min FICO score for "A" paper loan

Unfortunately, not many. Having just one derogatory mark on your credit report can severely damage your score(s), whether paid or unpaid. Paying on it will only afford you getting the mortgage.

Since you're two years away from purchase, I suggest you start reading up on the board as to what your options are pertaining to this c/o. One option, if you're simply looking to pay it off and not go through any modified validation process/violation catching on the part of the OC, would be to go for a settlement/agreement (in writing) with the OC that they will delete the tradeline with payment.

Not sure what exact score is considered min. for A paper. I would *think* high 600's. fla-tan (a member of the board) will be able to give you a better figure.

If you go for payment for deletion, this will not be an issue.

 

If you are first time homebuyers as it sounds like - check with your county/city, and state departments of housing - they will have special programs that you could probably qualify for right now. With a 620 score I got the lowest interest rate I had seen advertised anywhere - and didn't have to pay any points- using one of these programs.

Also, you might think about whether you really want to have a 20% downpayment. That's a huge obstacle for people and I think much less common today than it was for our parents. The program I used above only required 3% down, and I was able to use a county closing cost assistance program to cover all but $1,000 of that.

 

Ideally you want him to have a 661 middle FICO score for a A paper loan. I have found in my own case that a gain of about 3 points a month is what I have been able to achieve while in the range from 620 to 680. So if he is starting with a 606 a 661 is possible. Does he have any bank cards in good standing? Three of these would be good. Two store cards would be good to have as well.

Another thought. If your score is good you could make him a authorized user on your credit cards. I don't like this practice but you could do it until you get the mortgage.

There are many options for first time home buyers. You can get a mortgage when you can't get a regular Visa credit card. The real question relates to how much you pay in interest and weather you can get out of PMI.

It's great that you are preparing two years ahead. You also want to research what kinds of documentation a bank might want you to have like tax returns.

Good luck.

 

FICO is derived just from Equifax.

 

Have you paid the charge off? Is that the only negative on his report? You may be able to use debt negotiation to have it removed if you want to.

Each credit bureau sells potential lenders a FICO score. The lender will pull all three and take the middle number. Don't get hung up on scoring. Just work on not making any late pays and work on making sure all three credit reports are as clean as possible.

 

FICO is not derived just from Equifax. All three bureaus generate their own flavor of FICO scores.

 

Basically, you can only use the scores accessible to the consumer as a rough guide. Even the Beacon score provided by Equifax because the consumer has no idea which version of FICO this is. Scores for the same person will be different depending on if their shopping for a mortgage or an auto loan or something else.

Lenders will pull all three reports and drop your highest and lowest scores to determine qualification.

 

On the scoring issue we are both correct. We just stated the facts differently. A FICO score is a score that is on a scale of 300 to 850 that is generated by Fair Isaac. Http://www.my.fico.com
Fair Isaac creates and sells scoring algorithms to the three credit bureaus. Each credit bureau then sells their own version of a FICO credit score to a potential lender.

Don't sweat the three 30 day lates. When they get to 36 months old they won't count for much. If you have not paid off Emex yet you should consider negotiating with them on paying them off. I will include a debt negotiation letter at the end of this post that you can use. In general you always want to have a signed piece of paper stating that your account is paid in full. With debt negotiation I would offer a single lump sum to have the account deleted off all three credit reports. Then you need to deal with the charge off. The rest sounds good.

Here is a bit of Q and A from a while back. As I said before don't fret over how all the scoring works.

Q "What is the difference between a Beacon and a FICO score? Are there two separate algorithms? I've spoken to reps from two different financial loan institutions, and they've assured me that there IS a difference between your FICO score and your Beacon score.. hmmm..."

Q "What is the difference between a Beacon and a FICO score? Are there two separate algorithms? I've spoken to reps from two different financial loan institutions, and they've assured me that there IS a difference between your FICO score and your Beacon score.. hmmm..."


A "FICO is short for Fair Isaac and co. This company creates credit risk models.

Fact: Most basic credit scores are what is termed a FICO score. Only scores that takes the following criteria into account are considered FICO scores.
http://www.myfico.com/MyFICO/Credit...FICOFactors.htm

Also consider that FICO scores ignore things like having a job, how much you make and your age. See http://www.myfico.com/MyFICO/Credit...FICOIgnores.htm

Now there are many versions of FICO scores and there are several basic types.

The three major types are:
1 FICO (used with credit cards).
2 Bankruptcy (used for mortgages and auto loans).
3 Profitability (used to see if they can make money off of you). Weed out the free riders.

Now there are three major credit bureaus and they all sell credit scores to consumers and lenders:

CRA name------Consumer score name---------------------Lender score name


Equifax------------Beacon/FICO score---------------------------Beacon

Experian----------Experian credit score-------------------------Experian/Fair Isaac Risk Model score

TransUnion------Trans Union personal credit score---------Empirica score

Now a real FICO score uses a scale from 300 to 850 where 661 or 681 is very good and great respectively. When a lender pulls a FICO report they get a FICO score on this scale that has a name that varies depending on what bureau they pull from. Each CRA sells 12-15 different kinds of credit scores.

Equifax's personal credit score is the same as the one they sell to lenders and is on the normall scale of 300 to 850.

TransUnion sells consumers a score on a scale of 150 to 934.

Experian sells consumers a score on a scale of 340 to 820.

Now if this is not complex enough, Fair Isaac could sell a mortgage company a risk score that would fall into the bankruptcy type. This would technically not be called a FICO score even though it came from Fair Isaac. This type is used to see the odds that you will declare bankruptcy and is used in applying for a mortgage. They usually pull all three of your FICO scores first and take the middle number. Then they plug in the data you give them about income, debt ratios Etc.

To make things even more complex, some lenders such as auto dealers are using older FICO credit scores on potential borrowers in conjunction with other data to come up with a number that means something to them and nothing to the rest of the world.

With all the complexities of credit scoring don't be surpassed if the average credit rep is clue-less as to what is actually going on."


------------------------------------------------------------
Date:
Creditor Address
City, State, Zip


Re: Account Number


Dear Sirs:


This letter is an offer to amicably settle the above account. It is not to be construed as an acknowledgment of my liability for this debt in any form.


I will pay your company the amount of $____ as full settlement of this account.


If you accept this agreement, I will send you a money order or certified cashiers check for the settlement amount of $______ in exchange for a full deletion of all references regarding this account from my credit profile and full satisfaction of the debt. This agreement is binding and will be void should you not hold up to your end of the agreement. Furthermore the debt will be deleted from my credit profile at all three credit bureaus or the bureaus your company regularly reports to in the course of doing business.


If you agree to the above, please acknowledge with your signature and return a copy to me. Upon receipt of this signed acknowledgment, I will promptly send you a money order or cashiers check in the amount stated above.


Notice: This agreement is restricted. This is not a renewed promise to pay but rather a restricted settlement offer only. By not signing below, you agree that the debt has not been renewed nor has any concrete written agreements been exchanged.


Creditorâ??s Authorized Signature: _____________________________ Date:____________


Name Title :
Sincerely,



Do not sign or date letter (This is necessary to avoid renewing the debt, should the creditor refuse to agree.) Be sure to not use a personal check if they agree to pay.

 

Sure. Modify it as you see fit. The most important thing is to get them to agree that an account is paid as agreed. Especially with CA's.

 

about qualifying for an A paper loan...
this is something that I have been doing *alot* of research on as I also wish to qualify for an A mortgage in two years. This is what I have found:

Minimum Middle Fico Score of Highest Wage Earner:
depends on lender, I have read 660, 670, and 680.
(there are also other credit requirements beside score--basically they'll let you slide with a 30 day late on credit cards)

Sufficient Income:
This depends on how much house you want, basically you have to make enough to keep your debt to income ratio within the required limits.

Stability:
The magic number is 2. Two years at same residence and two years at same job (or at least two years in same type of occupation). I would say just wait until you've been at the same job for two years, rather than take the chance that they'll decide your previous job wasn't sufficiently related to your current job.

Debt to Income Ratio:
For mortgage related payments-
no more than 28% of monthly gross income
For other debt payments (e.g. auto loan and credit cards, doesn't include utilities, insurance, etc)-
no more than 36% of monthly gross income (some lenders will let you slide at 40%--which is what the FHA allows)

Down Payment
minimum 5%. sometimes stated as "max 95% LTV"

Liquid Reserves
I have had the most trouble getting an exact number on this..after calling up and annoying my bank they suggested that 4-6 months of mortgage payments is ideal.

this is what i have found...anymore information from an expert in the field would be most appreciated

briana

 

i misstated something for debt to income ratio...it is 28% for mortgage payments and 36% for mortgage+other payments

briana

 

Hey Erik,

I need all the info I can find about getting outta PMI. Can you link me to any resources you may have?

Thanx,