Need credit repair, possibly moving to Florida soon..

[DannyB215]

Right now I have a 585 credit score because of a very irresponsible youth and currently I have only one account in collections I am currently paying off, and all of my current lines of credit (4) are caught up, paid on time every month for the past 6 months, and I am looking to see if I can get my credit up another 30-40 points in the next few months (went up 35 pts since July because of this). I'm looking to possibly buy a house in Florida since the market is so great, but I'm afraid I will get laughed at by the banks. I actually have 9 accounts that were in collections but that are currently showing up as "negative" on my credit report, which I'm sure that they are bringing that score down significantly. Anyone know of any legitimate companies, or any other type of help that I could seek? Please help!!

[jmanbooyaa]

1-how many open trade lines do yo have(credit cards, car payments)?

2-do you have any store only credit cards(kohls, sears)?

3-what kind of balance do you have on your credit cards($1000 credit line $650 in charges)?

4-How old are the collections?

5-Do you rent?

6-will you have a job lined up?

[jmanbooyaa]

also is that 585 your mid score or from just one of the credit bureau's?
Do you also have savings acct, or any other liquid assets? not really needed for credit score but will help secure a mtg

DON'T have your credit run a lot it will bring your scores down

[DannyB215]

1. I have 4 open lines of credit. Three credit cards (2 personal with only $300 limits which I won't spend more than $100 on, 1 work credit card only used for expenses).

2. No store credit cards

3. Answered in question 1.

4. The only collection I have is a few years old, I think since 07-08. I am planning on just settling it and getting rid of it.

5. I have been renting for the past two years, yes.

6. I have a job transfer and I will be making twice the median salary in Tampa, which is 34, something....

I don't really use credit right now because I know that I won't get approved for much, and  I know that I would want to buy a house in the near future. I heard FHA will approve me, plus I have about $15,000 right now to put down on a house which I have saved throughout my life. So hopefully that will help, saw a 2,000 sq. foot house 4 bed 2 bath for 90k, so I cant wait to move! I'm sure I would get approved for a $75k loan.

Originally Posted by jmanbooyaa

1-how many open trade lines do yo have(credit cards, car payments)?

2-do you have any store only credit cards(kohls, sears)?

3-what kind of balance do you have on your credit cards($1000 credit line $650 in charges)?

4-How old are the collections?

5-Do you rent?

6-will you have a job lined up?

[DannyB215]

585 is my current Fico score.

I do have a savings account specifically for this purpose of buying, so I will be draining everything, or almost everything to put a down payment.

I hear you on that one I've been trying to get my credit report untouched for the past year or so, it has helped! I used to have a 530 credit score about a year ago!

Originally Posted by jmanbooyaa

also is that 585 your mid score or from just one of the credit bureau's?

Do you also have savings acct, or any other liquid assets? not really needed for credit score but will help secure a mtg

DON'T have your credit run a lot it will bring your scores down

[jmanbooyaa]

okay do you remember what the other 2 were? It is important because believe it or not the 3 credit bureaus do pull different info from time to time that is why I asked if this was your mid score because that is the score the banks will go off of. And if you don't know the other 2 you could be spinning your wheels because your mid score could actually be lower. 585 can be popped to around 615 relatively soon.

[jmanbooyaa]

You will also need reserves besides the down payment money(make sure that money can be sourced and seasoned) basically where did it come from and how long has it been in your account but that is not your real issue so that you can deal with your mtg banker

[jmanbooyaa]

585 still might be too low for FHA. Make sure you deal with a direct FHA lender, 75k loan I wouldn't put down all 15k. Can't remember the FHA guideline for how much minimum to put down I want to say 6% but could be wrong. Reserves are key as is Fico. You will have to pay an up front mip as well as monthly mip. Don't settle any outstanding debts until you are told to by your mtg banker you may do more harm than good. Anyway a quick way to pop your credit score is to carry a low balance if not none on a credit card(s) if you have only a $300 limit pay down 1 of your cards $25 or less and the other to like $50 if you can. You know to stay current and not to open any new lines of credit. In a month your score should jump into the 600 range

[DannyB215]

Totally, I've heard from some professionals yes and no about the score, but hey, I actually am planning on signing up with a credit repair company that will remove negative items from my credit report in 60 days guaranteed, so I will definitely do that and it should shoot up into the mid 600's in a month or two.

Originally Posted by jmanbooyaa

585 still might be too low for FHA. Make sure you deal with a direct FHA lender, 75k loan I wouldn't put down all 15k. Can't remember the FHA guideline for how much minimum to put down I want to say 6% but could be wrong. Reserves are key as is Fico. You will have to pay an up front mip as well as monthly mip. Don't settle any outstanding debts until you are told to by your mtg banker you may do more harm than good. Anyway a quick way to pop your credit score is to carry a low balance if not none on a credit card(s) if you have only a $300 limit pay down 1 of your cards $25 or less and the other to like $50 if you can. You know to stay current and not to open any new lines of credit. In a month your score should jump into the 600 range

[jmanbooyaa]

I wouldn't do the credit repair if I were you. They are the only ones who prosper from what they are selling. Do yourself a favor and contact a mortgage professional and let them guide you through the process. And yes they will need to run your credit, let them and take it from there. A tri-merge credit pull will not do anything to your credit score. It is understood that when looking for a mortgage you will have your credit pulled. Good luck to you.

[newtogolf]

Originally Posted by jmanbooyaa

I wouldn't do the credit repair if I were you. They are the only ones who prosper from what they are selling. Do yourself a favor and contact a mortgage professional and let them guide you through the process. And yes they will need to run your credit, let them and take it from there. A tri-merge credit pull will not do anything to your credit score. It is understood that when looking for a mortgage you will have your credit pulled. Good luck to you.

+1 on this advice as most of these "credit repair" businesses are scams including the non profit ones.  Unless  a trusted relative or close friend dealt with one that actually helped them I'd avoid this direction.   Your credit score is likely a result of your payment history and collections so until those no longer appear on your report you will have a difficult time getting your score increased.  I'd contact each company that you were in collections with, explain the circumstances and see if there is anything they are willing to do to assist you.  If you are current with all your bills I'd avoid any large cash payouts as the cash is more valuable than appeasing a creditor that has already damaged your credit.  Paying off one creditor while you have these other marks against you from other creditors isn't likely to raise your score enough (if at all)  to offset the reduction in your savings.  Calculate your debt to income ratio.  Also don't close any open credit accounts as banks not only look at total credit, but how you use credit.  It's better to have $5,000 in total credit with $2500 available than it is to have $3000 of total credit and only $500 available.  You should use your credit cards regularly for smaller charges and pay them off at the end of the month or leave minimal balances, this demonstrates responsible use of credit.

Your score is considered "average" and should qualify you for a mortgage, but you may have to pay a higher interest rate or PMI.  Larger banks are very risk averse now so I'd speak with your current bank and find out if they would approve your mortgage.  If not, they might suggest an alternative that they work with.

If you avoid late payments, and continue to improve your credit, you should be in a position to re-finance in a year or two.  There is some risk in this approach since no one can predict where interest rates will be or what the market value of your home will be in that time.  If you can afford the payments at the higher interest rate, and want the house, this is a great time to make a long term investment in real estate as most believe the market has bottomed out.

Good Luck

[DannyB215]

Yes, these companies are legit, and do exactly what you told me to do myself, and they guarantee results or full money bank. I searched only the ones that have a perfect BBB  rating, so I am still willing to give them a shot. TBH, I've never dealt with credit card companies before or collection agencies, so I wouldn't know how to go about it. Thankfully I have a ton of friends at church who are very very helpful and know the right thing to do, so I also plan to ask them for help. I do believe with my credit score on the way up I will get a loan, but YES you're all right, I will mostly have to pay a very high interest rate, but still can re-finance in about a year as long as my credit continues to go up. I didn't have these two $300 limit credit cards two years ago, so I decided to get them and make sure I'm never late on them and keep a low balance, which btw is VERY tough on a card that has such a low limit. Thanks everyone for your comments and advice!

Originally Posted by newtogolf

+1 on this advice as most of these "credit repair" businesses are scams including the non profit ones.  Unless  a trusted relative or close friend dealt with one that actually helped them I'd avoid this direction.   Your credit score is likely a result of your payment history and collections so until those no longer appear on your report you will have a difficult time getting your score increased.  I'd contact each company that you were in collections with, explain the circumstances and see if there is anything they are willing to do to assist you.  If you are current with all your bills I'd avoid any large cash payouts as the cash is more valuable than appeasing a creditor that has already damaged your credit.  Paying off one creditor while you have these other marks against you from other creditors isn't likely to raise your score enough (if at all)  to offset the reduction in your savings.  Calculate your debt to income ratio.  Also don't close any open credit accounts as banks not only look at total credit, but how you use credit.  It's better to have $5,000 in total credit with $2500 available than it is to have $3000 of total credit and only $500 available.  You should use your credit cards regularly for smaller charges and pay them off at the end of the month or leave minimal balances, this demonstrates responsible use of credit.

Your score is considered "average" and should qualify you for a mortgage, but you may have to pay a higher interest rate or PMI.  Larger banks are very risk averse now so I'd speak with your current bank and find out if they would approve your mortgage.  If not, they might suggest an alternative that they work with.

If you avoid late payments, and continue to improve your credit, you should be in a position to re-finance in a year or two.  There is some risk in this approach since no one can predict where interest rates will be or what the market value of your home will be in that time.  If you can afford the payments at the higher interest rate, and want the house, this is a great time to make a long term investment in real estate as most believe the market has bottomed out.

Good Luck

[weavej2]

585 is pretty bad.....our bank wont go under 620 and there are tons of restrictions.  2 things cure all credit problems...time and money.  Call a bank in florida, ask them if they have a CRA officer....call that person and see if they recommend / work with a non profit credit counseling agency.  Some of your explainations arent really clear on what is outstanding/incollections or paid off.

[DannyB215]

WEll, let's just say I had a ton of credit cards, that went to collections, and I actually pretty much had to settle with most of them. I have negative things like late payments and I only have one account still in collections. Everything else and all my lines of credit have a low balance, paid on time every month, and I only have those negative things from the past that I'm waiting on them to fall off my credit report. Why not try to get a company to help me out then?!?

[Caine]

As long as your score does not drop below 580 you can get a FHA loan with zero down payment.  Any score less than 580 will be a problem.

[The Road Dog]

Hey guys,  heres a thought. The housing market in FL is bad, lots of homes available and more for rent. Maybe you should consider renting for a while, work on building your rating. You may find someone who will agree to a rent to own deal. That's how I started my ownership in 1991.

Also the non profit credit counciling is a myth. They all charge, but the key is your rating gets worse for a while before it gets better. So if you are looking to improve your rating fast they are  not the answer. Pay off the debts as fast as you can.

If you don't need credit right away, debt counciling works like this: You stop paying all of the unsecured debt,  they contact the lenders asking for settlement offers. Meanwhile you are paying into an account the councillors will use to answer any offers the lenders agree to make. It takes time to save enough to make the first offer and the councillor will take their cut in the meantime as will the savings institution your money is being saved in.  During this time the lenders turn your account over to a collection agency and they come after you. Don't worry you will not be dragged into court over unsecured debt but you will get court papers advising of judgements. Each notice you get you send to the councillors and they make offers. After about a year you should have saved enough to satisfy at least one of the lenders and the process continues. You keep making the monthly payments, the lenders keep sending you letters and the collection agents keep sending you letters until you finally satisfy them all.  The amount of time it takes depends on how much you owe and how much you can save each month. You have to learn to live off what you have left each month because you damn well shouldn't get more credit.   Finally at the end of the process you will have releases from each of those Lenders and your credit score will have improved enough that you will start getting the offers of pre approved credit cards in the mail.  But you should, by then, have learned to live with out credit cards and rip up any offers you get.  And no I don't work for one of the councillors.

[DannyB215]

I think you're getting me wrong. I have only one credit card that I owe now, that's the one and only item I have in collections. It is a 10k credit card that I maxed out and I'm down to 4k and going, but went to collections in the process. Everything else is negative because I was not smart enough to make payments ontime every month and some were settled because I couldn't afford the full balance, but it stayed on my credit report. I think these companies do help those negative things come off your report, which is what is dragging down my score. There would be no companies to contact, because I'm already paying off the collection item. I would want that company to remove those negative items that are lingering on my report.

[newtogolf]

Originally Posted by DannyB215

I think you're getting me wrong. I have only one credit card that I owe now, that's the one and only item I have in collections.

If you're now paying that card on time now you're not in a good position to get them to settle.  Most credit companies would only settle an account if it was severely past due, and they believed you could completely default.  For you to put yourself in a position to negotiate a settlement your credit rating would suffer.  Have you tried to get prequalified for an FHA?  If not I'd suggest you try that before you spend any additional money to improve your credit.  If you are approved and the finance rate isn't too high you can save the money you're planning to spend on credit repair and put it towards your downpayment or repairs.