Best strategy to raise score to attain morgage?

[moving4ward]

Hello, thanks in advance for your help!

I'm trying to improve my credit so I can qualify for the best mortgage rate possible. I'll be a first-time homebuyer. I have downpayment saved, but I know my credit isn't the best. I have a few negative items and a few positive. I'm hoping to get advice on how to strengthen my credit profile, as well as what strategy to take to deal with the negatives. 

My scores are 643, 651 and 679.

Negative Items:

- I have an account with Progressive Mgmt for $1108 opened 8/2016. I think this is a collections agency for a medical bill from 2016.

- I have two accounts with a credit union for $1065 and $232 both opened 1/2013. (I thought items only remained on credit reports for 7 years?) This is 2 credit union accounts I let get overdrawn then they closed on me and I never paid it off.

- I have several late payments on 2 vehicle loans that were opened in 2012 but I caught up and paid off the loans in 2017. 

Positive Items:

- I had a vehicle loan opened in 2011 and paid off in 2014 with no negatives

- I had a student loan opened in 2002 and paid off in 2012 (again, I thought items only lasted 7 years?)

- I had a Bank of America line of credit opened in my name by my parents when I was a child in the 80's and it was closed in 2012 (obviously I'm wrong about 7 years)

So as you can see, I don't have much credit history at all. I think I need to deal with the negative items and build up some credit history by taking out some credit cards or new car loans. So I'm asking for advice in 2 areas...

1. What is the best way to deal with the negatives? Should I call and offer to settle if they delete the items from my reports? Should I hire a credit repair agency to handle them? 

2. What is the best way to build up more credit? Should I apply to credit cards? Should I buy a new car?

 

[moving4ward]

Has nobody replied because I"m missing info or something?

[willingtocope]

You  est approach would be to contact the negatives.  Try to negotiate a "pay for delete". Even if they won't deal, pay them off.  Wait.  In 6 months or so, your scores will climb.  Don't take out new credit.

[texasrocker]

Negative items can only be reported for seven years while positives will usually show for ten years which can be to your advantage.

[moving4ward]

22 hours ago, willingtocope said:

You  est approach would be to contact the negatives.  Try to negotiate a "pay for delete". Even if they won't deal, pay them off.  Wait.  In 6 months or so, your scores will climb.  Don't take out new credit.

Thanks for the feedback. I contacted the negatives and was able to get one deleted. The other 2 refused to delete but I paid them off so they should show $0 balance. 

I'm curious about your advice to not take out new credit.... I've heard that I should take out a credit card and an installment loan to start building more positive credit history. Why do you think I should not?

[moving4ward]

5 hours ago, texasrocker said:

 

 

Negative items can only be reported for seven years while positives will usually show for ten years which can be to your advantage.

That makes sense. It turns out the negatives with the credit union opened in 2013 but didn't go negative until 2015, so I still have 2 more years on those. 

[willingtocope]

New credit will help you get new credit cards.  Doesn't help so much with a mortgage.  The scores that CRA's report to the consumer are "sucker" scores.

[Frank_Allan]

Hi, you don't need to raise your score for the best mortgage rate possible, some time ago I was also looking how to raise my score for a better rate, but then one of my friends told me about a company who gives cash advances in Denver with only 1% annul rate and without any hidden fees. This company gives loans even to people with a bad credit score. I recommend you to address to this guys and don't waste time trying to get a better credit score.

[LaneBlane]

Before you can obtain a home loan you'll have to pay off any collection accounts, even if the debt has past the statute of limitations.

Applying for new credit is going to add some inquiries to your credit report that will remain for two years.  The number of inquiries can affect your credit score, so you should keep this in mind.  If you do open some credit cards to establish new credit, just be sure you're disciplined in your use of the cards so you don't accumulate more debt.

Do you have any negative payments on your report that are over 7 years old? 

Since you have a down payment saved for a house, I'd recommend seeing if you can negotiate a "pay for delete" with Progressive Management.  Just be sure to get something in writing from them that says they'll delete the item from your credit report upon payment in the amount of $XXXX. (Don't mention anything about trying to clean up your credit.)

[fisthardcheese]

I hope one of the ones you paid wasn't a credit union who are reporting beyond 7 years in violation of Federal law.

How I would have done this is:  Dispute the 2 Credit Union accounts with all 3 CRAs as too old to report. They should be deleted by the credit unions.

I would also dispute the medical collections as inaccurate and see if it is verified or removed.  If verified, I would look into the debt to see if it is in fact being reported completely accurate or not.  If not, I have leverage to use in court or an arbitration filing to negotiate a removal.  If that isn't possible, I negotiate a pay for delete for that one.

NEVER open a new account within a year of applying for a mortgage.  The longer between opening a new account and your application the better.  You don't need to raise your "good", you only need to remove those bads with balances showing as past due.  That alone will raise your score into a good area for a mortgage.