@dakota911 wrote:We have two car loans Wells Fargo and Chrysler with less than a year always paid on time. Less than $5000 owed on both. Oldest account is 15 years. One mistake was closing most accounts while paying off. Total of $5000 still owed on revolving with 12 accounts and half still open. No bankrupty or public accounts. 3 paid charge offs that I am working on getting deleted. So far 1 is off and two showing paid after charge off. Income is $115k gross and both been on the job more than two years and in same industry for career. Baddies are all in the last couple of years due medical issues and taking care of elderly family members. Just got out of hand with credit. house is valued at 225K and will need to refinance about 165K. Not concerned about ltv or interest rate just need to qualify! Current score is just over 600 for regular credit but middle score on mortgage is is at 575.
Okay, now you just need a plan of action!
These are my suggestions and feel free to ask questions if you need clarification.
1. Don't worry about paying the auto loans off early. When the auto loans are paid off your scores will probably drop. FICO likes for you to have open installment loans on your reports and gives you points for that. Installment loans are treated differently than revolving credit. (Credit Cards)
2. Get your credit cards paid down as best as you can. This is really the only area of scoring where you have 100% control. You would like to end up with 1 card reporting a balance of less than 10% of its credit line and all the rest $0. Do not ever close any credit cards unless they have an annual fee. Use the snowball method which is: Pay the minimums on all the cards except the 1 with the smallest balance. Put any extra money on the card with the smallest balance until it is paid off. Rinse and repeat. You NEED to have 1 card report a small balance every month or your scores will actually drop. I personally lose 18 points when all my cards report $0. You will pick up points for every card that you get to report $0 until the last card.
You mentioned 12 cards with 6 still open? Did you close 6 credit cards? Are there still balances on the closed accounts?
3. Work on getting the baddies removed. This is the quickest way to high scores. As long as you have just 1 baddie on a report the highest scores you can expect is about 700 to 740 no matter how good your report is otherwise. Visit the "Rebuilding Your Credit" forum on this website and learn how to do PFDs (Pay for Deletes) and GW (Good Will) letters. The first one is difficult to do but after that it is easy! IT REALLY WORKS! YOU MUST DO PFDs AND GW LETTERS! The last baddie on your report is worth the most points. It could be worth as much as 100 points! Even if you don't get all the baddies removed, you will look much better on a manual review with only a couple of baddies. Your attempts might not work the first time you try. Just keep sending the GWs and negotiating PFDs until they do what you want!
Work on the newest baddies first if possible. Mortgage lenders want to see AT LEAST 2 years of PERFECT credit history leading up to the mortgage application. If at the time of mortgage application you have ANY baddies that are younger than 2 years old you will have a hard time.
I have 1 baddie on my EQ and TU reports. It is a State tax lien from 2007 and is considered a MAJOR baddie. The tax lien dropped off my EX report about a month ago and left me with a spotlessly clean EX report. My EX mortgage score shot up from 682 to 786 which is a difference of 104 points!
Here are my scores from when I tested the 1 card reporting a small balance versus all cards reporting zero. You can see what my EQ and TU scores look like with the 1 tax lien versus my EX scores from a clean report:
