.

That said, you'll need to post a more detailed record of your credit report for others to make a more educated guess; i.e. is that your only mortgage tradeline, what other accounts do you have, what's the history on those (both good and bad), etc ad naseum.

[llecs]

The question to ask is...what's the alternative? Can you wait two years? If not, go with GMAC's kind offer to delete.

120 day late is bad as is the Deed in Lieu of Foreclosure comment.

If this account was opened in 2007, making it 5 years old, how old is your AAoA (average age of all of your OC accounts)? Is this your oldest account and/or oldest installment?

In the scheme of things, 2007 was yesterday. Losing 5 years of history, assuming it's your oldest, isn't a bad deal. In fact, if most of your OC accounts are before 2007, then you might see a net gain due to improved AAoA when deleted, and gains due to the baddie comments. If it is your oldest, then you can see a loss due to the loss in history. Assuming worst-case scenario, I don't see you losing more than 20-30 tops, and that excludes any potential gain washing out the loss due to the improved credit. I'd do it. Even if your mid-FICO hits 670, then that's not a bad thing. I think you'd see a net gain.

[Anonymous]

Thanks for the info. Here is the rest of the info on my accounts. Mortgage #1 is obviously what I am thinkning of deleting.

Mortgage Accounts:
MORTGAGE 1 - Date Opened 09/2006 Date Closed 04/2010 Status 120+ DAYS PAST DUE Comments:Forfeit of deed in lieu of foreclosure      
MORTGAGE 2 - Date Opened 09/2009 Status  - PAYS AS AGREED  

Installment Accounts:
TOYOTA Date Opened 07/2010 Status PAYS AS AGREED

Revolving Accounts Open
BANK OF AMERICA  Date Opened 11/2005 Status  - PAYS AS AGREED  
MACY'S Date Opened 01/2011 Status  - PAYS AS AGREED  
Credit Union Date Opened 12/2007   Status  - PAYS AS AGREED  

Revolving Accounts Closed
CHASE Date Opened 01/2000 Date Reported 10/2010  Status  - PAYS AS AGREED

Authorized User Accounts
AMERICAN EXPRESS  Date Opened 10/1982 Status  - PAYS AS AGREED 

[Revelate]

In my opinion, nuke that negative tradeline and don't look back.

It's not helping you much age wise by my sloppy math (if at all, I just estimated age while excluding the AU), and it's the only derogatory on your report... and it's a big one too.  Even with the possible rebucketing to a pretty people bucket, I can't see you falling below 700 and I would estimate you'll probably get a boost out of it.  Decent age, nice mix, that's a good report without the albatross.

[RobertEG]

+1

The two areas that will be affected by the deletion of the TL are average age of accounts and credit mix.

Since you have other installment, I doubt it will have any effect on your mix of credit.

The TL appears to be younger than your avg age of accounts, so no negative impact there.

Deletion of the derogs will most definately help your score.

It looks like a no-brainer to me.