FAIR??

[ainglese]

I have been trying to be a very responsible Adult, I have paid all my collections,repos, and paid down all my credit cards in order to buy a house.  These have been paid off for three months now and prior to that I have not been late on any payments for over a year.  My Credit score was a 590 and since I paid off all this dept my credit score, get ready for this!!! HAS GONE DOWN!! To 550. Are you kidding me?  Why has This so called Fair Issac not been so fair?  I have 3 kids and have been renting for the past 2 years after we lost our house when my business went under in 2008 and was forced to sell my house that I could no longer afford and was forced to rent.  Now that I have had a good paying government job for the passed 4 years I am ready to buy a house and have saved 20% to put down on a house, but still can not get approved to buy a home even through FHA.  Tell me where is the fairness in all of this?  How can your credit score go down after you paid $28,000 dollars off your entire dept and be dept free now for over three months?  This is not fair this whole Fair Issac Is a joke and is ruining the so called "American Dream".  I need to know what to do?

[IOBA]

*hugs*

My suggestion would be to write goodwill letters to the collections and ask them to remove the collections off of your credit report.

In addition to that, write goodwill letters to the creditors you were late with too, asking them to do the same thing.

It may or may not work, but it is worth a try  to bring up your credit score.

And each month that passes puts the negatives one more month behind you.  It really sucks when you work so hard to make things right and don't feel that you get credit for it.   Hang in there.   Lots of people here share your pain.   Lots of them are writing goodwill letters and letting time heal the wounds.

[llecs]

I'll add that FICO scores based on what and who is reported. Sometimes doing the right thing will result in lates being added or accounts updating in a way to where it looks worse than before. Lenders always want to know your past history, and even if you corrected by paying off debt, they will still hold it against you because it had happened. As a result, in the eyes of lenders (generally speaking) and FICO, it doesn't matter if you owe $0 or $10,000, the damage is the same.

But ditto to GW letters. They do work. Get ALL CAs deleted and get your newest OC baddies removed and you'll see some large score gains.

I know things are improving and this won't happen again, in the future, send each a PFD letter. If they agree in writing, then pay the debt and they'll delete.

BTW, has to be asked, where did you pull your score from?

[ainglese]

Thank you for the replies but I get my scores from myfico.com or the mortgage companies. 

[llecs]

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@ainglese wrote:

Thank you for the replies but I get my scores from myfico.com or the mortgage companies. 

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Great! You are on the right track. I wanted to be sure because 99% of the scores sold out there like through freescreditscore, quizzle, truecredit, creditkarma, and many others are not FICO scores and they go up and down for no reason at all.

Definitely send GW letters and I bet you can hit well into the 600s within a couple of months.

[ainglese]

Will do!  I am in the process now of sending out these godwill letters.  Thank you.  Do you have any recomandations on what to say in these godwill letters

[RobertEG]

I would only add that many regard FICO as a scoring of your credit-worthiness.  It is only a part of a lenders' view of your credit worthiness.

FICO is a risk of payment analysis.  It evaluates the risk of future delinquencies, not financial ability  to pay on time. 

The best indication of risk of payment is your prior payment history, which is the highest weighted FICO scoring factor.  The level of your debt as a percent of your approved credit limit is also an indicator of potential repayment risk, so is the next highest scoring category.  Repayment of debt after delinquencies is not actually an evaluation of your liklihood of defaulting in the first place, and thus is not significant in FICO scoring.  But it is most definately a significant factor in evaluation of your credit worthiness.  FICO is fair for what it is.  It might be viewed as unfair if that is all a creditor uses in their decision making.

[boomhower]

When you paid off your debt did that include paying off collection agencies?  If those were recent that could be a large part of the problem.  My understanding is that when you pay them it makes your collection look more recent and hence lowers your score.  A paid collection does nothing to improve your score but will look better on a manual review for a mortgage.  If you are paying a collection agency it's best to try and negotiate a pay for delete to get them off your report completely.

[MarineVietVet]

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@boomhower wrote:

When you paid off your debt did that include paying off collection agencies?  If those were recent that could be a large part of the problem.  My understanding is that when you pay them it makes your collection look more recent and hence lowers your score.  A paid collection does nothing to improve your score but will look better on a manual review for a mortgage.  If you are paying a collection agency it's best to try and negotiate a pay for delete to get them off your report completely.

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This doesn't apply to collections. Since HTSU explains things MUCH better than I can I will C&P this from one of her posts:

Collections are scored off the date of assignment, not the DOLA. A change in DOLA shouldn't affect the score. .

This is such a common belief that we're trying to find examples with before-and-after reports where it happened, in order to see what's going on. If either the CA or the CRA is handling the data incorrectly, it needs to be corrected.

Here's a thread discussing this: Settle or Pay in Full?

Again, I'm not saying that it doesn't happen, but it's not supposed to, if the CA is reporting correctly and if the CRA is putting the info into the correct data fields.

From a BK years ago to:
EX - 9/09 pulled by lender 802, EQ - 10/10-813, TU - 10/10-774

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".