WWYD: How to Maximize CS post Short Sale

[NNWalking]

Hello all

 

i was reffered to this board from FWF, here is my story:

 

 

short sale completed : Dec 2011

 

open accounts :10 mostly CC

 

total accounts: 24 age of lines : 7 years inquiries: TU/EX/EQ 7/14/11

 

utilization : 18% (can pay this down to 0% within a year)

 

CK score :700 (plan to subscribe to quarterly myfico.com soon)

 

questions:

 

1) what can i do to maximize credit score to apply for mortgage Jan 2014

 

2) will paying more than one payment each statement period help increase the # of on-time payments

 

3) between now and 2014, should i avoid any App sprees for CC rewards

 

4) here is what the TC/TU report shows

 

5) here is what is affecting my credit:

• The available credit on your open revolving credit accounts is too low. [TransUnion, Equifax] Having credit available to you is a sign that you are able to manage your finances responsibly. Lenders usually like to see that consumers have a large amount of credit available to them.

• The newest delinquent or derogatory status on your reported accounts is too recent. [Experian ] Payment history is a significant factor in the credit scoring process. Regular on time payments may make you more creditworthy to potential lenders.

• None of your real estate accounts show a credit amount. [TransUnion, Experian , Equifax] Lenders may be able to better evaluate your creditworthiness if there is more information about your accounts on your credit report.

• The balances on your open accounts are too high in comparison to their credit limits. [TransUnion, Equifax] It is a good idea to use your accounts regularly, but remember to keep your balances low in comparison to your available credit limits. Having a high ratio of balances to credit limits on open accounts may be viewed negatively by lenders.

• The sum of your bank credit card account balances is too high. [TransUnion, Experian , Equifax] High credit balances may be considered by lenders to be a negative factor when determining creditworthiness. Paying down your balance may improve your score.

• You have too many inquiries on your credit report. [Experian ] Excessive inquiries have a negative impact on your credit score. Limiting the number of credit applications you complete may improve your credit score.

Note [ TransUnion ]: In addition to the factors listed above, the number of inquiries on your credit report has adversely affected your credit score.

 

 

6) any help/advice would be appreciated? does the short sale in of itself limit the "upside" of my credit score? i guess im asking at what point is trying to improve my score a moot point.

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[SportsNut]

You should check with several local lenders but I think you will find current FHA Fannie Mae guidelines are a 3 yr wait after a short sale. Short sale, if you were delinquint on pymts at the time of the sale, are treated the same as a foreclosure, barrin 'extenuating circumstances'. "After a short sale, there’s a three-year wait if the borrower is in default at the time of the sale and there are no extenuating circumstances." See 2nd last para of this NYT article

So it seems that if this is found to be true you could be looking at Dec 2014 for a mtg on another house. Of course the guidelines can always change between now and then.

[NNWalking]

i thought that Fannie Mae allowed you to apply for another mortgage after 2 years if > 20% down payment and good credit. of course, what is actually happening "on the ground" is another story. anyone have experience getting approved for a mortgage 2 years post short sale?? is this just a guideline? is anyone actually willing to lend after 2 years of short selling? this is the first i have heard of a 3 year minimum wait.

 

 

article on wait times for mortgage after short sale

"Carrie shared the latest Fannie Mae guidelines with us. After a deed-in-lieu of foreclosure, preforeclosure sale, or short sale, there is a mandatory waiting period of two years for a loan with an 80% maximum LTV (loan-to-value ratio), or four years for a loan with a 90% LTV. If the borrower can document extenuating circumstances, the waiting period for a loan with a 90% LTV drops to two years."

[SportsNut]

OP,

 

Yes, correct it is 2 yrs for conv fannie with 20% down.

Hmmm, if you are able to do so just 2 yrs out of a short sale (from date of transfer of deed) you would be like 1 or 2 out of a 100 or maybe even a 1000, IMO. Most couldn't pull that off, so my assumption was based on the thought that most folks following a SS will need a higher LTV or FHA mtg, which requires the 3 yr wait. So if you can do the 20% down, plus pay closing and out of pocket costs 2 yrs out of a SS, you are the rare exception. Congrats!

Edited May 3, 2012 by SportsNut

[NNWalking]

thanks for the response back SportsNut!

 

i am still curious to see if this guideline is being followed by lenders.

 

any other tips on how to improve my credit score?

 

 

[jolla]

1) what can i do to maximize credit score to apply for mortgage Jan 2014

If your short sale was completed in Dec 2011, you have recent very bad marks; time is the best remedy for that. Another thing is to lower utilization (which you plan to do).

 

2) will paying more than one payment each statement period help increase the # of on-time payments

No

 

3) between now and 2014, should i avoid any App sprees for CC rewards

Inquiries: FICO only factors in inquiries that are 1 year or younger, so inquiries won't hurt you there.

Average age of accounts: opening new accounts will lower your average age of accounts, which is probably already low (if the age of your credit history is 7 years). I would avoid it.

[johnnyderp]

CK score :700 (plan to subscribe to quarterly myfico.com soon)

 

DCU offers members the same score for free monthly.

[SportsNut]

thanks for the response back SportsNut!

 

i am still curious to see if this guideline is being followed by lenders.

 

any other tips on how to improve my credit score?

 

Tried to respond back to you on the pm/friend system but you don't have enough posts yet, so it says.

So keep posting, not sure what the golden number is; prob 25 or so, then we will get that done.

 

As to your question about guidelines, that is a good one. Just because those are the minimum guidelines does not mean that a lender will underwrite to the min standards. Often times when underwriting a long is all about dotting the i's and crossing all the t's, so that the paper is the MOST marketable. What this means is lenders may wish to adhere to the most conservative u/w so that their paper is pristine and they may not have to season it at all. But then again I am speaking about something here that I know something about but not that much of late, and we all know is an industry that has gone on its ear and elbow the last couple of years. So I'd be prepared to hear about anything and shop around for a broker. There are some very knowledgeable ones here on CB, so include them in your consideration. You can easily see who is on top of their game by checking that forum.

[NNWalking]

still working on improving my cs.

 

1) working on paying off balances

 

2) when balances are paid, will only use 1 card at 1-9% util (will use more than one for rewards, but pay balance before statement cuts)

 

 

 

to those who know the answer:

1)how much of an "anchor" will the short sale be on the score??

 

2) is it realistic to aim for an >800 score? (whats a realistic max score to aim for?)

 

3) realistic to do a app spree before applying for mortgage early 2014? (or noapps between now and then)

 

 

i know time is my friend

Edited June 2, 2012 by NNWalking

[NNWalking]

also, does anyone know when this stops becoming "too recent"

 

• The newest delinquent or derogatory status on your reported accounts is too recent. [Experian ] Payment history is a significant factor in the credit scoring process. Regular on time payments may make you more creditworthy to potential lenders.

• None of your real estate accounts show a credit amount. [TransUnion, Experian , Equifax] Lenders may be able to better evaluate your creditworthiness if there is more information about your accounts on your credit report.

[fatherof5]

Suggest to post over on the mortgage board with Brian B