I have been paying bad debts off since January 2010.my credit score is 574. i want to get a FHA loan is it worth it to do so or am i just wasting time

Asked by Shon Mumphrey, 76179 Tue Sep 14, 2010

I am married
I have been at my job since 1997
our combined income is 61,000 yearly
we want a house min 110,000 to 120,000 max
we have 3,000 down
I know for sure i have 2 more credit cards to pay off for about $1000 both bad debt
will this help my score if i pay them off?

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, ,
Tue Sep 14, 2010
Paying them off may do more harm than good.
Also, if you 't have a lot of open credit you need to establish some.

http://dallasloanguy.com/docs/about_credit.pdf <= read this free e-book about credit and let me know if I can answer any questions.

1 vote
Don Groff, Agent, Austin, TX
Tue Sep 14, 2010
Paying on bad debt may not help you in the long run. It depends on how old the bad debt. The older it is the better off you will be leaving it along. In fact paying on a bad debt that is over 2 years old actually makes it more recent and can hurt your credit score.

You should really get with a lender in your area who can spend the time necessary with you to view your profile and see what can be done to improve your credit. Paying on a debt after the damage is done does very little if anything. You want to make good decisions going forward. If you have good debt like credit cards keep them at or below 50 or even 40% of your limit. Pay anything that appears on your credit report on time or early.

You may also want to set up a secured credit card with a bank that reports to the credit bureaus. You can do this by establishing a CD with say $500 or more. The bank then gives you a credit card for that amount and you use it just like a regular card. This way you get an additional trade line and you will eventually be able to get a secured card in a year or so.

Good luck with your credit rebuilding..... keep up the good work and you will be able to buy a house sooner rather than later.
1 vote
Chris Tesch, Agent, College Station, TX
Tue Sep 14, 2010

Tom Burris's book will be an excellent resource for you. He's one sharp guy! The only thing that I'll add is that if you can negotiate with the lender and tell them that you will pay them off in full if they remove it from your credit it might work to help you. In the past I've seen that happen successfully.

Good luck!

Web Reference:  http://www.ChrisTesch.com
0 votes
, ,
Tue Sep 14, 2010
I am going to answer the best way that I can, but the short answer is yes. If you have an account that is currently open with outstanding balances then you definitely want to pay them down to below 30% of the limit. This will help your score tremendously. If they are closed accounts with outstanding balances then you will want to pay them off as soon as possible and make sure that you have at least 1 open revolving account to help increase your score with good payment history. I would need to know if there are any late payments on these accounts because that will also affect how the score changes. If you would like to go over this in more detail please feel free to give me a call and I would be happy to help in any way that I can. You can reach me at 817-944-8094. You can also go to http://www.optoutprescreen.com and opt out of pre-screened offers. This will increase your score by an automatic 5-10 points. I hope this helps! Talk to you soon & Have a Blessed day!
0 votes
Dallas Texas, Agent, Dallas, TN
Tue Sep 14, 2010
GREAT PAY OFF THE DEBTS however never close an account it will tank your credit scores. Paying your bills timely, reducing debt on each balance on open accounts by 50% or more will increase your credit scores.

Job history works !
Income is great !
You will need 3.5 or more down payment plus closing costs

If you have been late pay for each account it will tank your scores by approx. 30 pts.

Lynn911 Dallas Realtor & Consultant, Loan Officer, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
0 votes
Sloan Yorek, Agent, Fort Worth, TX
Tue Sep 14, 2010
This lender below can tell you exactly how and why it IS worth it. She's helped MANY other wise unqualified persons become able to buy a home. I can send you examples of clients that she's helped.

DeAnna Morgan
Mortgage Advisor
Cendera Funding

Cell: (817) 944-8094
Office: (817) 447-4443
Fax: (469) 621-2152
0 votes
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