Complex Credit Situation

Financing, Hard Money Lenders, Private Money
1

Ok on September 11th 2007 i had a 787 credit score. and no debt but around 2000 in student loans.

On Sept. 12 i purchased a car for 11,000
On October 1 purchased a house (as my personal residence)

Things started to get tricky on November 26th. To make a long story short I borrowed about 25,000 from my credit card to purchase another rental property in the Cincinnati market. I didn’t end up getting the house because they wouldn’t accept my lowball offers.

So since November 26th i have been biding on properties in hopes of getting one. Currently i have a property under contract to buy, but is being delayed because of title issues.

My plan is once this deal closes i will do a cash out refinance and put a mortgage on the the house to pay back the credit card company.

Yesterday however I ran my credit and I had a VANTAGE SCORE i believe was 650 (which was pretty low) if it wasn’t 650 it was one category away from being the worst rating. I would assume that the VANTAGE SCORE should translate into a similar Fico score even though they are calculated differently. http://www.bankrate.com/brm/news/debt/debtmanageguide/vantage-scores2.asp?caret=40

Keep in mind that I have had a credit card since i was 16 and have always paid my bills on time AND in full and also I still have every penny of the money that I borrowed in a money market savings account.

My question is

  1. Will i even be able to qualify for the cash out refinance in the first place so I can pay back the money to the credit card company? (there is significant equity in this property if i get it at my purchase price)

  2. Will my credit score return to the upper 700s(Fico) once I pay back the loan? If not how long will it take you think to get a 700 (Fico)?

Any help is greatly appreciated!

2

You can still qualify for a cashouts loan with a 650 credit score, but you will most likely have to go with a full documented loan to qualify. That score is too low to qualify for a stated income cashout. I have never heard of a vantage score.

3

Don’t assume your Vantage score is equal to your FICO score. FICO’s algorithm for calculating scores is proprietary so the credit reporting agencies and whomever is creating the Vantage score are running their own formulas. Get your current FICO score so that you are comparing apples to apples.

4

Please bear in mind that the score the consumer has access to is not the same as the one that a creditor gets.

5

I would also concur that the Vantage score is not comparable.

Your score may have taken a drop though. Not sure what your limit was on that card but if you went over 50% the fic will drop. A significant portion of the credit score is based upon your revolving credit balances and limits.

Once paid off (or down) your score would shoot back up.

If indeed that low full doc cash out no seasoning may work for conventional. Stated income not likely unless using hard money.

A broker specializing in investment loans should be able to help.

6

Is there a way for you to get a personal loan to pay off the revolving debt? If so, try that option. That happened to me. My FICO dropped by 30 pts. It went back up when I paid it off with a loan. Then I realized that high balances on revolving debt counts against you more than a loan. That’s because you can always charge the card back up. Equifax.com has a decent service that allows you to view you FICO up to 4 times per yr. Use the FICO as your score guide. I believe that’s what most lenders use. Good luck.