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jdbellmon · Joined: 12 Aug 2008 Posts: 8 5.19 Dollars($)

My wife and I both have a poor credit score. She has a slightly better credit score than me at around 600+ while mine is -600. However my income much higher than hers. She only makes around $17,000/yr but I make $50,000/yr. While our credit is bad, we have a very low DTI. With a Car Payment of $500 and my Student Loans at $222 our DTI is only 12%.

My first question is this. Which of us should become the primary borrower with the other the co-borrower? Also if anyone here has knowledge on VA Home Loan Guarantee, both my wife and I being Veterans have qualified and received our Certificate of Eligibility. I also receive other benefits by being a Disabled Vet. Would this help with being approved for a loan?

If anyone could give some advice on this and/or lead us in the right direction I would greatly appreciate it.

Thanks

larry · Joined: 27 Jun 2007 Posts: 3322 474.67 Dollars($)

Hi jdbellmon.

Welcome to the forum.

You have low DTI ratio and also a good income. VA loan programs are not credit score driven. So you should not have any problems for having low credit scores. BTW as you have the Certificate of Eligibility for VA loans, that should help you to get the loan. You can get the addresses of Regional Loan Centers at http://www.homeloans.va.gov/rlcweb.htm . You can also seek no-obligation free mortgage quote from the community lenders and if anyone can help you, he will contact you directly.

Hope it helps. Feel free to ask if you have any further questions.

Best of luck,
Larry

jdbellmon · Joined: 12 Aug 2008 Posts: 8 5.19 Dollars($)

Thanks Larry That's just the info I was hoping to hear. We've been delaying doing anything for a while because we were not sure this would go our way. We've been trying to repair our credit in the meantime. But we would like to have a house really soon. The info you gave looks really promising. Thanks

Thanks
Jimmy

gmakerley · Posted: Wed Aug 13, 2008 7:40 am Post subject:

jimmy, you didn't state just how low your score is; but if it's 570-plus (or so), that won't prevent you from qualifying...depending, of course, on the other strengths of the request. your job/income situations are favorable, but you must also demonstrate favorable aspects such as reasonable explanations for the credit issues that have caused the lowered scores; in addition you quite likely will be requested to make sure that all collections/charge offs are paid in full.

gmakerley · Posted: Wed Aug 13, 2008 7:42 am Post subject:

one more comment...i don't think we can safely say any longer that there is such a thing as "not being credit-score driven." in the majority of cases, you'll find a pricing penalty attached to a loan resulting from a low score. not only that, but most underwriters are required to make an awfully strong case for approving a loan with a quite low score.

sorry...i guess that was more than a comment.

jdbellmon · Joined: 12 Aug 2008 Posts: 8 5.19 Dollars($)

Thanks for the comment George. Great information!

Actually my Scores are 532 Experian, 541 TransUnion, and 556 Equifax. My delinquent listing are all medical bills -under $3000, student loans, and three credit cards -all combined under $2500. I also have a listing for a car I bought in 1997 that lasted about year. It was a lemon with a bad engine and transmission (they got me that time). Afterwards I just refused to pay for the car anymore and surrendered it for voluntary repossession. That was over 9 years ago. I could have paid some of these off, especially the credit cards, but learned that by paying some off it would show a recent payment and in turn may lower my score even more. I am still investigating those things. I feel like I can explain the car (lemon), my medical bills, and my student loans (a 12+ span of not having a full-time job). I am in the process of disputing everything on my report and hope that some things will be removed, so within the next month I hope my score can rise a bit. Whatever is removed by the bureaus, I will attempt a pay for deletion agreement with some, then whatever is left with collections and charge-offs I will paid them off. I am hoping to have all this done by atleast November.

I am prepared for the possible high interest that may result, I am able to maintain.

gmakerley · Posted: Wed Aug 13, 2008 8:49 am Post subject:

541 isn't going to go very far. i am not a believer in the theory that paying collection accounts will have a detrimental effect on credit score. there is evidence that this is so, but the credit agencies are working on ways in which to improve their scoring modules so as to prevent that. is it perfect? of course not.

one thing you can count on finding is that most lenders will require that all your old debt obligations be paid off. since how you've handled your obligations in the past is usually a pretty good harbinger of the future, lenders don't want to see a credit report full of unpaid bills - no matter the reasons.

disputing may or may not work. if a creditor can document that you owe a certain amount, a dispute will simply verify that. clearly if you can pay for a deletion, that ought to be helpful.

you noted november as the target date for the clean-up process. that's fine, but you'd better not expect to obtain a loan too quickly thereafter. what you've not mentioned is favorable credit, either. if you have some bills that are being currently paid on an as-agreed basis, that's favorable, and once your other, older things are taken care of, the good should begin to increase your score. however, if you haven't taken on any new debt to speak of that would help increase scores, it's going to take a while for those low scores to come back.

6 months? maybe. 12 months? maybe more likely. much of this depends on how you've handled credit accounts in the recent past, as well as balances as a ratio of credit limits, as well as length of time that established "good" accounts have been open.

jdbellmon · Joined: 12 Aug 2008 Posts: 8 5.19 Dollars($)

I have many favorable accounts. One being my auto loan payment with Capital One Auto Finance, which is in good standing. Another are two store credit cards, Sears and Best Buy. And one major visa credit card from Capital One. All currently have a zero balance. They all appear on my reports with activity within the last 6 months to a year (I often use my Best Buy Card but pay it off quickly if not within a month then within 2-3). I have nothing delinquent in the past 2 years. What I have been doing the past year is making purchases on my cards and making the minimum payments for a few months (just enough to show up on my report) then paying them off. I also have had a few finance and loan accounts in the past year, all paid for in good standing. I am planning to get another next week and keep it until January (when I plan to apply for a mortgage loan).

sara · Posted: Thu Aug 14, 2008 5:56 am Post subject: RE:

Hi jdbellmon,

I guess you've managed some accounts well but the unpaid bills are something that you''ll have to work upon. I mean at least try to pay some of them because you're not actually taking a loan now. So, there's some time left for you to pay down some of the bills, if not all. Why don't you take some credit counseling advice in paying those bills?

If you can manage to pay some of the accounts with a "pay for delete" status on your credit report, it's going to help you remove such items from the credit report and probably your score would go up this way.

An important factor here is your credit utilization ratio, that is, the amount of credit balance you owe to the total credit limit on all cards. The higher the ratio, the lower will be your score and hence the tougher it's gets to qualifying for a loan.

I hope you understand.

Take Care

smckaybiz · Posted: Wed Aug 20, 2008 7:46 pm Post subject:

There is one other thing that wasn't mentioned. How long have the two of you been working at your current employers? With a low credit score most lenders would like to see atleast two years with the same employer.

jdbellmon · Joined: 12 Aug 2008 Posts: 8 5.19 Dollars($)

Thank you all for all the advice. Based on your advice here, I've decided to pay off my outstanding bills on my credit. I will also try to get a "pay for delete" for any if possible.

I had someone mention to me about some of these companies that are suppose to help with things like that. I've always been leery of these "Clean up your credit" Companies. I assume there are legit companies out there but I would not know how to investigate them to see if they are. But a friend was telling me a company would challenge all my negative credit for possible mistakes and get them fixed and/or removed then work with each for get them resolved plus try for a pay for delete is possible. Basically saying they would do everything that I am trying to do plus more. A company like this would come in handy I'd be willing to pay the extra money if they could do it more efficiently than I can.

Anyone have any advice on such companies?

jdbellmon · Joined: 12 Aug 2008 Posts: 8 5.19 Dollars($)

My Wife has been working at the hospital for 3 years now. I have been working at my current employer for 15 months now.

gmakerley · Posted: Thu Aug 21, 2008 7:49 am Post subject:

something you noted about your payment habits that i would advise you to avoid is this: you mentioned that you use your credit card, make minimum payments for a brief period and then pay off the balance. though this is not at all harmful to you from a credit standpoint, you're paying interest you don't have to pay. i advise my clients to charge minimally (once or twice each month) and pay the bill in full when it comes; repeating this practice for a period of time so as to show timely payments. this helps your scores, but also avoids the needless payment of interest on your debts.

basically, it gives you the best of both worlds. those who've followed this plan have agreed that it's worthwhile to do.

jdbellmon · Joined: 12 Aug 2008 Posts: 8 5.19 Dollars($)

Thanks George. Thats something I was unknowledgeable about. I was under the impression that if I paid my bill in full it would not show up on my credit. But I now think I understand what you are saying. I can charge very little on my card each month and paying if off at the end of the month with no interest? Am I correct in understanding that just by making a payment each month, whether in full or the minimum it would still show as a monthly payment each month?

gmakerley · Posted: Thu Aug 21, 2008 9:21 am Post subject:

that is correct, with one caveat. check with your card issuer to be sure that if you pay the balance in full, you'll pay no interest. i have a suspicion that not all companies treat accounts the same way. in my personal experience, paying in full does eliminate the interest cost.

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