I need to establish credit but all of my old accounts have been closed for five years. What is the fastest way?
I have a 590 credit score and my husband has a 580. We want to purchase a home this year and our scores are fine for an FHA loan but all of our credit is 5 years old. I need to show that we can pay our bills on time and I wouldn't mind raising our scores to 620 (so we may qualify for a traditional loan). I have heard of secure credit cards, which ones report regularly and could I qualify? Also we were going to pay cash for a new car but someone told me that I would be better off going through a buy here pay here that will report to my credit in order to help this issue. Is that good advice? And should I do both or which route should I go?
Thor I have been told 580 for FHA and 620 for conventional. Caren in regards to collection companies- my husband has a couple credit cards that were closed (some that were paid off and some that had remaining balances) two that had remaining balances were then reposted to his credit report about a year ago under (I assume) collection agencies. Is that what I need to pay off? And is it legal for those to be on there twice?? Also if I go through a "credit repair" specialist would this be helpful for me?
- ThorLv 56 years agoFavorite Answer
These days it is very unlikely to get a mortgage without a 640, for both of you. Make sure there are no delinquencies for two years and you both have two years of steady employment.
Go through each bureau and dispute and incorrect information.
If you have collection accounts talk to the creditors and try to pay them off and have them remove it from the bureau. Sounds like they are all old (5 years) so they may be willing to do so. Showing them paid is still better than still in collections.
Both of you should have at least one open line of credit, ideally with a limit of 2k. DO not utilize more than 40% of the limit on either card.
Good payment history is really most of your score. Stay on top of your payments and it will increase.
EDIT: 580 is the federal minimum for FHA, but 640 is the standard today.
Credit repair specialist do not do anything you cannot.They just pay your debts for you.
- bdancer222Lv 76 years ago
Your info is not correct. FHA requires at least a 620 FICO score, but most lenders require 640. Conventional loans require a minimum of 720 FICO.
You also need all three credit reports to be clean -- no unresolved derogatory items. You should be able to negotiate settlement for 25% to 50% in a lump sum, depending on the age of the default. Get any settlement agreement in writing and do not give the collector direct access to your bank account.
It is normal for the original creditor to show on the credit report as charged off and a 0 balance. The collection agency would also show. If the debt is sold to yet another collection agency, the debt would be listed for a third time. This is perfecty legal. People reviewing your credit report realize this is all one debt that has been sent to collections.
Stay away from credit repair companies. The only thing they do well is take your money. They cannot do anything to remove legitimate negatives from your credit.
Buy here/pay here car dealers do not report to the credit bureaus and won't help your credit at all. Those lots tend to have nice looking, overpriced, mechanically crappy vehicles and very high interest.
You need to rebuild your credit. A secured card is probably your best bet. Wells Fargo offers a secured card with a low annual fee that will allow you to convert to a regular card after a year or so.
- CarenLv 76 years ago
every collection company needs to be fully paid down to $0.
you have not done this.
getting a secured card is useless if you owe collection companies money,, they will sue
buy here pay here places don't report to the credit bureaus,, worthless.
more: yes, the collection agency is what needs to show paid,,, not the original credit card company,,, just ask again in a new question,,, trust cat dad's answer with the link on how to negotiate a settlement,,, not hard to do. you'll need a cash lump sum
forget credit repair people !!! they will just scam the daylights out of you
they don't do anything you can't do yourself,,, and that's call and settle
- falsi fiableLv 76 years ago
Sorry, you and your husband will not qualify for a mortgage anytime soon.
Also, Buy Here, Pay Here are for people with no credit. That is yet another trap that will tarnish your credit. Their cars are usually 7+ years old and in terrible shape.
Read "Personal Finance for Dummies" to learn ways of managing your finances. Or anything written by Suze Orman.