New here need to know what to expect

[Anonymous]

Hi there, I'm new here and on the path of cleaning up mine and my husbands credit.  We are trying to get a USDA loan this summer to purchase our first home.  Our landlord is selling our house and we will need to rent another one if we cannot get a house first, I'd also like to move during the summer before the kids go back to school in September.  Is there any hope?

Husbands credit situation

1 collection - charge off credit card 193.00

3 current credit cards, no late payments but less than 1 year old

CAP 1 $200 LIMIT, BALANCE 150.00

HSBC $300 LIMIT BALANCE 246.00

BOA $300 LIMIT BALANCE 108.00

His credit scores are between 555-578.  Because his credit is so new would paying off the collection and getting the balances on all his credit cards below 10% give him a major boost in his credit scores or are the credit cards too new?

Mine is more complicated

Several collections/charge offs, total less than $5k and all will be paid in the month of March.

I have 2 current credit cards, just paid off the balanaces this week so no improvement on my score just yet. these cards are less than 1 year old.

Cap1 limit 200.00, 0 balance

HSBC limit 300.00, 0 balance

My scores are 568, 554, 633.

If I pay off those collections/charge offs and keep the balances below 10% on my cards can I expect an increase on my credit scores?

I also wanted to ask - should I pay down his  credit cards first, then pay my collections/charge offs?

I would like us both to be at or above 700 before we apply so we can get an interest rate below 4% (hopefully they will continue to be low this summer)

[Anonymous]

I also wanted to ask - should I pay down his  credit cards first, then pay my collections/charge offs?

[Anonymous]

I also wanted to ask - should I pay down his  credit cards first, then pay my collections/charge offs?

[Anonymous]

Sorry one more thing, the credit simulator here said the best course of action would be to pay down all my cards (which I have just last week) and it  estimated my score to be in the mid 700's...I find that hard to believe with all my charge offs/collections. 

[llecs]

Revolving utilization is the fastest way to improve your FICO scores. If you can, I would take care of the baddies and CC balances at the same time, but if I had to choose, revolving util is the fastest route.

Keep your two CCs at $0. About a month before your mortgage app, charge one for a cup of coffee and let it report a balance. Oddly enough, all $0 balances can hurt, but leaving them there now will have no lasting FICO impact. Same for your DH. Pay all down to $0 and when ready, let a small balance of under 9% of the CL report.

Don't add any more credit before the mortgage.

Hitting 700 would be tough, since the CCs are less than a year old. Give it 2-3 years and there's a chance. If going USDA, the score doesn't matter too much anyway (other than being qualified).

Refer to your post in Rebuilding Your Credit for info on the baddies and what to do with them. Just don't pay them off without taking steps first.

[llecs]

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@Anonymous wrote:

Sorry one more thing, the credit simulator here said the best course of action would be to pay down all my cards (which I have just last week) and it  estimated my score to be in the mid 700's...I find that hard to believe with all my charge offs/collections. 

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Check the source of your scores. If all 3 scores did not come from a lender, and all 3 scores are from the same source, then none of them are FICO scores. Your FICOs can be higher or lower. If the simulator came from that same source, then ignore that too. Mid-700s seems too high for less than a year of credit history.

[Anonymous]

My credit history goes back 10 years, with 2 paid off car loans within that time period, but my credit cards with the zero balances are new.

I wish I could pay it all off at the same time, I'm so impatient  I want to get everything cleared up and taken care of so i dont have to worry about anything when it comes time to apply for a mortgage.

it is good to know I dont have to hit 700 for a USDA.  Even 640 would be great at this point.

I got my credit scores by doing the free trial on myfico, and then one on transunion.com, and one on Equifax

[llecs]

The scores from myFICO are FICO scores. All scores on TransUnion.com are FAKOs. And all scores from Equifax.com are FAKOs except for their version of ScoreWatch and products found here.

[Anonymous]

so if I sign up for the score watcher on myfico.com I can expect an accurate fico score?

[llecs]

The EQ FICO offered via ScoreWatch is a FICO score. It's the same one almost all mortgage lenders use. ETA....and if you already pulled your EQ FICO through here, it'll be the same score (assuming it didn't change since your last pull).