How can my husband and I bring up our credit score to refinance in about 9 months?
brownsugar1961 asked:
My husband’s middle credit score is 599 and mine is 587. We bought a house in Nov 2006. It’s an ARM 80/20 loan which means our payment will go up in Nov 2008. We both have a lot of charge offs and collections from previous divorces but, we have paid some off and we are working to pay off the othres. We both have been told that when refinancing they only look at the last two years. Is this true? We have heard so many different stories from lenders and we are really confused right now. Is it impossible to refinace with scores this low. What we don’t understand is we have paid the mortgage on time every month and also our car payment but it don’t seem to help any. What can we do?? Please advise us both.
Lloyd
My husband’s middle credit score is 599 and mine is 587. We bought a house in Nov 2006. It’s an ARM 80/20 loan which means our payment will go up in Nov 2008. We both have a lot of charge offs and collections from previous divorces but, we have paid some off and we are working to pay off the othres. We both have been told that when refinancing they only look at the last two years. Is this true? We have heard so many different stories from lenders and we are really confused right now. Is it impossible to refinace with scores this low. What we don’t understand is we have paid the mortgage on time every month and also our car payment but it don’t seem to help any. What can we do?? Please advise us both.
Lloyd
Tags: Credit Score, Divorces, Lenders
May 25th, 2009 at 8:41 am
Chad
Hi,
It’s very much possible with the credit score. Try to explore different options. Checkout for some useful info and tips on handling the situation. Good luck!
May 26th, 2009 at 6:59 pm
Ruth
Are you carrying credit card balances? Pay down the credit cards to below 30% of your credit limit. Paying them off completely is even bettter. This will improve your debt to availble credit limit ratio.
They are going to look at more than two years. Work on settling those negatives. Start with the newest one and work backwards. You should really concentrate on clearing up as much as possible. Your scores are pretty iffy for a new mortgage.
May 28th, 2009 at 9:38 am
Ray
BrownSugar,
The truth is . . . the 24 months is what matters. . . if you expect a refinance with the tightening of credit that is going on in America, you need to make sure the 24 month period the potential lender looks at is spotless AND that you address and pay-off old collection items.
You can try to ask EACH creditor for a pay-for-deletion arrangement which you must send in writing and send via certified mail to the collection agency. Do NOT talk over the phone about these matters.
If they agree to it in writing when corresponding back to you (and have signed the letter), then send the collection agency the payment as promised.
Then forward a letter to the credit bureau requesting deletion of the collection item. Enclose a copy of the “agreement letter” AND a copy of the cleared check as proof of the truthfulness of your claim.
Once these collection items are removed from your credit report, you should see a rise in your FICO score.
And of course, continue to pay ALL bills on time, without exception.
A form letter for this pay-for-deletion arrangement is contained in the link.
May 29th, 2009 at 9:31 am
Randy
There are many different criteria that are evaluated affecting your credit score. Just a few are: amount of open credit, (either too much or not enough), late payments, number of recent credit enquiries, Number of reporting credit entries, and on and on. For your refinance, they will be looking most heavily at your debt-to-income ratio, any equity you have in the property, and then your credit score. They use these to develop a risk evaluation on your ability to repay their loan timely and completely. With a year to go, there are things that you can do to improve your debt to income, reduce the number and amounts of credit lines you have and place yourselves in a position to get a better deal on your refinance product for your home.
The best way to do all of that is to get with a proper financial coach that can show it all to you. Even if he/she does not have a product that will immediately help, you will get a plan for debt stacking that will hurry up your improvement. If you would like more details IM me and I will be glad to help you with more detailed information or get someone that, while not trying to SELL you anything, can offer you more applicable, pertinent advice.