I've been approved with one lender for the amount we need and made an offer on a house. However, I was advised that I need to clear up the disputes on my file and I need to clean up a timeshare Repo which EQ shows as 4/2010 but should be 3/2009. I have a letter from Worldmark by Wyndham indicating the account is closed and they are not pursuing collections but it does not have a date.
EX removed via the phone most of the disputed items. TU started the process and EQ was not much help so I mailed them. The Lending Officer (LO) advised that my scores came in at 630. EQ is my lowest. I have heard that if I get my score to 640 the LO doesn't need to worry or care about some of the items on my report. I was thinking I can take care of a small unpaid collection that shows on EQ today for $200. I tried to take care of it in the past but the collection company wouldn't send me anything in writing. I just received a settlement offer for 50% though.
Should I bother paying this to attempt to improve my score? Purchasing a house we have a lot of expenses but I thought this could be low hanging fruit as far as score improvement goes.
I've also heard that if the disputes are on items that are paid and closed that it doesn't matter? Is this true? It seems both lenders I am working with are concerned about the disputed items and all but two of mine are paid/closed.
Thanks for any help you can provide. My wife and I are excited to be homeowners again (especially since our house will be larger and our mortgage will be the same as rent!)
FHA Loan and credit score
Started by
instableoxymoron
, Jul 25 2012 01:31 PM
8 replies to this topic
#1
Posted 25 July 2012 - 01:31 PM
#2
Posted 25 July 2012 - 01:37 PM
I should add that the other thing hurting my score is I haven't had a credit card for three years. Most of my baddies were between 2006 and 2009. Some CC's charged off and went to collections. The ones that didn't I paid and closed. I only have two active collections - one is medical for $900 and the other is the one I am thinking of paying.
My LO suggested I add a CC to improve my score so I went out and got a Kohls card. Now that I've been reading about the difference between store cards and bank cards though I feel that may not help. I applied for a Barclays but was declined due to my charge offs and no recent credit history. I sent a recon letter. The only other avenue I can think of in regards to a cc is to open a secured card. I really don't want to spend too much money right now if I don't have too though. I also have 3 recent HP's from mortgage companies and 2 on each CRA for cc's so I want to limit any more HP's. I also do not want to get one of the cards that has a sign up fee, annual fee with a limit of $300 and starts with $150 in fees.
My LO suggested I add a CC to improve my score so I went out and got a Kohls card. Now that I've been reading about the difference between store cards and bank cards though I feel that may not help. I applied for a Barclays but was declined due to my charge offs and no recent credit history. I sent a recon letter. The only other avenue I can think of in regards to a cc is to open a secured card. I really don't want to spend too much money right now if I don't have too though. I also have 3 recent HP's from mortgage companies and 2 on each CRA for cc's so I want to limit any more HP's. I also do not want to get one of the cards that has a sign up fee, annual fee with a limit of $300 and starts with $150 in fees.
#3
Posted 25 July 2012 - 03:45 PM
What kind of a timeframe are you looking at to buy a house?
In MY opinion, I would be VERY cautious paying an old collection if they arent requiring you to. It is very possible it would hurt your score, I know this is counter intuitive but it definitely happened with me, and it looks like you are already borderline on scores. I think opening another card would only be beneficial if you were either able to get a higher limit (above 1,000) and/or you have a few months to let them age before you buy. I say this because opening another card(even secured) could also lower your score in the short term. (Too many new accounts)
So basically to me it boils down to, if you have to buy this month don't touch anything they don't require you to pay for closing. If you have time on your side, you might try for a decent card, try Navy or someone who is known to be generous with CL's even with a less than perfect report.
In MY opinion, I would be VERY cautious paying an old collection if they arent requiring you to. It is very possible it would hurt your score, I know this is counter intuitive but it definitely happened with me, and it looks like you are already borderline on scores. I think opening another card would only be beneficial if you were either able to get a higher limit (above 1,000) and/or you have a few months to let them age before you buy. I say this because opening another card(even secured) could also lower your score in the short term. (Too many new accounts)
So basically to me it boils down to, if you have to buy this month don't touch anything they don't require you to pay for closing. If you have time on your side, you might try for a decent card, try Navy or someone who is known to be generous with CL's even with a less than perfect report.
#4
Posted 25 July 2012 - 04:48 PM
It is a short sale and we are just starting the process. The listing agent indicates that the amount was recently approved when they had a buyer and that buyer backed out. Apparently the buyer put offers on a few short sales then pulled out when he got approved on one of them. So, my timeframe could be 60 days or it could be a lot longer.
I called the new collector on the old Kay Jewelers account and have a faxed offer to settle. It's Resurgent Capital and the debt is now owned by LVNV. I am very familiar with LVNV. So, now my concern is if I do not go through with paying this could show as a new collection. I think I screwed myself into having to pay the collection either way. I can dispute the collection because the company that originally reported it no longer owns it and probably doesn't care. I know for certain though LVNV will report the collection if I do not pay. Ugh!
I did a projected score with opening a new bank card and my score increased by 10-20 points. I did another one with a department store card and it dropped by 10 points.
I called the new collector on the old Kay Jewelers account and have a faxed offer to settle. It's Resurgent Capital and the debt is now owned by LVNV. I am very familiar with LVNV. So, now my concern is if I do not go through with paying this could show as a new collection. I think I screwed myself into having to pay the collection either way. I can dispute the collection because the company that originally reported it no longer owns it and probably doesn't care. I know for certain though LVNV will report the collection if I do not pay. Ugh!
I did a projected score with opening a new bank card and my score increased by 10-20 points. I did another one with a department store card and it dropped by 10 points.
#5
Posted 27 July 2012 - 04:37 PM
If you are already working with a loan officer have them run a credit simulator. Also, do not offer to settle for less on any collections.
#6
Posted 30 July 2012 - 09:22 PM
why would i not offer to settle for less?
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#7
Posted 30 July 2012 - 09:24 PM
FWIW my middle score is at 628 TU with EQ at 607 and EX at 648. the collection is on the EQ report so if it goes down it shouldn't impact my middle score.
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#8
Posted 01 August 2012 - 11:13 AM
Paying the account will ONLY help you if you get it removed from your credit upon payment. if you just need a few points, first see if you can pay down your balances on any current revolving accounts first, that is the fastest way to a score boost. be aware that removing the disputes alone could lower the scores, so if you have 2 months or so to work with i would go ahead and get a secured credit card on there, that can get you 15-40 points just for signing up, depending of course on what you already have, if you have 4 or more revolving accounts already then another will not be too helpful.
as for paying accounts, this WILL make your credit score go down, unless it is deleted. when talking to creditors be tough and know your rights! reporting to the bureaus is 100% elective, they have the right and the power to remove, and if they don't there is no reason in the world for you to pay them. who can afford to spend money to make their credit rating lower?!?
as for paying accounts, this WILL make your credit score go down, unless it is deleted. when talking to creditors be tough and know your rights! reporting to the bureaus is 100% elective, they have the right and the power to remove, and if they don't there is no reason in the world for you to pay them. who can afford to spend money to make their credit rating lower?!?
#9
Posted 01 August 2012 - 11:16 AM
a great secured card is Capital One Secured. deposit $49-200 for a $300 line, and if you have no credit, it is likely to get you a good chunk of points.
will take roughly a month and a half after getting the card to have it show up on your credit though
will take roughly a month and a half after getting the card to have it show up on your credit though
Edited by CAdamsRP, 01 August 2012 - 11:17 AM.
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