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     | Monday, January 15, 2001 - 03:58 pm  Any insight would be greatly appreciated! I'm closing on my home this Friday at an incredibly high interest rate. I was led to believe that paying off some old debt that I would be able to qualify for an A-paper loan. Obviously, this did not happen, and one letter grade sure does make the difference! My lender told me that I qualified for an A-paper loan but ended up in the 'B' category because my FICO was below 620. I guess that I might of qualified for A paper if I was able to have the paid-off creditors remove their trade from my reports - but that's pretty much of a mute point now. My credit situation is this: (1) Never late on my last mortgage (3 yrs) (2) Never late on my present car payments (2 & 4 yrs) (3) Last late payment was for 30-days 28 months ago. (4) Had some financial overturn 7 years ago which there are 2 charged-off accounts totaling $700 still on report which I'll now be paying AFTER they drop off my report this year (1/2001 & 8/2001) (5) 'Paid-off' account ($2k 6/2000) which I had started making monthly payments to for 1.5 years prior - was charged off in 5/1994. (6)'Settled-in-full' account ($3k 6/2000) which I had started making payments for 1.5 years prior - was opened in 1996 - never charged off. Late payments ---------------------- 30 Days Late 09/1998 60 Days Late 07/1998 90 Days Late 4/1998 60 Days Late 01/1995 120 Days Late 1994 Account Balances ---------------- Revolving Account Balances $1000 of 1100 Dept Store (should be a lower balance - I know) $350 of 500 MC Cars $23k of 34.5k $9k of 18.5k Income: $115,000+ Mortgage Loan: $262,500 As far as the loan goes, because of medical expenses, we had to go for a 0% Down loan which of course didn't help. The rate we are closing at is JUST below 12%. What has been so frustrating on top of not getting a better score is that we have been told not to pull any credit reports because that would lower our score (which I know is true) and could possibly mean us not getting the loan, but the reason I want to pull my credit is to see if the paid off creditors have updated my reports. Anyway, our FICO score is around the 570-580 range which is just terrible. I've also been told that by next year, we'll be able to refinance and all will be well - I'll get to use the huge interest as my tax deduction and be able to pay my taxes from my return. However, from reading the posts here, I'm not so sure things are going to be any better in 12 months. In hindsight, I of course would have never of started making payments or paid off the old accounts until after 7 years. From what I understand, I'm now going to have to suffer another 7 years on these accounts? If you have read this far, THANK YOU FOR YOUR PATIENCE & TIME. If there are any terrific mortgage companies out there that will not weigh their rate decision so heavily on the FICO score and would be able to close quickly, please let me know! I'm completely frustrated and really don't want to wait over 6 years to get GOOD credit. What can I expect after another 12 months of timely payments? THANKS A MILLION FOR ANY HELP!
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| | Monday, January 15, 2001 - 04:17 pm Don't worry - if you get your own copy of your credit report it does not count as one of those negative inquiries. No one will see that but you. The negative inquiries are the ones from other lenders that make it look as though you are going for more credit. You can pull your own report as often as you want - only you will see that you've gotten it. As for those old debt that are more than 7 years old - I'd leave those alone if I were you. They can't go back on your report if you don't pay them and the SOL is long past.
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| | Monday, January 15, 2001 - 04:23 pm Thanks for the info Mel. That's exactly what I thought, however, my lender was telling me otherwise and now I'm sort of up against a deadline - actually, it's too late now (for my mortgage loan) since I close Friday. Thanks again!
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| | Monday, January 15, 2001 - 05:53 pm Paying the old debts SHOULD not reset the clock, but you have to check your reports to make sure. The DATES are most important, NOT the reporting date but the date of the original charge-off. It there is ONLY the reporting date OR the PAID date, you need to dispute. Also, I got a near final version of my credit ordering recommendations up at http://www.bayhouse.com/order-credit.shtml The important point is that for your current loan it does not matter what's on the report you pull. You can of course get a copy of the credit used for the loan. And while during PRE FICO days balance UPDATES could easily be ordered for the RMCR, those manual updates do NOT change the Scores. Whether you can refinance within a year is the million dollar question, I wouldn't bet on it.
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| | Tuesday, January 16, 2001 - 01:36 am a note to all--- read my many posts on several of these threads to see what FICO has done to me. i'm looking for other fico victims to start a class action lawsuit. i think you'll find my story quite interesting. (un)fair isaac sucks--  *
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| | Tuesday, January 16, 2001 - 05:22 am Christine: First off, thank you for the help! I would like to reverify with you that if I try to refinance by Febuary/March 2002, and my credit is updated to the below with the old debt falling off, do I truely have only a slim or one-in-a-million (or one-in-a-ten) chance at being able to refinance? The target is to raise my FICO by 40-50 points over the next 12-13 months. I value everyone's opinion here, just want to make sure what I should plan for. I will have about 15-20k equity in the house at closing because of the housing market which is why I'm buying the house even at the high interest rate. My credit situation should look like this by 02/2002: (1) Never late on current mortage (1 yr) or last mortgage (3 yrs) (2) Never late on my car payments (3 & 5 yrs) (3) Last late payment was for 30-days 41 months ago. (4)'Settled-in-full' account for $3k paid on 6/2000 - was opened in 1996 - was never charged off. Late payments ---------------------- 30 Days Late 09/1998 60 Days Late 07/1998 90 Days Late 04/1998 Account Balances ---------------- Revolving Account Balances $0 of 1100 Dept Store PAID DOWN BALANCES $0 of 500 MC PAID DOWN BALANCES Cars: $17k of 34.5k and $3k of 18.5k *** DROPPING OFF *** *** Late Payments: 60 Days Late 01/1995 120 Days Late 1994 *** Accounts: *) 2 charged-off accounts totaling $700 *) 'Paid-off' credit union account for remaining $2k of $3.5k on 6/2000 - was charged off in 5/1994. Besides making timely payments and paying down balances, what else should I do to increase my score. Open 1 or 2 more accounts, close an account? Is the FICO score really this harsh? (I'm sure I'll hear at least one yes!) Again, thanks for everyone's help!
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| | Tuesday, January 16, 2001 - 06:01 am Frustrated, The reason you are up there with the rate is a combo of two things. It's both the FICO and the fact you were doing a 100%LTV. Based on what you listed above, there is no way FNMA or Freddie would approve this loan. Don't take this personal but for the readerships info here is what we potentially have: 1) No Money Down 2) Prior Financial Mismanagement 7 yrs ago 3) Rencent mismanagement 30/60/90 in 1998(thus making person seem like a habitial credit problem) 4) No Reserves/Savings -- assuming this due to zero down. 5) Prior delinquent obligation not paid off. In this case I've got to believe that the scores you have are pretty accurate. Though Doug may feel that you are being treated unjustly, I have to disagree. As for some advice, if your planning on refinancing in 12 months, make sure your loan does not have a pre-payment penalty. Chances arfe it does and they can be expensive. Save money!!! Get a sizable reserve account. FNMA and FHLMC weigh heavily on reserves. Besides credit this may be their #2 item. People with "Money in the Bank" tend not to have so many credit issues. Get all the old bills taken care of. The accounts that fall under the SOL, follow up to make sure they get removed timely. As for getting yoru own copy of your credit as mentioned by Mel. Make sure you go through the bureaus to get it. Don't order it any other way or it will affect your scores. Bad thing about the bureaus is I don't think they give you scores yet. But it seems your more interested in making sure the items are corrected. Any way--good luck and if you have any other questions just post them back here. Sorry if my response seems a bit harsh.
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| | Tuesday, January 16, 2001 - 06:37 am Don, I'm asking for any GOOD information which could help plan the best course of action for the future - be it pointing out negative or positive issues with my current situation. So, thank you for your good advice and points! Here's a little more info about my situation: 1) No Money Down - Would of had 5% down, but it would not have been sitting in my account long enough to count (needs to be in my account 90 days prior to closing, per lender). 2) Prior Financial Mismanagement 7 yrs ago - This was a terrible time where both my wife and I lost our jobs and our car died on us, and we found out that we were pregnant. Unfortunately, on top of all of this, we had about 14 open accounts which just snowballed and we accrued late fees and over-the-limit fees one after the other. I know, get my violin out, but that is what happened and I did send a written letter stating all of this to the CRAs (Should I be able to see this notation when I request a report?) 3) Rencent mismanagement 30/60/90 in 1998(thus making person seem like a habitial credit problem) Ties in with your point #4 - Didn't have reserves and couldn't get credit for A/C unit which went out - ended up taking a paycheck and causing a ripple effect. I was hoping since it was 2 years ago I wouldn't seem so habitual, but obviously, I'm going to be biased. 4) No Reserves/Savings -- assuming this due to zero down. - This is true - any savings have been put down as earnest money. 5) Prior delinquent obligation not paid off. - I have the $700 in delinquent accounts to pay-off, but I was afraid that since paying of the big items seemed to have no effect on my FICO and later finding out -which turned out to be incorrect- that if I paid off an account it would be on my record for 7 years from the payoff date, I decided to wait. I know understand, thanks to Christine, that it is 7 years from a charge-off date and from reading a post by Kristi F. that it is 7 years from the last activity for a judgement. Thanks for the advice Don! I know you're not my lender and could probably care less about my individual situations. I only added them to show a more complete picture (and to make me feel somewhat better).
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| | Tuesday, January 16, 2001 - 07:11 am Also, a bit of additional info, as far as prepayment penalty, the loan does have one, but it is only for 1 year which is most likely no problem in my case - unfortunately.
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| | Tuesday, January 16, 2001 - 04:41 pm I can see a number of problems with your refi, and unfortunately have to agree with Don. I don't think he mentioned LTV, refis usually appraise LOWER than purchases. Unless you have some serious appreciation in your area it might be tough. Make sure your house looks real nice from the outside, i.e. well maintained and landscaped. I'd have to see your house to be able to suggest specific improvements that an appraiser could use to up the value, and much depends on your neighborhood. The one big plus will be that you'll lower your payments substantially. Re. credit: You might have read here that by next year we'll have the new NextGen Scores with 80 variables to come up with your scores. Of course underwriting requirements change all the time too. 3) Recent mismanagement 30/60/90 in 1998(thus making person seem like a habitual credit problem) Ties in with your point #4 - Didn't have reserves and couldn't get credit for A/C unit which went out - ended up taking a paycheck and causing a ripple effect. I was hoping since it was 2 years ago I wouldn't seem so habitual, but obviously, I'm going to be biased. In essence the problem is that you weren't able to raise the money for the A/C without screwing up your credit for almost an entire year. Many people would have asked friends or relatives for a loan. I'm curious, did you not know anyone who could afford to help out? Or you didn't want to ask? I also realize that if you had been APPROVED for the loan for the A/C you probably would NOT have any lates. Since the old problems will be dropping off (make SURE they do) your habitual status will also disappear. You can negotiate the unpaid accounts, limit inquiries, increase your limits, get rid of finance company accounts, etc. etc. I also just updated my general recommendations on increasing credit scores at Improving Credit Scores
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| | Tuesday, January 16, 2001 - 05:41 pm Authentication ErrorYour username/password combination was invalid, or you do not have permission to post to this topic. You may revise your username and password using the form at the bottom of this page.
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| | Wednesday, January 17, 2001 - 05:58 am Christine: My current appraisal came back at $7.5k higher than the loan amount. To give you a rough idea of the neighborhood, the houses range from $190-300k with a couple of homes above $400k and there is also a HOA. If I were to build the same house today it would cost over $22k more - so, hopefully, when I try to refinance this will not be an issue. What does the LTV need to be when you refinance, generally speaking? I can see a number of problems with your refi, ... The problems you see, are they insurmountable? I understand the appraisal part. Do you also think that even with the old debt off my report and establishing another year of good pay history, that my FICO score may not make it up another 40-50 points? Or are there other outside credit factors you see such as reserves that are bigger problems? I'm curious, did you not know anyone who could afford to help out? Or you didn't want to ask? I thought at the time it was better if I could work it out myself without asking family. Well, I didn't do a great job of working it out since I added bad credit. Today, I would definitely ask someone and try to preserve the positive credit history I currently have. I had borrowed money in '94 and had LOTS of issues with family through that time and have always felt looked down on because of borrowing money. My family's basic belief is/was that once your out of the house you're on your own and helping, especially financially, just weakens you. The obvious solution for the future, as already stated I know, is to build up a reserve. Anyway, stupidity sometimes doesn't seem to appear stupid until it becomes crystal clear through hindsight. That is why this forum is so valuable, it enables learning from other people's mistakes be it their fault or not. On my credit situation - In your opinion, how long would it take for me to achieve good credit - where I would have no worries about applying for a dept store card or car loan (and getting the going rate)? (I'm sure you've never been asked this question before!) Thank you!
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| | Wednesday, January 17, 2001 - 06:14 am Christine: I apologize for asking - I see that you offer a service to look at credit reports and give individual recommendations. Thanks for the Improving your Credit Scores link.
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| | Wednesday, January 17, 2001 - 09:39 pm Mr. Frustrated, I was just curious how this A/C turned into the $10k or more A/C due to the credit implications. My mind works in strange ways and strange things interest me. "Why" is my favorite word. Credit problems are a lot like cancer. There are countless "cures," some treatments work for some people. Luck has an awful lot to do with it. Some people experience miraculous cures, others just slowly wither away in spite of expensive treatment. People get so consumed with their credit rating and they anticipate credit scores like the results of the scans after 3 weeks of chemo. Did it work? Are the tumors gone? Did they shrink? Is another round of expensive "treatment" required? While no doctor can guarantee the success of the treatment, they can analyze the test results and then make recommendations. And that's all I can do. Look at the reports, tell you what's wrong, and tell you what your options are. I have no crystal ball. I have no idea what interest rates will be in a year, I have no idea what housing prices will be. I don't know if you'll still have a job. I've been a stuckee for many years myself, but lucked out when I got my refi just BEFORE the market dumped 30%. I also had a house appraise at LESS than the purchase price while appreciation was 10%+. Appraisals aren't science, and the bastards at Beneficial got my last $250 for that appraisal. I had no idea that could happen. I don't subscribe to the idea that housing prices always go up. I KNOW it's not true. At the same time I do like real estate as a LONG TERM investment. But I'd NEVER count on being able to do anything in a year. Been there, done that, and ended up looking pretty stupid. There are a lot of factors you can't control. All you can do is work on your credit and house. 
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| | Thursday, January 18, 2001 - 09:11 am I was just curious how this A/C turned into the $10k or more A/C due to the credit implications. The $10k figure, are you getting that from "...ended up taking a paycheck..."? I get paid every two weeks and my salary was lower at that time, so we're actually talking about $2500 after taxes and medical. The real cost of the A/C was $2k, not $2.5k, so not truly a 'whole' paycheck, but most of a paycheck. The problem at the time was no reserves, and we had a nifty $3.5k we owed the IRS. I see you try to read between the lines which means you really read the posts which I do appreciate. I try to keep my posts as concise as possible which I guess opens it up to interpretation. I'm really not trying to paint a prettier picture than it really is and I'm not trying to portray that I'm a victim of the system. I'm just wanting any opinions on where I stand and what can I expect in the upcoming year. Hopefully, I'll have a job next year and my house appraises to the amount I need for a refi, otherwise, everything else is a mute point. I was just wondering, given the information provided and using my current situation as the guideline for the upcoming year, if you knew whether or not it is even possible for me to raise my FICO score 40-50 points. I understand the answer to be ... no one knows. Thanks for all of your time and help.
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| | Thursday, January 18, 2001 - 10:48 am What I meant by the "10K A/C" was that aside from the initial fees, in the long run it caused this really expensive mortgage along with higher rates on any other loans plus lost opportunities. Not to mention the stress. There are more $1,000 dinners than one would think. Good luck to you!
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