Helping a Client - Veteran Client Needs 3 Points for Loan Approval!

[Anonymous]

@credit8502020 Quick question, are the chargeoffs updating regularly? You may have mentioned that earlier, but I'm just double checking. If not, how long since the most recent update of a chargeoff? And what's the most recent opening of a collection? How many closed revolvers whether charged off or whatever?

[credit8502020]

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@SouthJamaica wrote:

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@credit8502020 wrote:

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@Anonymous wrote:

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@credit8502020 wrote:

Hi All! I have a Veteran client that needs 3 points (640 score) to get approved for a program to help buy his first home! 

Here is a quick summary of his accounts: 

1. Capital One - $500 - Opened 2/2020
2. Credit One Card - $300 - Opened 6/2020
3. Auto Loan - April 2018

Negative Accounts

1. Charge Off - Wells Fargo Auto Charge Off - (Trying to Negotiate Pay for Delete)
2. Paid Collection
3. Paid Collection with 1 Late (Trying to get removed)

Questions

1. Right now, he has balances around 2% for both cards. Should he have 1-2% on Capital One and $0 on Credit One card to do AZEO?

2. Since he is already in a dirty score card, while working to get that CO and the paid collections removed, how long and how heavy of a hit do you think he'll have for opening a new secured credit card? I know he'll gain from having 3 cards but not sure if it will be more beneficial when compared to what he'll lose from adding a new account. I'm not as concerned about the inquiry because he may decide to get a card that will not require a credit check.
Of course a much higher score is the goal, but because of circumstances, essentially he is trying to get a 640 to qualify for a program to buy his home.
By the way, I asked the lender to do the "What If Simulator" and of course the suggestion was to settle with the CO and get it deleted. However, that may take some time as they are not wanting to settle. I'm looking for other shorter term alternatives in the meantime. Also, the lender is not worried about the charge off. I've seen it discussed frequently on the forums, but charge offs are definitely not deal breakers for getting home loans for many. There are other factors that easily allow them to still qualify even with charge offs on their accounts.

Here are the details from the mortgage report: 

EQUIFAX/FICO CLASSIC V5
SCORE: 646
00039 - SERIOUS DELINQUENCY
00018 - NUMBER OF ACCOUNTS WITH DELINQUENCY
00014 - LENGTH OF TIME ACCOUNTS HAVE BEEN ESTABLISHED
00013 - TIME SINCE DELINQUENCY IS TOO RECENT OR UNKNOWN

TRANSUNION/FICO CLASSIC (04)
SCORE: 637
038 - SERIOUS DELINQUENCY, AND PUBLIC RECORD OR COLLECTION FILED
018 - NUMBER OF ACCOUNTS WITH DELINQUENCY
021 - AMOUNT PAST DUE ON ACCOUNTS
013 - TIME SINCE DELINQUENCY IS TOO RECENT OR UNKNOWN
FA - INQUIRIES IMPACTED THE CREDIT SCORE

EXPERIAN/FAIR, ISAAC (VER. 2)
SCORE: 636
38 - SERIOUS DELINQUENCY AND PUBLIC RECORD OR COLLECTION FILED
18 - NUMBER OF ACCOUNTS WITH DELINQUENCY
14 - LENGTH OF TIME ACCOUNTS HAVE BEEN ESTABLISHED
21 - AMOUNT PAST DUE ON ACCOUNTS
08 - TOO MANY INQUIRIES LAST 12 MONTHS

Inquiries

2 - EXP

1 - TU

1 - TU

Thank you for your feedback! 

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@credit8502020 I don't know how much AZEO is going to help him being in a dirty card, but let's hope. (You always want them to only have a balance on one card.) Yeah getting revolvers would probably provide some points and since he's in a dirty card, there's no new account penalty. The aging won't matter unless he's right on the threshold and it wouldn't be much of a loss anyway. 

Question is, will lender will approve him with another new account? other than that, you need 1. time away from the derogs without updates, or 2. paid+time or delete on COs, 3. and/or PDF all CAs. 

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@Anonymous Yes. I'm hoping it will help. We'll see. Ok. Regarding the new revolver. Yes, one of my lenders has no problem with the new account. They only want the score. I'm waiting to hear back from another lender regarding the new account, but I don't think they will have an issue either. 

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Whether they "have a problem with it" or not, it will no doubt lower your client's mortgage scores across the board.  The mortgage scores are hypersensitive to new inquiries and new accounts.

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@SouthJamaica The lender already ran the simulator based on the new account being added so they had a good idea of what it would do. In their experience and mine, it has been pretty spot on or close. 

[credit8502020]

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@Anonymous wrote:

@credit8502020 If they don’t care about the new accounts, one more revolver at zero balance will assist, imho.

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@Anonymous  Thanks. That's what I was thinking as well. 

[credit8502020]

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@Anonymous wrote:

SJ, He’s already in a dirty scorecard, so the only penalty is going to be average ages and the inquiry, but maybe they can get a soft pull card? Edited. 

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@Anonymous Yes. He was considering a card that would not require a hard pull. I'm not holding you to this, but how much of a penalty do you think should be expected for the average age decreasing? 

[credit8502020]

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@Anonymous wrote:

@credit8502020 Quick question, are the chargeoffs updating regularly? You may have mentioned that earlier, but I'm just double checking. If not, how long since the most recent update of a chargeoff? And what's the most recent opening of a collection? How many closed revolvers whether charged off or whatever?

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@Anonymous Yes, on his September 2020 credit report it shows that the Wells Fargo Auto charge off just reported in August 2020. The 2 paid collections reported in June and August 2020. One car installment, that's in good standing was opened in 2018. No other accounts are showing on the report.

[Anonymous]

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@credit8502020 wrote:

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@Anonymous wrote:

SJ, He’s already in a dirty scorecard, so the only penalty is going to be average ages and the inquiry, but maybe they can get a soft pull card? Edited. 

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@Anonymous Yes. He was considering a card that would not require a hard pull. I'm not holding you to this, but how much of a penalty do you think should be expected for the average age decreasing? 

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@credit8502020 To even speculate you would need the date of account opening for every account on his CR. You would have to figure then what his the average age is. Then calculate what the new avg age would be with the new account. Also give me before and after average age of revolving accounts, then I will hazard a guess. 

if his average age is already low or not near a threshold, he may not cross one and there may be no loss for it. But, if he crosses one threshold on a PR card? maybe ~3 points? He may get 5 for the card?

Put adding 2 new accounts into the simulator and how does that come out with 2 new revolvers? What did it say adding the one?

[Anonymous]

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@credit8502020 wrote:

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@Anonymous wrote:

@credit8502020 Quick question, are the chargeoffs updating regularly? You may have mentioned that earlier, but I'm just double checking. If not, how long since the most recent update of a chargeoff? And what's the most recent opening of a collection? How many closed revolvers whether charged off or whatever?

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@Anonymous Yes, on his September 2020 credit report it shows that the Wells Fargo Auto charge off just reported in August 2020. The 2 paid collections reported in June and August 2020. One car installment, that's in good standing was opened in 2018. No other accounts are showing on the report.

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@credit8502020 that auto chargeoff is killing him by updating monthly. If you can get that to stop he would be doing much better, even more so with time. If you could get it deleted, it would do wonders.

[credit8502020]

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@Anonymous wrote:

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@credit8502020 wrote:

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@Anonymous wrote:

SJ, He’s already in a dirty scorecard, so the only penalty is going to be average ages and the inquiry, but maybe they can get a soft pull card? Edited. 

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@Anonymous Yes. He was considering a card that would not require a hard pull. I'm not holding you to this, but how much of a penalty do you think should be expected for the average age decreasing? 

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@credit8502020 To even speculate you would need the date of account opening for every account on his CR. You would have to figure then what his the average age is. Then calculate what the new avg age would be with the new account. Also give me before and after average age of revolving accounts, then I will hazard a guess. 

if his average age is already low or not near a threshold, he may not cross one and there may be no loss for it. But, if he crosses one threshold on a PR card? maybe ~3 points? He may get 5 for the card?

Put adding 2 new accounts into the simulator and how does that come out with 2 new revolvers? What did it say adding the one?

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So do I calculate the average age of all account and then avg age of just revolving? His average age is definitely already low, but what are the thresholds? Is 6 months a threshold? 
Open Dates are as follows: 
Revolvers

Capital One - $500 - Opened 2/2020
Credit One Card - $300 - Opened 6/2020

Installment

Capital One Auto - April 2018

Derogs

WF Auto - 7/13 & 2/18 - I'm not sure why it has 2 dates under the Date Opened Section

Paid Collection (Collection Agency - For a College) - 8/15

Paid Collection 2 (Collection Agency - For VA) - 12/14 & 3/15

I'm waiting to hear back from the lender. But when it was put into the simulator it said it would take some time to add points, but they didn't mention that it would hurt them. Since the client is waiting to get those negatives removed anyway, they wanted to build their credit in the meantime. 

Someone also gave them advice to add a Self Account and they did before I spoke with them again. I didn't think it was necessary considering they already have an installment loan, but I could be wrong....

[credit8502020]

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@Anonymous wrote:

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@credit8502020 wrote:

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@Anonymous wrote:

@credit8502020 Quick question, are the chargeoffs updating regularly? You may have mentioned that earlier, but I'm just double checking. If not, how long since the most recent update of a chargeoff? And what's the most recent opening of a collection? How many closed revolvers whether charged off or whatever?

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@Anonymous Yes, on his September 2020 credit report it shows that the Wells Fargo Auto charge off just reported in August 2020. The 2 paid collections reported in June and August 2020. One car installment, that's in good standing was opened in 2018. No other accounts are showing on the report.

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@credit8502020 that auto chargeoff is killing him by updating monthly. If you can get that to stop he would be doing much better, even more so with time. If you could get it deleted, it would do wonders.

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@Anonymous Definitely! 

[Anonymous]

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@credit8502020 wrote:

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@Anonymous wrote:

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@credit8502020 wrote:

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@Anonymous wrote:

SJ, He’s already in a dirty scorecard, so the only penalty is going to be average ages and the inquiry, but maybe they can get a soft pull card? Edited. 

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@Anonymous Yes. He was considering a card that would not require a hard pull. I'm not holding you to this, but how much of a penalty do you think should be expected for the average age decreasing? 

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@credit8502020 To even speculate you would need the date of account opening for every account on his CR. You would have to figure then what his the average age is. Then calculate what the new avg age would be with the new account. Also give me before and after average age of revolving accounts, then I will hazard a guess. 

if his average age is already low or not near a threshold, he may not cross one and there may be no loss for it. But, if he crosses one threshold on a PR card? maybe ~3 points? He may get 5 for the card?

Put adding 2 new accounts into the simulator and how does that come out with 2 new revolvers? What did it say adding the one?

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So do I calculate the average age of all account and then avg age of just revolving? His average age is definitely already low, but what are the thresholds? Is 6 months a threshold? 
Open Dates are as follows: 
Revolvers

Capital One - $500 - Opened 2/2020
Credit One Card - $300 - Opened 6/2020

Installment

Capital One Auto - April 2018

Derogs

WF Auto - 7/13 & 2/18 - I'm not sure why it has 2 dates under the Date Opened Section

Paid Collection (Collection Agency - For a College) - 8/15

Paid Collection 2 (Collection Agency - For VA) - 12/14 & 3/15

I'm waiting to hear back from the lender. But when it was put into the simulator it said it would take some time to add points, but they didn't mention that it would hurt them. Since the client is waiting to get those negatives removed anyway, they wanted to build their credit in the meantime. 

Someone also gave them advice to add a Self Account and they did before I spoke with them again. I didn't think it was necessary considering they already have an installment loan, but I could be wrong....

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@credit8502020 All the self lender did was screw them by giving them another account with a balance which the mortgage scores hate. And lowered average age that's the worst advice he could've gotten, and it increased DTI. That just screwed the pooch. 

is the Wells Fargo with two dates also a collection? And why does the last collection have two dates? The dates I need for the collections are the dates they were opened, not when they were paid, same thing for all the other accounts only the date of opening.

yes you calculate average age with all opening dates and you calculate average revolving by calculating the opening dates of all revolvers. Then you do a second set of calculations adding in the first of this month or next month for a proposed new account to see the effect.