Best Way To Repair Credit, and Reasonable Expectations

For just about anything you want to get off your chest about credit cards.
User avatar
CarefulBuilder14
Centurion Member
Centurion Member
 
Posts: 3744
Joined: Thu May 08, 2014 7:42 pm
Location: United States

Re: Best Way To Repair Credit, and Reasonable Expectations

Postby CarefulBuilder14 » Tue May 05, 2015 12:53 pm

protechig wrote:
CarefulBuilder14 wrote:What sort of price do you expect to pay for a home? If you can save a big chunk of your income, a big down payment will make it easier for a lender to overlook your bad history.


How big of a percentage are we talking? While i'm not against it, i'm looking to purchase a multifamily unit (for investment reasons) so the least I put down the better. Also FHA loans won't take that into account since there underwriting on strict guidelines set by the government.

I thought you wanted to buy a property where you'd be the owner-occupant. Getting a loan for an investment property will be even harder.

The specifics will depend on your market, but for a multifamily investment property with bad credit, I wouldn't be at all surprised if you had to put 40% down. Otherwise, the APR (on the slim chance you'll get a loan) will be awful and eat up your profits. Multifamily mortgages aren't usually subsidized and are less liquid than mortgages for owner-occupied properties.

I've done some work for a successful multifamily property investor. He has tended to put about 30% down and keeps rents low. It requires a big cash outlay at the start, but the properties are rented quickly to low-risk (not always no-hassle) tenants, and they are producing steady, positive cash flow (and accounting profits, too, actually) within weeks of purchase. I'm sure his credit report shows that he has successfully paid off millions of dollars in mortgages over the last few years, and even he isn't able to qualify for the super-low rates that owner-occupiers with 700-ish FICOs can get.

I wouldn't even be remotely considering this until you have paid off your debts and have a lot of cash on hand.
Wallet: Prestige CSP SchwabPlat Freedom It Hyatt SallieMae AAPlat
SD: Arrival BrooksBros BCE ED IHG
Letting new accounts cool off since May
Really not sure what I'll add next or when


protechig
Green Member
Green Member
 
Posts: 16
Joined: Sun May 03, 2015 1:24 pm

Re: Best Way To Repair Credit, and Reasonable Expectations

Postby protechig » Tue May 05, 2015 1:40 pm

CarefulBuilder14 wrote:I thought you wanted to buy a property where you'd be the owner-occupant. Getting a loan for an investment property will be even harder.

I am. The plan is to purchase a multifamily unit (or a single family unit and convert it to a multifamily - if it makes fiscal sense). I would then live in one unit and rent out the other 3. While i'd still want it to be cashflow positive, while being rent free for me, i'm not overly concerned about the profitability perspective.

CarefulBuilder14 wrote:The specifics will depend on your market, but for a multifamily investment property with bad credit, I wouldn't be at all surprised if you had to put 40% down. Otherwise, the APR (on the slim chance you'll get a loan) will be awful and eat up your profits. Multifamily mortgages aren't usually subsidized and are less liquid than mortgages for owner-occupied properties.


I would be able to do 40% down when the time comes. Again, even if I get a loan with not the best interest rate (but is cashflow positive, or even slightly negative, realistically) i'd be fine with that, then I can refinance down the road when my credit gets much higher.

CarefulBuilder14 wrote:I've done some work for a successful multifamily property investor. He has tended to put about 30% down and keeps rents low. It requires a big cash outlay at the start, but the properties are rented quickly to low-risk (not always no-hassle) tenants, and they are producing steady, positive cash flow (and accounting profits, too, actually) within weeks of purchase. I'm sure his credit report shows that he has successfully paid off millions of dollars in mortgages over the last few years, and even he isn't able to qualify for the super-low rates that owner-occupiers with 700-ish FICOs can get.

I wouldn't even be remotely considering this until you have paid off your debts and have a lot of cash on hand.

That's what I want to do, ideally while living in one of the units myself. I am aware that investment/additional properties will always be at a higher rate than than a primary owner-occupied because there is more inherent risk. I wouldn't consider this until about 13 months from now where all of my debts will be paid of (in 1-3 months) and i'll be saving from there.

Thank you so much for your feedback!

amex007
Centurion Member
Centurion Member
 
Posts: 131
Joined: Wed Apr 01, 2015 3:31 pm
Location: NY

Re: Best Way To Repair Credit, and Reasonable Expectations

Postby amex007 » Tue May 05, 2015 4:19 pm

rockyrock wrote:6. Do try to negotiate with creditors/collections to have negative entries removed as part of your payoff agreement. This isn't likely to work but can't hurt to try.


Why do you say its unlikely for a PFD? Just curious.
It used to be that paid collections still remain on your CR for the rest of the 7 year period but i hear that now it's changed that once you pay off the collections, it doesnt show up anymore. Thus not penalizing those who have made an effort to settle their derogs.
Amex Gold NPSL | Amex ED 28500 | Barclaycard Arrival 17500 | Hyatt visa signature 5000
sockdrawer-- GM 4000 | Unionplus 2200
EX 795 EQ 786 TU 790

amex007
Centurion Member
Centurion Member
 
Posts: 131
Joined: Wed Apr 01, 2015 3:31 pm
Location: NY

Re: Best Way To Repair Credit, and Reasonable Expectations

Postby amex007 » Tue May 05, 2015 4:41 pm

Vermonster wrote:
protechig wrote:Capital One - 1483/1500 - $39AF
Capital One Business - 735/750 $0AF
Capital One - 370/500 $39AF
Discover IT - 235/500 $0AF
Credit One Bank - 280/400 $60AF
Amazon StoreCard - 1358/1360 $0AF
Walmart Store Card - 825/860 -$0AF
Boscovv's Store Card - $400 $0AF (haven't used it in years)


Ok so my opinion is to
A) make minimum payments on all card, always.
B) any extra should be put towards the discover, then Cap one.

With all cards over 20% I don't think there is much savings to be had with paying one down faster than another. Unless there are any close or over 25%. I think if you treat it well the discover will give you a few soft pull clis you can always try recon and tell them you want to run more of your expenses through it. Be nice to cap one so you can ask for AF to be waived. Also see about a soft pull for a cli.

I say pay off credit one soon and SD that card. Don't close it as you badly need your util to look better.


This is what i would do. Pay off your cc balances 1 by 1 while maintaining the min payment for the rest of the cards.
You can pay off your Credit One in a month and then I would close it before the AF hits ($400 CL is not going to affect your total util that much if you can pay off numerous cards eventually. Then I would pay off the Discover and SD it (I personally wouldnt want to keep adding a balance to a card i worked hard to pay off).
Then I would pay off the Cap One 370/500 $39 AF but keep it (you're not going to get much better than a $39 AF and Cap1 is a good creditor). Next I would probably pay off the Capital One Business. But you can take your choice as you have a lot of high amt cards. Wouldnt close any of the rest as they are either $0 or $39.

Overall, I would pay off in the order of Credit One, Discover, Cap1, Amazon, Walmart, Boscow's. You'll feel better after you see your own progress of paying accts off 1 by 1.
Personally I would knock out the ones that are smaller and then go higher. It is more settling to see accts paid off than being burdened with more balances across diff cards. Only start using Cap1 and Discover after all accts are paid imo.

With your collection amt of $600, that isnt so bad. You can probably settle for $300. If they wont drop it thats fine. Having a paid collection looks much better than an unpaid collection.
Good luck, you just need to remain disciplined. Not sure how realistic it is to fix your score in 13 months but you'll get it raised although your interest rate will still be high. Credit takes a long time to repair although not as long as it used to take.
Amex Gold NPSL | Amex ED 28500 | Barclaycard Arrival 17500 | Hyatt visa signature 5000
sockdrawer-- GM 4000 | Unionplus 2200
EX 795 EQ 786 TU 790

amex007
Centurion Member
Centurion Member
 
Posts: 131
Joined: Wed Apr 01, 2015 3:31 pm
Location: NY

Re: Best Way To Repair Credit, and Reasonable Expectations

Postby amex007 » Tue May 05, 2015 4:47 pm

Oh yea if you needed to use a cc while you're paying off all these cc balances, I would get a secured cc so you're not adding to any amounts you cant afford.
Amex Gold NPSL | Amex ED 28500 | Barclaycard Arrival 17500 | Hyatt visa signature 5000
sockdrawer-- GM 4000 | Unionplus 2200
EX 795 EQ 786 TU 790

protechig
Green Member
Green Member
 
Posts: 16
Joined: Sun May 03, 2015 1:24 pm

Re: Best Way To Repair Credit, and Reasonable Expectations

Postby protechig » Tue May 05, 2015 11:33 pm

amex007 wrote:Oh yea if you needed to use a cc while you're paying off all these cc balances, I would get a secured cc so you're not adding to any amounts you cant afford.


Thank you for your responses. I really don't like Credit One Bank as a company, and don't want to use them long-term. I regret ever signing up for this card. I like Discover and Capital One.

Once I get all of my debts paid off, should I use the cards at all, like charge up a little bit and pay it off at the end of the month?

Thanks,
Zach

amex007
Centurion Member
Centurion Member
 
Posts: 131
Joined: Wed Apr 01, 2015 3:31 pm
Location: NY

Re: Best Way To Repair Credit, and Reasonable Expectations

Postby amex007 » Wed May 06, 2015 9:50 am

protechig wrote:Once I get all of my debts paid off, should I use the cards at all, like charge up a little bit and pay it off at the end of the month?

Thanks,
Zach


Once you get all your debts paid off, feel free to going back to using your cc's in a responsible manner - trying to PIF if you can. It doesnt matter how much you charge bc your total CL is high enough. But i would probably stay away from using those store cards unless you get a good benefit from them.

Also by the time your debts are paid, you should get better cc offers maybe from amex and chase. Good luck
Amex Gold NPSL | Amex ED 28500 | Barclaycard Arrival 17500 | Hyatt visa signature 5000
sockdrawer-- GM 4000 | Unionplus 2200
EX 795 EQ 786 TU 790

amex007
Centurion Member
Centurion Member
 
Posts: 131
Joined: Wed Apr 01, 2015 3:31 pm
Location: NY

Re: Best Way To Repair Credit, and Reasonable Expectations

Postby amex007 » Wed May 06, 2015 9:54 am

Also once your debts are paid off, i think you should PIF after the statement cuts so that they can see you have a record of paying responsibly. I know some ppl like to pay it off before the statement cuts but then i dont think a balance reports for that month and it'll just seem like you didnt use the card.
Amex Gold NPSL | Amex ED 28500 | Barclaycard Arrival 17500 | Hyatt visa signature 5000
sockdrawer-- GM 4000 | Unionplus 2200
EX 795 EQ 786 TU 790

protechig
Green Member
Green Member
 
Posts: 16
Joined: Sun May 03, 2015 1:24 pm

Re: Best Way To Repair Credit, and Reasonable Expectations

Postby protechig » Wed May 06, 2015 2:35 pm

amex007 wrote:Also once your debts are paid off, i think you should PIF after the statement cuts so that they can see you have a record of paying responsibly. I know some ppl like to pay it off before the statement cuts but then i dont think a balance reports for that month and it'll just seem like you didnt use the card.


I would definitely PIF - i'm fine doing so after the statement cuts. What I don't want to do is get back into credit card debt, but I have no issues using CCs for everyday bills (utilities, grocery stores, biz expenses, etc..). If I do end up wanting to go for a better card, like an entry level Chase card - how long should I be waiting? I know I have late payments, so I should wait what 3-6 months of consistent payments until applying?

User avatar
CarefulBuilder14
Centurion Member
Centurion Member
 
Posts: 3744
Joined: Thu May 08, 2014 7:42 pm
Location: United States

Re: Best Way To Repair Credit, and Reasonable Expectations

Postby CarefulBuilder14 » Wed May 06, 2015 3:12 pm

protechig wrote:The plan is to purchase a multifamily unit (or a single family unit and convert it to a multifamily - if it makes fiscal sense). I would then live in one unit and rent out the other 3. While i'd still want it to be cashflow positive, while being rent free for me, i'm not overly concerned about the profitability perspective.

Also keep in mind that real estate is not really a passive business. Pipes break and some people pay late, don't pay at all, and/or make you go through the courts to evict them. The frequency and intensity of problems will somewhat depend on your state laws and whether they favor tenants or landlords.

Sure, you could hire a property manager, but that's no guarantee of success and will cut deeply into your profits.

You say you're also running a business. Being a landlord, too, may not be right for you. Rental income provides diversification and a steady return, but takes up a lot of time.
Wallet: Prestige CSP SchwabPlat Freedom It Hyatt SallieMae AAPlat
SD: Arrival BrooksBros BCE ED IHG
Letting new accounts cool off since May
Really not sure what I'll add next or when



Return to “General Credit Card Talk”

Who is online

Users browsing this forum: No registered users and 2 guests