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What to do?

I have bad credit.  Score right around 600.  Had major surgery and subsequent hospitalization which resulted in huge medical bills.  Insurance covered the majority but I was responsible for over $30k worth of treatment.  No repossessions.  No foreclosures. Never late on my mortgage.  Never late on car payment. But have two collections relating to medical bills that are currently being paid, but are still listed as collections.

I have had late/slow payments on 3 credit cards.  Pulled credit report and found problems.  Filed disputes for items that should be removed.

Father passed away in December.  Left me a house worth $53k.  House is paid for and I've been told that the probate process will be completed in the next few weeks.  Renters have been instructed to begin making monthly rent payments to me.

My goal is to get a Home Equity Loan on the paid off home in July so I can consolidate my debt.  The individual payments to different creditors is killing me.  So far, I've applied at 2 banks and at LendingTree.  Been denied by all.

What are my options? Any suggestions?
  • May 18 2011 - Middletown
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Answers (5)

Profile picture for HGfromOmaha
Thanks for the advice everyone.  I really appreciate it.

I took the advice and took out a loan from my 401K.  I reviewed my credit report and spoke to the mortgage lender about which items I should focus on paying first.  I basically mapped out the items that I can pay off with the greatest immediate impact to my score, and then planned on a schedule for finishing off the remaining few items that are current but I would like to close.  

The mortgage lender is going to run the Rapid Rescore for me after I've paid down the balances but she told me that it's going to be $90 per line.  Is that a fair price?  She said $30 per bureau, per line.  Ouch.  This is going to hurt if that's true......


Anyway, thanks again for the advice.  
  • May 19 2011
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I agree that you ned to work on your scores.  Is your company (work) affiliated with a credit union?  Sometimes a credit union will help when no one else will.  They can use your work history with the company as a strength and deduct payments directly from payroll.  This in itself will help raise your scores. 

I hope this helps. 
  • May 19 2011
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You need to work on getting you score up at least 80 points.  Wait a few months and repull credit after those disputes you registered get resolved.  With your situation and a 600 score you have zero chance of getting a refinance, let alone a HELOC.  With a 680+ score you have a better chance of getting a automated approval when your loan is submitted(this means the bank will not nit pick everything once they start to physically underwrite your loan)).

If you have any credit cards, pay the balances down and your credit will improve.  Dispute everything negative on your credit report as well.

Hope this helps.

Paul
  • May 19 2011
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Work on the credit score.  Clean up what you can and do your best to pay everything on time.

Also, I don't know of many places that will do a home equity loan on a rental property.  Either way, you will need your credit score higher so this should be job #1.
  • May 19 2011
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I suggest speaking with a local lender vs. applying online. They can give you advice as to if & what you can do as far as a home equity line.
  • May 19 2011
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