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Personal Loan to Clean up FInal Baddies


Headwaters44
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Hi CB'ers. For a brief back story, my credit journey started 4 months ago when I joined this site and I've enjoyed about 40 point increases on average for all three FICO scores since then. I'm shopping for a house in the spring (fha loan) and I need some advice to maximize my credit scores and clean up CRs in preperation. My 3 ficos were inthe 590-605s when I joined here now they're in the 640-650 range. I removed approx 9 lates/derogs, paid off 3 cc's to reduce my util to about 45% of 12.5k (still plugging away and plan to be below 20% by home loan app time), paid off 13k car loan, and got a big 15k private student loan CO settled in full to avoid being served. I have a goal to be between 660-680 (due to my ongoing credit repair laboring) by mid october and I'm fairly confident I can get there.

 

What I have remaining is 2 small collections ($75 and $300) I'm in the processes of PFD'ing, have about 2-3 more lates I have evidence to dispute, and here's the kicker......3 more private loan COs all around +/- 2.25k/ea totalling 7k. Based on a settlement I already did with the same OC on the other CO, and letter correspondence with them over the last 6 months, I'm fairly confident I can settle on these last 3 loans for 55-70%. Any FHA borrowing homeowner knows getting an FHA loan with COs over $2k is going to be next to impossible. That said, I'm hoping to take out a personal loan to settle these COs and clean up my reports. I intend to pay off the installment loan over the next 3-4 years (it was a student loan I intended to pay anyway, so I don't mind and it's well within my budget)

 

I have poked around the boards and read some threads on personal loan lenders. Places like Lending Club and Prosper seem appealing, but I would also be open to debt consolidation or settlement lenders If need be. Would anyone recommend Prosper or LC for my situation?

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Best buy rewards -20/750

Credit One (yeah I know) - 35/500

 

CLOSED WHILE UNDER DMP

Meijer - 2800/5250

Key 2 More Rewards - 1800/3500

Chase (just paid off) 0/2000

Capital One (just paid off) 0/1750

 

50k/year income. I don't have much going for me cc wise since I'm just coming out of a DMP, so I thought about applying for a Barclays card to improve util and bump my score a few points. But I'm not sure if I should do that before or after the personal loan.

 

As far as cc lates none are within 2 years. One with chase 60 day, one with Key 30day, one with PayPal bill me later 30day. Couple more fed school loan lates but those will either be dispute deleted soon, or due to fall off soon.

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sure.

 

just depends on the rate you can get.

 

Thats what I am most curious about. The rate and the chances I will be approved with my scores and reports. Does anyone have experience with either 2 and their approval tendencies? Not too much detail in P2P section. I'm curious which will be more suitable to my situation so I don't have to pull more than 1 inquiry. I only have one recent inquiry now that was over a year ago for an auto loan, the rest are more than 2 years out. So thats one good thing, but on the other hand I don't know how sensitive each will be with the 2 collections and 3 COs.

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OP, please consider saving a lot more money before buying a house.

 

We've had our "new" home for 2 1/2 months, and we already need to put in ~$5,000 in new windows (I'll know more after Wednesday).

 

Also the A/C and furnace are original to this house, which was built in the early 1990s. We obviously knew this when we bought it, but it could die any day and leave us with a five-figure expense.

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OP, please consider saving a lot more money before buying a house.

 

We've had our "new" home for 2 1/2 months, and we already need to put in ~$5,000 in new windows (I'll know more after Wednesday).

 

Also the A/C and furnace are original to this house, which was built in the early 1990s. We obviously knew this when we bought it, but it could die any day and leave us with a five-figure expense.

 

Good point CV. Fortunately, I work in construction management and have the experience to eyeball and identify pending repairs and associated costs. I will be hesitant to purchase a home that may need more repair than we can afford. But that said, I know we will still need plenty of cash in the bank after closing. My sister just bought a house and they're 6k in Home Depot Credit Cards for materials alone, less than 6 months later.

 

Right now I think my plan will be to wait a couple weeks for my recent CC payments to post my lowered util and I'll go for a Barclays or similar CC to try to force one last small score boost, maybe even balance transfer if the interest rate is better. Then a month after that I'll go for the Lending Club App when my FICOs numbers turn yellow.

Edited by Headwaters44
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Keep in mind that the loan would be another factor into your debt to income ratio. If that's not a problem, try a CU, they tend to have decent rates.

 

Mano, I actually like the thought of a CU over anything else, but would be concerned they would not want to lend on bad debt consolidation, or more importantly before knowing for sure that the CO OC will accept the offer. That is why I have been leaning towards Lending Club or similar.

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