Raising credit score while in a 13

[rjd78]

So, here's my dilemma...

I'm 2.5 years into my Ch13 plan. In about 10 months, my lease expires on my house. At that time, I'd like to purchase one. Talking to my attorney, he said that it shouldn't be much of a problem with the Ch13 Trustee to get approval to incur new debt, to buy a house. However, he said that I need to get approval from a bank first. Once I get approval, we'll petition the court to buy the house.

My problem is that my Transunion credit score sucks (600), while my Equifax credit score is really good (701). I have no idea why they're different. I checked the reports and they both have the same info on them. At any rate, I have no Experian score. For whatever reason, I simply have no score. So, the FHA loan requires 620 or higher. However, they typically go with the "middle" score from the three credit bureaus. And since I have no Experian score, they go with the lowest one; the Transunion.

My question is, how to I raise my credit score while in a Ch13? My attorney said that the Trustee will not allow me to get a credit card, even if it's a secured credit card from my bank.

Can my utility companies report my payments to the bureaus?

Are those "IMPROVE YOUR CREDIT SCORE NOW!!!!" companies worthwhile?

I'd like to try and get my score up as high as I can within the next 8-10 months so that I can take advantage of a lower interest rate. I have this feeling, that in 2.5 years, once my BK is discharged, rates will be through the roof; especially for me.

Any help is appreciated.

Thanks a bunch.

[SMinGA]

No & No.

Utilities are not credit - you pay for services as you go. And offers that sound too good to be true often are wasting your time.

Do you have any accounts that are reporting incorrectly? Correcting any errors could help. It used to benefit one's score if they were an authorized user on an account, not sure if it still does. Can try though - ask a friend/family member to add you as an AU to one of their accounts. (Preferably something open for years and low balance.)

Can my utility companies report my payments to the bureaus?

Are those "IMPROVE YOUR CREDIT SCORE NOW!!!!" companies worthwhile?

I'd like to try and get my score up as high as I can within the next 8-10 months so that I can take advantage of a lower interest rate. I have this feeling, that in 2.5 years, once my BK is discharged, rates will be through the roof; especially for me.

Any help is appreciated.

Thanks a bunch.

[SMinGA]

PS-where did you get your scores from? FICO is what you want - and FICO scores are no longer available to consumers for Experian. Not sure why, apparently that changed sometime in the last 2-3 years.

The best way to know where you stand might be to have someone run it from a mortgage/lender's office. The inquiry now would not be a real factor in 8-10 months as inquiries in the most recent 6 months weigh more. And time could add a few points, so you'd at least know where you're starting from.

[rjd78]

PS-where did you get your scores from? FICO is what you want - and FICO scores are no longer available to consumers for Experian. Not sure why, apparently that changed sometime in the last 2-3 years.

The best way to know where you stand might be to have someone run it from a mortgage/lender's office. The inquiry now would not be a real factor in 8-10 months as inquiries in the most recent 6 months weigh more. And time could add a few points, so you'd at least know where you're starting from.

I applied for a loan about 6 months ago, and the bank gave me all my info. It was my FICO scores and reports. They said I had no Experian score.

A few days ago, I logged into myFICO and checked out my scores (yeah, I was aware that I can't get my Experian score). For no apparent reason, my scores were down a few points.

I don't know what the deal is. It's all very frustrating. I'd like to go talk to someone who deals with this kind of stuff all the time, but I don't really know where to turn. The loan officer was of no help. My attorney just says to wait till the BK plan is over.

:shrug.

[NoTomatoCan]

The loan officer was of no help. My attorney just says to wait till the BK plan is over.

:shrug.

That is probably good advice.

While you may hear of a few stories of folks in BK who have successfully purchased a home, they are in the extreme minority.

You face a severe uphill battle in trying to purchase a home while in an active CH13. I wouldn't get your hopes up too much, as I suspect you will get a lot of responses similar to what the loan officer and your attorney have already provided.

[SMinGA]

One other possibility would be to find a lease w/ option to purchase situation after 2-3 years. Scores would matter when you acted on the purchase option.

[rjd78]

I appreciate the replies here.

I've looked at a lease option. There just isn't much to choose from in that regard.

I guess I'm not that concerned with getting financing once my credit score is high enough. The loan officer told me that they do lots of loans for people currently in a CH13. It's just that their scores have to be high enough, and their income has to be high enough. Not to mention perfect Trustee payment history.

So, it seems that I'd qualify for an FHA loan with this bank so long as I can get my score up.

My dad offered to put me as an "Authorized User" on his credit card. But, I don't know if that's allowed in a Chapter 13. I suppose I could ask my attorney.

[catleg]

You might want to review your credit report and dispute any line items which still show as derogatory. The nicer banks will change the status to unrated, the meaner ones will show 'wage earner plan'. In any event your recent balance should also be 0 or N/A. You don't owe anything because of the bankruptcy. I would recommend disputing by written letter, TU's website is nearly impossible to figure out and there is a bias to just reject online disputes.

[Flamingo]

The reality is this - approval for financing during an active 13 requires trustee approval. Let's just say the approval for anyone in an active Chapter 13 to purchase is house is probably at or close to 0%. That is why your attorney said to wait until your Plan is over. Your credit score right now is bad because you filed bankruptcy and probably had late payments/chargeoffs prior to filing. It will gradually improve. What you have to do is to ensure you make ALL payments of any kind on time. That includes utilities - many utilities report to the CRAs if you are late and that includes phone companies. All debt incurred after you file is your own debt that you have to pay. If you are late paying a doctor bill or anything else incurred it will really look bad for the next several years with the Chapter 13 on your credit reports.

What you need to do is investigate all this with a broker who is experienced with folks having recent BK's on their records trying to refinance or purchase. They can set you straight. Just realize your BK will affect you in many ways over the next several years and there is no guarantee you will be approved for any credit as some creditors just will not lend to anyone with a BK on their credit reports no matter what their score is.