Credit building advice needed?

Beverly S

Hi, I am a mortgage lender (since 1986). In your case I would get rid of the delinquencies first.. when we look at credit there can't be any late payments in the last 12 months. Next step would be to start getting your scores up by keeping credit card balances under 50% of the limit. This REALLY helps & 33% is even better. 640 is a target score for most programs but the better the score, the better your rate. Lenders pull all 3 credit bureaus for both buyers & take the middle score of each as our qualifier.. We look for at least 2 year job histories (doesn't have to be the same job- but no gaps in employment.) It's okay to change jobs as long as you don't take a cut in pay. There are several different options for down payment.. VA (if you or spouse) is a Veteran requires zero down payment. USDA also has zero down, but needs a 680 score, lower income & must buy in a Rural area. When I say lower income I mean you can't make OVER a certain amount per year.. depends on where you live what the limit is. Then there is FHA - 3.5% down payment (can actually go down to 620 score or even lower.. depending on compensating factors. Finally there is Conventional which normally requires 20% & a higher score. Hope this info helps!

Michael

Pay off the delinquencies. Use the remainder to reduce any other debt, especially high interest credit card debt.

nt

Pay what is late first, and then pay the highest rate debt next. Don't expect quick results. Building /improving poor Credit is a slow animal.

real estate guy

First, PLEASE talk with a mortgage lender (or even a couple) and have them pull your credit report. They will tell you want you need to do in order to get a mortgage. DO NOT WING this yourself. Usually you would need to pay off the accounts that are in delinquency. You should be saving around 10% of your gross monthly income without fail. And you should be paying down the credit cards each month, making payments that are MUCH more then the min payment. IF this means getting a part time job and using this money to pay down debt and to increase savings, then so be it.

Slumlord

If you can pay off the delinquent accounts and still be ok on everything else, then do it. It'll get your credit moving up more quickly. If there is any chance you will need the money in the next few months then I'd just hold onto it. No point in paying off these old accounts just to go back into more debt in a month.