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How to improve credit score to qualify for new home?

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#1

Posted 07-17-2012, 05:32 PM

nicholasyud is offline

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How to improve credit score to qualify for new home?

Hi everyone, I'm new to the forum and have a bunch of question to ask for everyone around here with experience using credit card and stuff. I recently building back my credit score to qualify for a new home and establish a long and high credit lines.

My file :

Currently 2 collection one from checking account Capital One $$400 with Alpat Co inc in 01/2010.(unpaid)
Origin Cap and Collection agency Midland funding ##1467 back in July 2008(unpaid)
Charge off from Chase for $1600 back in 2008 also.(Unpaid)

I know i were stupid and student and all that crap blow up everything i had and now try to establish my credit journey again with a good faith. Also i had 3 credit card :

Cap Planti $500 on Sep 2011 paid on time utili 2%
Orchard Bank $300 Oct 2011 On time utili 10%
Credit one $400 June 2012 on time utili 25% ( may stop using this card because they charge daily interest purchase charge which is $5 for 200 billing statement ) they crazy but wth i just wanna build my credit.

Also a student loan from sallie mae that paid on time for the last 3 4 years never miss no payment amount of $$75/months.

My current June 2012 Equif :622 Expe: 639 and Trans :645 ( improve almost 40 to 50 points after a good clean up for my credit report.) were (Equi: 562 Exp: 576 Trans :601 in Oct 2011)

About 10 Inquiries for the last 2 years.
Anyway i just want some of your expert advice on something on my file and my credit improve :

1. I want to establish a high credit limit like 4 or 5000.What should i do ? Should i get another credit card that a better change for credit increase because i know with those card i had right now, they deadly gonna give you some increase or stuff like that.
2. I try to get a mortgage maybe sometime the end of 2012. Any advice what i should do or anything like that very appreciate. I would try to improve my score good enough for a best qualify loans as possible. It's gonna be my first time home buyers .Good bank or good interest rate or any tips gonna be very helpful. Thank guys.

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#2

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07-17-2012, 05:52 PM

vaultaddict

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I think that the last thing you need is another credit card.

How much money do you have saved for a down payment?

Why are your collections still unpaid?

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#3

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07-17-2012, 05:52 PM

Brian1 is offline

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Take the Orchard Bankcard with a utilization ratio of 10% down to 7% or less. Take the Credit One card with a utilization ratio of 25% down to 7% or less.

Those three unpaid items should be paid. Contact the original creditor for all three items and find out if your account information is still accessible and if you can pay them directly. Contact either with the original creditor or the collections agency (whoever is the current collector) and indicate that you're willing to pay your debt. You can offer to pay them a figure less than the amount owed and see if they'll accept that amount as payment in full. Whatever they agree to take for payment in full, make sure you get it in writing that your payment constitutes payment in full. Do not pay them a single cent until you have your agreement in writing. You can also negotiate that they remove that item completely from your credit report if you pay the debt (either a reduced amount if they'll accept that as payment in full or the full amount). At the very least, you want to make sure that your payment will be reflected on your credit report as "paid". A few months after you've paid it, pull the applicable credit reports (the ones showing the charge-offs) to make sure that whatever you've agreed to with them has, in fact, been done.

Paying everything on time moving forward as well as just letting time heal the past are the two biggest things, other than lowering your utilization ratios, that will help your credit score.

Last edited by Brian1; 07-17-2012 at 06:01 PM..

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#4

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07-17-2012, 06:13 PM

DlickSeals is offline

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...Why are your collections still unpaid?

<--- Hopefully he/she is challenging them and not about to reset the 7 year clock. Actually, depending on his state, the SOL might already be up for this and he could legitimately get these removed. My first move would be that. Especially the Chase (2008).

My advice is to avoid the CAs at all costs as they will NOT and cannot promise to remove the OCs tradeline and chargeoff. The sad truth is that the OC has already sold the accounts and will no longer deal with bad debts, (they've been charged off their books which would have implied tax ramifications). Additionally, the CAs are the easiest to remove and will not sue you. A 'pay for deletion' might be an option, but quite literally a very, very last option.

I would honestly pump ever ounce of funds into killing the existing balances. Keep that up and continue to be on-time payments (very nice secured loans at that with SM that probably have a low interest rate and are above-the-line tax credits...forbearance might be a thought if it allows you to kill the other stuff). Next, send two separate dispute letters to all three Credit Agencies, (certified return receipt mail). On one, deny one of those chargeoffs and on the other deny, the other. They'll likely validate. Fine. At the same time, send a validation (CRRM) to the OCs and CAs. Depending on your state, you might site that the CAs are out of the statute of limitations on an unsecured debt and continuing to report will be interpreted as harassment. They likely won't respond, but it'll drop from the reports.

Also, with what vaultaddict mentioned, exactly how much do you have saved - in relation to your potential home price - for a house?

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#5

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07-17-2012, 06:20 PM

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Make arrangements to pay the collections accounts. If you negotiate to pay a reduce amount, your credit file will reflect that. So you have to weigh whether you want to pay more money or save a few dollars and have it documented that the collections accounts weren't paid in full. But settle the collections account ASAP.

Next, pay off all your active credit cards.

Third, save as much money as possible for your down payment. The more money you put down, the easier it'll be for the bank to lend you money with a less-than-great credit report.

I went through this same journey basically many years ago. Can you have someone cosign for you?

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#6

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07-17-2012, 06:44 PM

nicholasyud is offline

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DlickSeals : i basically try to do all the idea you had come up with ....I dispute some of the items and waiting for their validation. on top of that i dont get what you said about to reset about 7 years clock and about your Chase case i would love to hear more details about it......
vaultaddict: what credit cards should i apply for my credit score ?
Anyways i currently paid all my credit card bill on time for the last 9 10 months.....and the student loan is on time all the time.....
Second things i did dispute those negative effect on my account and still waiting for the result and get the valid on those collection department. They did offer me for $400 for $1467 for settle the debt or 800 for settle the debt in full. I did offer them $300 to paid to delete and stuff well its just my first offer.
I plan to paid for the collection $467 paid for delete or settle in full. but when i ask them to settle or paid in full should i request them to state that ""paid "" ""paid as agree"" or remove it right. Is the ""settle """" hurt ?
And maybe i probably get about 50% down payment i know they won't be refuse for it but i just try to get my credit score pump up and get a better deals. Its would be my first home after 8 years paid for those stupid rent .....

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#7

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07-18-2012, 08:54 AM

heavylee is offline

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Not just paying your currect CCs on time; pay off the entire balance. Your credit worthiness is partially based on your debt-to-income ratio. The more debt you have, even if you're in good current standing, the worse you look as a borrower.

Get the collections accounts settled ASAP. Whether you pay in full, or negotiate; get it done. The more time that has passed with it being settled the better. When you work with any collections agency, make a deal verbally on the phone then request that they send you a letter outlining every detail you had just agreed upon (including the amount agreed upon and how the debt settlement will be reflected on your credit reports). After you receive the letter and it is exactly as you expected, send them a check for the amount agreed upon. Once the check clears, print out a copy from your bank's website and keep it with the letter from the collections agency. If they don't follow through on their end of the deal, you will need those documents to present to the CRAs to have your file updated without the collection agency's cooperation.

When your credit report shows a collections account is "settled for $xxx" that's not as desireable as "settled/paid in full" but it's way better than not being settled at all.

A 50% down payment on your house purchase is very desireable from the bank's perspective. Does your lender know that you're planning to put 50% down? They may loosen up on their requirements for you to fix your credit since a down payment of that size considerably reduces their risk/exposure. Even if they do loosen up, you still need to fix your credit.

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#8

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07-18-2012, 10:31 AM

DlickSeals is offline

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DlickSeals : i basically try to do all the idea you had come up with ....I dispute some of the items and waiting for their validation. on top of that i dont get what you said about to reset about 7 years clock and about your Chase case i would love to hear more details about it......
vaultaddict: what credit cards should i apply for my credit score ?
Anyways i currently paid all my credit card bill on time for the last 9 10 months.....and the student loan is on time all the time.....
Second things i did dispute those negative effect on my account and still waiting for the result and get the valid on those collection department. They did offer me for $400 for $1467 for settle the debt or 800 for settle the debt in full. I did offer them $300 to paid to delete and stuff well its just my first offer.
I plan to paid for the collection $467 paid for delete or settle in full. but when i ask them to settle or paid in full should i request them to state that ""paid "" ""paid as agree"" or remove it right. Is the ""settle """" hurt ?
And maybe i probably get about 50% down payment i know they won't be refuse for it but i just try to get my credit score pump up and get a better deals. Its would be my first home after 8 years paid for those stupid rent .....

Sorry, should have specified: When you make a payment - even to a Collection Agency - it ensures two things: You've admitted this is your debt, (exhaust the SOL if it's applicable), and it means that you're going to have that negative tradeline on your reports for at least 7 more years from the time you make the latest payment.

As for as a settlement, since they don't have as much as an upperhand as you think, if you were going to pay the Collection Accounts, do not settle for anything short of full deletion off your report. They will not be able to remove the OC's tradeline, but a negative account - regardless of the status - is the critical piece you want removed.

Oh, and don't apply for anymore credit. 10 in two years is a lot and you have to factor in your mortgage will be another hard pull. Do you know when the 10 will drop from your reports, (they have a 2 year lifespan)?

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#9

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07-18-2012, 11:09 AM

nicholasyud L3: Novice Original Poster Member sinceJun 2012 Posts198 Reputation 32 Followers 1 + Give Rep	any of you had experience with collection agent ? what about your settle paid as full or delete ? How much did your credit improve after your settle or paid to delete ? how long does its usually take ? Dslick: some of them will fall of in sometime of Jan 2013. 5 from equi 4 from exp and 1 in trans. thanks. What did you do to your chase account ?
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#10

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07-18-2012, 09:49 PM

8mpg

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Id wait until the inquiries fall off before applying for a loan. Having a sizable down payment will forgo a lot of the credit hassles. FHA is very helpful in these situations when creditworthiness comes into play.

Like said above dispute the charges before ever negotiating on the phone for a settlement. If they validate the charges, then only pay the negotiated amount when you have it in writing that they will delete. Keep copies of the paperwork and follow up that they have deleted it.

I recommend checking out creditboards.com for fixing your credit. This is a good place for mortgage info but creditboards is the holy grail of fixing credit.

And DO NOT apply for any more cards or credit. You need a clean 2 year history with low inquiries or the bank will want to know why you are opening more credit. Often people open more credit simply because they need money.

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#11

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07-19-2012, 07:53 AM

nicholasyud L3: Novice Original Poster Member sinceJun 2012 Posts198 Reputation 32 Followers 1 + Give Rep	The stupid Capital One actually pull all my three credit bureaus when they pre-approved me for an offer. Got$300 credit limit with 3 inquiry. I end up to hate them so much now.
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#12

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07-19-2012, 08:12 AM

okashira is offline

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any of you had experience with collection agent ? what about your settle paid as full or delete ? How much did your credit improve after your settle or paid to delete ? how long does its usually take ?
Dslick: some of them will fall of in sometime of Jan 2013. 5 from equi 4 from exp and 1 in trans. thanks. What did you do to your chase account ?

Pay for delete is precisley your best option. Your credit will go to as if the reports had never been there when they are removed.

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#13

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07-19-2012, 10:27 AM

nicholasyud is offline

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Pay for delete is precisley your best option. Your credit will go to as if the reports had never been there when they are removed.

Whats your offer % ? and your experience process about those step ? That would help alot....

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#14

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07-20-2012, 10:34 AM

DlickSeals Teenwolf for President! Member sinceOct 2010 Posts247 Reputation 46 Followers 0 + Give Rep	Said perfectly okashira!
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