rylee1 asked in Business & FinanceCredit · 1 decade ago

Raising credit score in 5 months?

My husband and I are hoping to buy a house in the summer. Right now our credit scores are in the low low 500's. We have about 5 collection accounts ranging from 2003-April 2007. I paid off about 4 collection accounts but don't have the money to take care of these all right now. I have our credit cards paid down to 30% and have been paying our vehicle and credit cards on time. Is it possible to get our scores up to mid 500s to qualify for a good mortgage loan by July? Our mortgage person is a friend who told us we needed at least a 540 to get a good rate and 97% financing.

Update:

In response to the answer, we have dealt with people we don't know and seem to get screwed every time, at least I can trust her. I actually monitor our credit at myfico.com

11 Answers

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  • Anonymous
    1 decade ago
    Favorite Answer

    Well, I deal with underwriting so I can tell you that it will be difficult but not impossible to raise your score. But 5 months is not exactly realistic. If you've had collection accounts, even though you've paid them off, without negotiating a "pay to delete", which is a payment in exchange for removal from the report, the collection may be paid, but the damage is still done to your score. Getting them removed as if it never happened is the best thing Also, another thing to keep in mind is that the last 24 months of payment history on all accounts affect your score the most. One thing that will help you out is by enrolling in PRBC. This is an alternative credit bureau that reports non traditional accounts such as rent, utlities, insurance, etc, to build credit. Also, back in November, they've teamed up with Fair Issac, in order to roll out a new FICO credit score called the FICO expansion score. If you pay rent and utlities on time, this is a way to boost your score.

    Here's a press release

    http://prbc.com/main/about/prbc-20071114.php

    I also posted links to neogitate debt as well

    Good luck!

  • Pengy
    Lv 7
    1 decade ago

    Just because you paid them off does not mean they come off your credit report, at least not for 7 years, 5 collections the most recent being 4/07 you are not going to be able to raise your score enough in the next 5 months, sorry it will be another few years. Credit is tight right now even for prime borrowers FHA might be able to help you but that includes 5% down, closing costs, having to pay PMI, and having the debt to income ratio to show that you can afford it and no the good rate will not be good that is in the past, if available at all. Do yourself a favor and start reading the news on the economy, and housing, educate yourself and you will see that this, at this period of time is not likely to happen

  • 1 decade ago

    My mom and step dad just went through the same thing. Her score is very low, under 500 and she recently had her house foreclosed. Her husband also had very little credit, his was in the low 500's I believe. They were able to get an 85,000 home loan after her husband was able to get together all of his recent financial information. Bank statements showing he didn't overdraft, cell phone and utility bills, absolutely everything. But, the real estate lawyer was able to get them a loan and they managed to get an okay house on a huge lot for it. Check around, talk to a lot of people and you never know, maybe someone might be able to help.

    I don't have a lot of knowledge about credit (I'm only 19, and my other stepdad screwed mine up when I was a kid), but from what I've looked at trying to fix my own, you want to pay everything off asap. Then maybe look into a secured credit card or something? My credit union lets you open a CD, then take a loan out up to 100% of the CD balance, and paying off that loan builds your credit. You end up paying a lot, but at least at my CU they report it every month, and since it's not a large loan you can pay it off in a few months without too much interest piling up.

  • Anonymous
    1 decade ago

    Umm I would be paying off those debts before you get a mortgage your just going to go into debt further.

    As a person that is also in debt and had my scores in the 500s a few years ago and now I'm ranging between 692-702 right now. My advice would be pay everything off first. If you get a mortgage at that rating your going to be paying a sub. amount of interest.

    Rent cheap and then pay those bills and then go buy that house. Your just going to get yourself into more debt...

    Sorry to preach but trust me, I've been there and still am and my advice cut up the cards and go with the cash base-system and work out a budget each month. If you have to eat pbj and cereal it is worth it then being in debt.

    How are you getting screwed?? Your getting probably told your interest rate will be over 20 percent if not more... Plus, I'm surprised a bank will even approve you with that score.. What is the rush for buying a house??

    Again my advice is to pay down that debt.

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  • 1 decade ago

    The 97% financing is an FHA loan. It is not score driven at all. FHA looks at your last 2 years credit. You need to pay any collections that are less than 2 years old. The others can stay if they aren't judgments. You need 2 years of employment, does not have to be same job- just a 2 year history of working, no gaps. Hopefully you can document 2 years worth of rent on your home with cancelled checks.

  • 1 decade ago

    Ain't gonna happen in 5 months. You need a much better score than that and you will need a downpayment too.

    Concentrate on cleaning up the rest of your credit report. Mortgage companies will insist that all that old debt to paid before you get a mortgage.

    Take another couple years to put yourself in a better financial position. Just because you want to buy a house, does not mean you can afford to buy one. Owning a home is a lot more expensive than just renting.

  • 1 decade ago

    Look at THE site for info on credit scores:

    http://www.myfico.com/CreditEducation/

    I have no idea where you live or how high up the food chain your friend is, but you will be lucky to get any kind of subprime loan with a score in the 500s. If you don't have at least 640, I wouldn't count on getting anything offered, especially now. I suggest you speak with a non-friend to get an idea about what is really out there for people in your circumstances because I think you've been misled seriously. You need to work on your credit score, of course, but you also need to know what your real options are.

  • 1 decade ago

    You are headed for some serious trouble. You and your husband are in no position to consider purchasing a home. To purchase a home you must have no less than 10% saved to put down (ideal would be at least 20% down). These 97% loans and such are the reason that so many people are upsidedown are their mortgages now and therefore losing everything. I suggest that you get one of Suze Orman's finance books, she is great and very knowledgeable about these types of things (her books have helped my husband and I out tramendously). Good luck and please please please do not buy a house this summer, it is a bad move for a couple in your current financial state.

  • 27ysq
    Lv 4
    1 decade ago

    Pay off your collections , then go after paying your credit cards. then take another look. i would hold off getting the property until you only have a car payment and no other debt. your situation indicates a catastrophic financial occurrence [medical] ,disorganization in bill paying ,and/or living beyond your means.

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    4 years ago

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