Increase credit scores to buy a home. (pay, debts, collector)
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My husband and I want to buy a new home, problem is my score is 591 (ExP) and 503 (Exfax), however the TransUnion I have no line of credit on that note no score for TransUnion. We want to save for the year of 2014 put a down payment of about $40,000.00, during the year of 2014 we plan on reconciling collection debit, I'm worried if I cannot get the collection agencies to delete these debts after payment from me of course, that my dream home is nothing more but a dream. I do have student loans which will be out of default in nine months. My husband and I thought about just paying the last 14,000.00 off at tax time, however I'm thinking even "paid off" or should I say "Settlement" less the $4,000.00 won't imply an increase in my credit score. I have so much debt in Medical bills mostly, what is on my credit total of about $15,000.00 which I can pay in full. What I'm afraid of if I pay all this in full and the collection agencies don't do the "Pay for delete" then these items will remain on my credit as well as not increase in my credit score. Does anyone have some advise for me. I just want to know if I just pay this stuff off in full although it will remain on my credit for the duration of the seven years, will I still get qualified for a mortgage loan with the status being just that "Paid", and will my credit scores go up or just remain the same.
Making the right choice here really is what I want so I know how to move forward with the reconciliation process of my debt. Thank you for all your help. My husband and I are full of drive to do the right thing, but what is the right thing in reflecting my credit scores?
What ever the debt collectors say you must get in writing and keep everything. when someone hasn't paid bills a lot of times creditors will sell the right to collect the debt. collection agencies will tell you anything to get money and make a lot of false promises. The best you can usually do is get an agreement (in writing) with a debtor and negotiate a settlement say 40 cents on the dollar and have the agreement that they will show your debt as settled on your report. It is not going to say you had good payment history because that is false but settled debt won't hurt as bad as unsettled defaults. Another thing you can do is have a parent with good credit list you as an authorized user on their good standing credit cards, especially ones they have opened for many years with low balances and high credit limits. Lastly right before you apply for a mortgage call up and dispute everything bad on your credit report. While things are in dispute they are not suppose to count against your credit score. This will only work temporarily and will probably only work once.
If you have credit cards keep them all current. have low balances, limit inquiries on you credit burea. Any new store credit cards will likely hurt your credit.
Ultimately you want 4 credit cards that have been active for many years with high credit limits and low balances, you want a car loan at least 2 years old with good payment history, everything current at time of application or settled. low amount of credit inquiries, no public records or liens against you.
Lastly right before you apply for a mortgage call up and dispute everything bad on your credit report. While things are in dispute they are not suppose to count against your credit score. This will only work temporarily and will probably only work once.
I don't think this is correct. I think that if disputed debts are over $1,000 it requires manual underwriting.
If I'm wrong about this, it's a ridiculous loophole that needs to be fixed ASAP.
TO the OP: Why are you waiting until tax time to pay off the debts? Get it paid off NOW. If your tax refund is enough to pay off a $14K debt, you're withholding WAY too much money. Fix your withholding's and start paying off the debt NOW.
I don't think this is correct. I think that if disputed debts are over $1,000 it requires manual underwriting.
If I'm wrong about this, it's a ridiculous loophole that needs to be fixed ASAP.
TO the OP: Why are you waiting until tax time to pay off the debts? Get it paid off NOW. If your tax refund is enough to pay off a $14K debt, you're withholding WAY too much money. Fix your withholding's and start paying off the debt NOW.
It is technically not a loophole , credit reports are notorious for having incorrect information on them. I have been out of the loan business for 7 years now so the information may no longer hold true. When you say Disputed debts requiring manual UW I think we are looking at from two different things one is the Underwriting for loan approval the other is "manipulating a credit score" from a third party credit reporting agency. But these techniques will only work on the people on the cusp of approval not for someone with a history of bad credit and no good credit. To truly have a good credit score in the 800 range there is no quick fix to replace years of good payment history.
OP - I'm a little confused as to why you are asking on a forum (basically asking strangers who may or may not know much) how to raise your score so you can buy a house. You should be seeing a financial expert who can look in depth at your personal situation and give you sound information to achieve your goals. Or go to your bank and ask what you need to do to buy a house.
OP - I'm a little confused as to why you are asking on a forum (basically asking strangers who may or may not know much) how to raise your score so you can buy a house. You should be seeing a financial expert who can look in depth at your personal situation and give you sound information to achieve your goals. Or go to your bank and ask what you need to do to buy a house.
It's a personal finance forum. Why not ask personal finance questions??
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Quote:
Originally Posted by monieruiz23
I have so much debt in Medical bills mostly, what is on my credit total of about $15,000.00 which I can pay in full. What I'm afraid of if I pay all this in full and the collection agencies don't do the "Pay for delete" then these items will remain on my credit as well as not increase in my credit score.
If your husband has credit cards that are, and have been, in good standing then he should add you as an authorized user to them.
For the medical bills, if you can pay in full then pay the original medical providers (OMP's). If you pay the OMP's in full, and cite the applicable laws while doing so, then the OMP's must recall the debts from the collectors (even if the collectors had purchased the debts instead of having the debts assigned to them) and the OMP's must make the collectors remove anything about the debts from their own files and from your credit reports. Once the OMP's are paid in full then there is no longer any permitted business purposes (under HIPAA, your states privacy laws, the FCRA and other laws) for the collector to have the medical debts in their files or to report them to your credit reports.
Google the term Why Chat's Credit Confusion and then look under his Special Purpose Letters section for the HIPAA Letter Program. Follow the steps that are laid out exactly as they are written. The site and the info on it is free to read and to use. It is a read only site, so you cannot ask questions on it. If you have any questions then go to creditboards.com, which is also a free site, and post your questions about the HIPAA letter program in the Medical Forum on that site.
Save yourself a bunch of grief. Sure you can hunt all over and do a lot of research on fixing your credit. That is fine as information and the knowledge you'll gain are good things to have.
That being said, you hire a lawyer (not very expensive) to send out letters for you in response to any collection letters you have. Alternatively you can join one of those legal services that provides you with document and contract reviews and so on do to the same. What happens is that now you have a professional reviewing the terms of any agreement you consider BEFORE sending collection agencies any money.
I dislike going to a lawyer because so often you see money flowing from you to them but sometimes, it pays to go that route. First, they are going to know a lot more about the process and your rights than you'll get on any forum where the opinions vary according to how someone likes the facts or sometimes simply make things up. Also, much of the information you find is simply copied from others sources and when dealing with this kind of issue, the last thing you need are opinions, you need facts and someone to ask point blank questions.
The costs aren't expensive and if you're talking about quite a bit of debt, do it right. Stay away from those commercial lawyer ads or debt resolution agencies. The last thing you need is a middle man taking a percentage of the debt as payment and some scheme to part you from the remainder of your money.
You can easily get a consultation for free and get several before you decide on a course of action.
Yeah, lots of people go it alone and sometimes it works out, that is what you hear about. What you don't so often read about are the disasters where people entered into payment agreements that dissolved and in the end, they still ended up in court or dealing with lawyers.
Get the consultations, they aren't going to cost you a dime. The add in the rest of the info you get and decide on a plan of action. Anything else is a rush job. Fixing credit and dealing with old debts is not a quick fix affair. It will take time so figure on the next year or two to get all this in order. That house? Take care of business first, then go after the house. There is always a house available, they didn't make just one.
I'm confused by the original post. You'd probably get more specific advice if you could list what sorts of debts you have, which are in default, etc.
and as others advised, you probably want professional help. But the short story is, pay off debt as soon as possible. late payments will show up on your credit report either way, but accounts in good standing will help you start improving your score.
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