[fico_tiger]

Hi everyone, I'm new here. I originally posted this in another forum, but didn't really get too many responses, so I'll try here.

For the last few years, I racked up 13,000 on one CC, and 2000 on department store cards. The department cards were closed due to inactivity, even though I was still making payments monthly. I also had many loans with Wells Fargo, around 8,000 in total. They were in perfect standing. I consider myself a victim of bad lending practices (28 % interest anyone ??), and didn't really understand interest rates. My fault. I will never do such things again.

My FICO score is around 550. There were a couple late payments (30 days)
and one collection for an old home phone bill ($160) that was marked as paid about 7 months ago. I find in hard to believe that my score was that bad, and I can only attribute it to the fact that my cards were maxed out almost every month for a year, I had 1 collection, and a couple late payments.

After researching a strategy, I went with a consolidation loan. the bank wouldn't give me one because my assets were not greater than net worth.
So I turned to my parents. Thank god I'm in a position where I could turn to someone for help that wasn't going to screw me. I took out a favorable loan with them, best art is it's off the "official" record.

I've now paid off EVERY last bit of debt. No CC balance. No loan, No car lease (I own a used car), No mortgage.


I will buy groceries every month on the cc, pay it off in full.

I pay all my bills on time (utilities, cell phone, etc..) every month.

I want to buy a home in 2 years. Realistically, how much will be credit score increase ? I do not plan on applying for any more credit, so there shouldn't be any new inquiries on my account.

Can I expect at least 100 point increase in 2 years ?

Thank you very much for any responses!

[Hedwig]

What's your history? How long have the accounts been open? How many derogatory accounts, and what type are they (collections, late pays, etc)?

What is your mix of accounts? Utilization ratio?

There are a lot of things taken into account in computing your FICO score.

[fico_tiger]

thx for the response. I have a relativbely long history.

I've had about 4 loans, 2 with main bank, 2 with wells fargo, over the course of the last 5 years. All were in excellent standing, no late payments, and all are now paid off.

I had a car lease for 4 years, never missed a payment, and lease expired about 6 monthes ago.

Previous to 5 years, I did have 1 credit card with td bank owed 1400, that was sent to collection. I paid the amount owing a couple monthes later. I can't see it on my credit report anymore.

I have one collection account from about a year ago, that has been paid, but it still on my report (as paid).

I do have late payments as recent as a few months ago on my current visa card (30 days reported) which is fully paid off now, and a Best Buy card (fully paid now), but that account is closed as I never used it, but was making monthly payments.

so I guess in the last year, perhaps 3 30 day late payments, and one paid collection from a year ago.

I have no debt now...and will pay all utilities & cell phone etc... on time

Is it too late to get mortgage in 2 years ?

[Hedwig]

Closing the Best Buy may not have been the best thing to do. A mix of account types (store, gas, major credit cards like Visa and MC) seem to be best for the score. In addition, closed accounts don't factor into your utilization ratio.

The late pays will hurt, but the impact lessens with time. If they're as recent as a few months ago, you might not be able to do much now except make sure you pay on time.

In another six months to a year, if you're making all the payments on time, you might want to contact the lender and ask if they'll remove the lates as a goodwill gesture. But have a good payment history for a while first, so that you can show that you have turned yourself around. If they're recent, my bet is that they won't remove them now.

If you only have one credit card, you may want to think about getting another card or two. It seems that multiple accounts are better than one. Your score will take a hit initially because of the newness of the accouts and the inquiries, but if you do it now, you'll have time to get the history built and the inquiries can age off before you apply for a mortgage.

One thing that may boost your score quickly is to be added to someone's good account as an authorized user. There is talk that AU accounts will not be considered in the future, but for now it still seems to help.

If you go into the mortgage forum, Loan Doctor has posted some articles about things like this. Do some reading there and if you have specific questions, post them.

[fico_tiger]

thx for the response. I didn't actually close it. A month after I opened the account, Best Buy switched from Wells Fargo to HSBC, and I got a notice saying that the account was closed. I never bothered to re-apply for a new card, and just kept paying of debt. The same thing happened with a Future Shop card. They both show up as closed on my report, but the monthly statement from the futureshop still shows my available credit as 1500 on the statement.

[fico_tiger]

Another thing I noticed on my credit report, that my old car lease shows up as paid as agreed, high limit of 19,000, balance as "unavailable", not closed. I returned the car in January when my lease expired. Is this something to be concerned about ?

[Hedwig]

You might want to dispute it with the CRA and say it's closed. The danger is that if it's not verified, it might be deleted.

You might also want to contact the creditor and ask them to update--that way it won't get deleted.