Regarding Credit !!!

This is a 2 part question regarding credit.?

First I am trying to find out what is the best way to improve my credit score for a mortgage approval to purchase a home for the first time. Currently, i have two judgements from old credit cards totaling a balance of 3k. Those have both been paid to law firms this week.

.
In addition i have approximately 1000 to 1500 in various and numerous collection accounts approximately 10-15 accounts depending on which report you look at. some of them are six years old some are less than two years old and the highest balance on any one of them is $300.

.

Being that i just paid off the judgements i dont have a lot of other cash lying around to pay anything else. I also have a secured credit card with a 500 limit that i never pay late or carry more than $125 on. only had that account since june. Also an auto loan just opened last month for 5k that is current and will continue to be paid on time. my scores are anywhere from 587 experian to 630 equifax and 617 transunion...how do i get over 700?




The Answer : Okey , here's the real....

.

But first, to give you an idea of what you're working with, I'm going to break down what makes up your score:

.

1.Payment history- 35%

2. Total debt owed vs. availalble credit- 30%

3. Length of time establishing credit- 15%

4. Types of credit established- 10%

5. Inquiries and New accounts- 10%Having said that, here's what you need to work on.

.

1. Paying those judgements off will help, but it would help more if they were either changed to a favorable rating or removed altogether. Keep in mind that those judgements even though paid, will stay on your report 7 years.

.

2. As for the collection accounts, there's several ways that you can go with this. You mentioned that some of the debts range anywhere from <>

.

If a debt is older than 5½-6 years, there's no sense in paying it since the SOL will expire and it will stop reporting after year 7. The more recent debts, you may be able to settle. Here's a link on how to settle debts that you may find useful.

.

http://creditinfocenter.com/debt/settle_...


http://creditinfocenter.com/debt/neg_rat...


http://creditinfocenter.com/debt/CanCred...


http://creditinfocenter.com/debt/ActualD...

.
Now as for the accounts that you have, the car loan will help since it's an installment loan, and the secured card will end up being your ace-in-the-hole. Reason I say that is that 30% of your score depends on how much you have available versus your total debt.
.

A secured credit card can help you change that because you can increase the credit line by adding to the deposit. One thing that would help your score tremendously would be to aggressively start adding to the deposit. This money would also serve as a down payment toward the house.

A credit card with a high limit and a low balance definitely helps your score. As long as you keep the balance manageable, when it comes time to convert to a regular card, you'll keep the limit you built with the deposit, which you'll get back anyway with interest attached.
.
And another thing to think about is this, with the recent situation with mortgage lending, I would strongly suggest waiting some before pursuing buying a house, at least a year, if not 2. The mortgage industry's going back to what's called "common sense" lending in which other factors besides credit score will be taken into consideration.Hopefully my answer will have shed some insight for you

Good Luck!