New with ??'s

Discussion in 'Credit Talk' started by CharJ, Oct 2, 2003.

  1. CharJ

    CharJ Member

    Good morning!

    I am new here having found the site a few days ago. I have appreciated all of the posts here and hope that I am not redundant with my questions. If I am please show mercy on me, a newbie :eek:)

    My husband and I are refi'ing our home using Ameriquest Mortgage. Some background FYI: We fell into some financial peril a a little while back ( 2 years ) after my 7 yo daughter spent some time in a burn center. Shortly thereafter, my husband, self employed, had to close his business down for a short period of time as a result of our state's economy going south. He began working with someone else and, of course, his income is not what it used to be therefore some rearanging is needed.

    Due to the strained nature of our finances, we found that we just could not afford to keep up with our obligations. We did have a reposession of a leased vehicle and we have a mountain of medical bill collections. There are a couple of collections from the cable company and a small dept store charge card.

    We were shocked that his scores dropped so rapidly. Maybe not shocked, but disheartened nonetheless.

    Although we will be paying a higher interest rate on the new refi, it gives us an option of paying off all debts and the hope of rebuilding to where we once were credit wise.

    We haven't been financially irresponsible but I will admit to having given in to the "who cares if it gets paid" mentality due to the stress. Fortunately, our home equity is really really excessive and we aren't tapping into all of it. I don't want to do that.

    My question is...If we refi, pay everything off, and make all of our mtg pmts on time, should we reestablish a couple of lines of credit to BOOST his scores?

    I am looking to go through the next two years with a pmt almost identical to the one we have now and then do a rate and term only refi but, the mortgage will be the only open account.

    I am considering a couple of small loans against a CD or something to that nature. Something that we know we will be able to pay. I don't want the CC debt again but know that those types of accounts, when paid on time reflect favorably in some cases. Any advice?

    His current scores are 570/543/551, Yes, it sucks especially having been in the 7's and 8's only two years ago.
  2. lbrown59

    lbrown59 Well-Known Member

    I don't want the CC debt again but know that those types of accounts, when paid on time reflect favorably in some cases. Any advice?
    Scores rely to heavily on CC accounts.

    THE END ** *** ** LB 59
  3. CharJ

    CharJ Member

    Since scores are reliant upon CC accounts, should I maybe use a small portion from the loan proceeds and do a secured account? We closed all of our CC accounts in good standing JUST to get out from under what we saw as forthcoming mountains of debt. With the scores that we have now, I very seriously doubt that we would qualify for a CC from anyone without it being secured.

    I am sitting here looking at his CR and I tell you, some of these medical collectons are actually small so I think that we are going to pay them off as well. I know that we won't be able to pay them all off at one time but am thinking that maybe doing them as we go that this will help as well. I would sincerely like to get this file clean.
  4. Hedwig

    Hedwig Well-Known Member

    First of all, before you pay the medical collections, do some research here and validate them. If they can't validate them they'll have to remove them. If they do, try to make a settlement for deletion.

    Before you go too far, read the threads at the top. Several times.

    Also, find out what the SOL is in your state. That may be important as well.

    Were any of your credit cards in good standing when you closed them? If so, you might want to call and see if you can reopen the account. Just because you have it, doesn't mean you have to use it. Length of time you've had your accounts is also a big factor in your score. So, if you can reopen the account, use it several times a year to buy gas or something, and pay it off the next month. That's what we call putting a card in the sock drawer. You still have the length of history on it, but not the balance.

    The balance to credit limit ratio is also important. So if you reopen one or two cards, you want the highest credit limit you can get, but you don't want to use it.

    I hope this helps a little bit. If not, read the threads at the top and ask more questions.
  5. CharJ

    CharJ Member

    I am going to be extremely honest and tell ya, I don't have a clue as to how to validate these collections. I am reading the threads at the top now so I will, hopefully, learn something that will be of benefit to me. I am looking at about 20,000.00 worth of medical collections as I typr this. It looks discouraging to me, to be honest.

    I don't think that the CC acounts could be reopened as we closed them down PRIOR to our credit going down the toilet. Unless they didn't do a CB on us, I think it would be impossible to reopen them. ???
  6. Hedwig

    Hedwig Well-Known Member

    You never know. If you call the executive offices or the retention department and explain things, perhaps they'll work with you. If they say no, you aren't in any worse shape. If they say yes, you're better off.

    Be up front. Tell them what happened, that you closed the accounts because you didn't want to get into trouble, but now you realize that having a long credit history is important. Be nice, not confrontational. The worst that can happen is that nothing changes.
  7. Hedwig

    Hedwig Well-Known Member

    After you wade through the posts at the top of the board, do a seach for "validation" and read some of those threads. You'll have to read a lot of this several times before you really understand.

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