My job has been transferred and I will need to look for a new house sooner than I had thought. While I have a good deal of money saved, I haven't been as diligent as I should have concerning my credit and accounts in collections from about 5 years ago because I didn't think time was of the essence. I'd like to take some steps to help my credit score so that I will be in an okay position to get a decent mortgage rate. Any advice or help anyone can offer would be much appreciated. I checked my scores and I am at 604EQ/634EX/621TU. I have some good positive accounts on my CR, including my current mortage and auto loan that are both up to date with no lates. However, I also have some negatives--a total of $374 with a local CA for med bills (4 seperate listing), and $127 from a storage unit bill that I never paid when I moved 5 years ago. I guess I want to figure out what is going to have the maximum impact on my scores. I know that is easier said than done, but since I have the money, here are my options. 1.) I sent validation letters to the CAs. Depending on the response, I plan to request deletion after payment. Not sure where I will get with that, but since the CA is a smaller local company, I may have better luck. Also, is there any way that I could ask the CA to consolidate these into one account/entry? Not sure if that will even help. 2.) I have a personal loan from a credit union that I used for grad school tuition (initally 2500, down to 1650) that I could pay off quickly if it would benefit me. I just opened this in January--is it more important to keep this open for longevity or pay down quickly? 3.) My student loans (totalling $4500) are currently deferred. Should I continue to pay these down or just wait and use that money for something else? 4.) I have two credit card with CL of $1000 total. I usually try to pay these in full each month; however, I sometimes have as much as $800 on them at one time. Is this hurting or helping? 5.) There is an entry from a utility company from a previous apartment in 02. I moved for work and foolishly left the electric bill in my name when I moved out and my old roomates stayed. I knew about the bill but did not pay on time because I was short sighted. Is there anything I can do about this? The account is paid and closed, but still there... I know I have a bunch of questions, but I guess I am just looking for help with prioritizing. Anything anyone can help with would be appreciated. Thanks!
Resolve the most recent and the most negative first. Save the old ones for last. High balance to limit is bad, so paying those down/off will help as well. Which is worse depends on how recent the negative entry is.
OPT OUT ASAP. One option is to call (888) 5 OPT OUT. Get all your old addresses off all three reports, incorrect spellings, phone numbers, anything which can be used for matching accounts. Any accounts which appear to be inaccurate send simple dispute letters to the CRA: these accounts are inaccurate, please investigate or delete them.
If you have your TU report handy (direct from TU); TU helps you to prioritize, most times the TU entries are listed in impact order. Most negative (scorewize) first in the negatives. Most positive (scorewise) first in the positives. So, the accounts that appear at the front of the negative information are the ones which are impacting your score the most.
I suspect that you'd qualify for FHA financing if you can come up with 2 or 3 months of mortgage payment in reserve. This is just at an educated guess. The collections would likely be ignored, and the student loan would be ignored if it's deferred for at least another 12 months (conventional would make you count a payment toward it.) My opinion is don't send any money to those collections until a lender tells you to. You should be able to consult with an FHA-approved lender, in the area you're moving to, at no charge. I'd love to do the "ambulance chaser" thing, but for FHA, you have to be within 250 miles of me. (Unless of course, you happen to be in the Chicago area?)
Most "my community" programs and FHA would take you now at 100% financing, 30yr. fixed. Your rate would be about a 10% to 10.5%. With that said in to answer your questions: 1) Requesting validation at this point is not a bad move but, it really has no legal effect. However, they may elect to simply remove the tradeline rather than deal with you. Pay-for-deletes are become more and more unlikely but, it never hurts to ask. If they refuse, I probably wouldn't opt to pay insofar as it would do little for your scores, if anything, inasmuch as the accounts are older. Conversely, it could actually bring you down some if the re-up the date of status. Finally, the debt collector cannot legally combine all those accounts into one account tradeline in that it would be inaccurate. The best move here is to simply dispute it through the credit reporting agencies by challenging the dates of statuses, balance history, etc., 2) Keep it open but, I wouldn't worry about paying it off right now. Installment accounts are not factored by FICO in the same manner as those which are revolving and thus, balance-to-limit is immaterial in this context, 3) If they're deferred, use that money to season some funds for mortgage reserves, 4) At this point, I would never take the balances on these two cards above $300.00; &, 5) Dispute this account tradeline through the credit reporting agencies. Pinpoint the date of status, date of initial delinquency, date opened, and balance history. In that it's paid, the furnisher has less incentive to verify your dispute. Overall, sounds like to me your scores are down simply because you do not have enough available credit and thus, your utilization is out of proportion. Consider getting a credit line increase on your two cards or asking a friend or relative to add you as an authorized user a few of their's if they haven't been late in the last two years and have good utilization themselves.
Hi....curious, where do you get these rates from? FHA loans are usually coming out in the mid 6% range (it's not really credit score dependent, you get the approval or you don't) and the Community would probably be right around 7% (although PMI could vary depending upon the approval level.)
I was assuming that he would have to go stated insofar as he's transferring but, perhaps not since it is in the same field/same employer. I should have omitted FHA but, my lenders couldn't do a mid 6% with their community programs.
As long as the Verification of Employment shows that they are with the same employer, it's ok and shouldn't matter that he's moved to a different branch of the company. Even if he changes jobs, it's usually OK if it's in the same line of work and for similar or increased pay. If he's changed from being an employee to being self-employed, this usually won't qualify (too much risk, being newly self-employed.) The Community program version that I use, works off of the Agency conforming rate/pricing matrix. There is an extra pricing hit which causes either a higher rate, or about a point in pricing...but, other parts of the guidelines are more lenient.
