Credit Advice

Have a question? Have advice to share? The combined knowledge and experience of everyone in the Credit Karma community can help you. Enter your question or help others below to get started!

Question

Posted in Credit Scores
Profile Image

Question By
lts2008

2 Contributions
0 People Helped
What steps to take?
In Nov 2015 I lost my second job decreasing our income. So we started a debt settlement program. Since then our credit has dropped to Me-520 Wife-580 due to missed payments on debt in program. We now have increased our incomes Wife-$40k Me-$40k with increase to $55k+ in next 2 years. We would like to purchase our first home in the near future (6 months to 1 year if possible). With $4k in cash from previous job and no emergency fund, What steps should we take to achieve our goal?
Wife’s C.C.- $3,075.00 in program 110% utilization
Car 1- $4,224.00
Lending Club- $4,993.00 in program settled
Avant- $5,094.00 in program
My C.C.- $7,598.00 in program 117% utilization
My student loans- $19,000.00
Car 2- $30,081.00
TOTAL DEBT $74,065.00

Your Credit Scores Should Be Free. And Now They Are.

View your scores and reports anytime.

SIGN UP NOW
All Responses

Results 1-2 of 2Results per page: 5 | 10 | 25Page 1 of 1   Previous | Next
Top Contributor
5038 Contributions
1136 People Helped

Be realistic. Put off the home purchase for a couple of years until you get your financial affairs in order. In the meantime you will have time to build your credit up to where it needs to be. Read everything that you can about credit and work to get your bills paid off.

Top Contributor

Reply by
jwsister

7377 Contributions
3814 People Helped
Helpful to 1 out of 1 people

Right now, neither of you have a good credit score and those missed payments are negatives that are going to impact any chances of getting a mortgage.  Owning a home is not as easy as renting (personal experience here) because of taxes aand insurance and the inevitable repairs that will come up at the most inconvenient times.  You need to get the credit card down to 10% or less usage and strive to pay them off in full every month.  Build that emergency fund up, too.  This site has really good articles and interactive financial tools that I found very helpful.  Being patient will pay off.

Reply by
lts2008

2 Contributions
0 People Helped

Should we continue with the debt settlement company or try to get out. Also should I use some of the cash on hand to pay off my wife's cc or leave it in the settlement company. This is her only debt in the program shes not signed on any other debt in the program.

Top Contributor
1884 Contributions
3682 People Helped

I agree with the others.

Based on the info you gave you need to pay off at least  $66065.00 + the interest on the debt.  You will also need to Save up at least  6 months of living expenses for your emergency fund.  Then you will need to save up the 20% down your going to need for a down payment in order to avoid PMI.

  According to my ruff estimate that should take about  2 1/2 years if you can dedicate 50% of your income to paying off debt and saving. Paying off the debt should get your score up to where you will need it to be qualify for a decent rate on your mortgage.

Good Luck

Results 1-2 of 2Results per page: 5 | 10 | 25Page 1 of 1   Previous | Next

Your Credit Scores Should Be Free. And Now They Are.

View your scores and reports anytime.

SIGN UP NOW

Reply to this Question

Write your response:
Enter Your Comments

The Credit Advice pages of the Site may contain messages submitted by users over whom Credit Karma has no control. Credit Karma cannot guarantee the accuracy, integrity or quality of any such messages. Some users may post messages that are misleading, untrue or offensive. You must bear all risk associated with your use of the Credit Advice pages and should not rely on messages in making (or refraining from making) any specific financial or other decisions.