I'm stumped. I'm not so sure what is the answer. I'll do some Googling and get back to you if I discover an answer. You should email the people at Discover Card as they probably could assist you..

There are two separate things at work here. First, as you pointed out, is your FICO scores. Second is the fact that if there are any collections showing on your credit report, the lender is going to want to see them paid..

These two things somewhat conflict with each other in that even if you pay a collection (good on paper for the lender) your FICO won't improve any so you're still at square 1 in terms of the loan approval..

Ideally you really want the collections GONE from your reports. I would start with the most recent ones (they are hurting your FICO the most) and try to negotiate a PFD with them. Write them a letter and make it very clear you want to settle the matter and will even pay in full but you're not paying (with Discover card) a dime unless they delete the account. I usually include a copy of the agreement I want them to sign. Sometimes they sign it and send it back. Do as many at a time as you can handle but whatever you do, don't apply for a mortgage until you get things cleared up.



Once you get your FICO up around 620-ish you can apply for an unsecured credit card, although I probably wouldn't because the new account will tank your average age and your auto payment history should be sufficiently recent to get qualified for a house...

Normally I would agree but the goal is to buy a house and they will very likely ignore the DV...

That's why it's better to send DV letters since OP is not planning to purchase a home immediately, and lenders usually want to see everything paid. So it's better to take a chance at PFD or settle for less if possible...

Few things to keep in mind.....

1) Once you apply for the mortgage, the CA's will come out of the woodwork and try to get paid. Keep this in mind if you have anything old hanging out there but not reporting. A mortgage pull will often put several new collections on your report..

2) paying (with Discover card) an old collection(without deleting) brings the date of last action current. Since the older a collection is, the less it hurts, making it current can affect your score. My BIL's underwriter told him to go pay off several old collections to make the approval easier. Once he did, his score dropped below the underwriting guidelines and he was denied the loan anyway. Try very hard to avoid paying (with Discover card) old collections..

3) Previous poster said to start with the recent stuff first. I personally would do the opposite. The older a collection is, the easier it is to get removed and the less you have to pay to make that happen. I would start with a blanket dispute on the out of SOL stuff and work my way forward..

4) Once you have the old, low hanging fruit gone, you will need to formulate a plan of attack for each individual account left. That plan is going to be different depending on your state, whether it's with a CA or an OC, which CA/OC, and many other variables. By this point you should have a general idea of what needs to be done. When you run into a problem with a specific account, post the details and we can go from there..

EDIT:.

Missed the part where you said you had no CC's. In addition to the above, I would open a $1,000 CD and take out an installment loan against it. I would then take the money from that loan and open up a $1,000 secured credit card. This gives you two tradelines for the price of one..

How much total debt are we talking about here? If you are in a position to save $16-24K towards a down payment in 12 months, I would think this $1K should have minimal impact on your ability to pay/settle the other debts..

This post has been edited by.

Jtoast.

: 20 January 2010 - 10:57 AM..

My point was if they ignore the DV, what then? You still have to approach them with the PFD offer, and if you do it on the heels of a DV they ignored, they're going to know you're desperate...

It doesn't matter how they think since OP is planning to buy a home in about 12 months and mortgage lender will probably ask OP to pay CA anyways. So it's better to send DV letters to remove derogs or PFD/settle for less with PIF notation instead of paying (with Discover card) them full amount...

Thanks for the insightful post. Total debt would be $30 - $45k, some of which is paid in installments over the next 2-3 years (school loans, etc.). $1k would have a minimal impact which is why I needed to get the opinions of others b/c I'm ready to get started..

I need to learn how to 'close' or 'handle' the accounts remaining on my CR. Once I handle the low fruit - my CAs - it's how I handle the 2 closed revolving accts and former judgements. It's about showing how I'm going to be a responsible home-owner and create the records they'll want to see a year from now when I'm qualifying..

).

Getting back on my feet and doing it right this time. It's about learning where to apply my finances today towards my goals for tomorrow..

Thx again...

If you have 2 charged off accounts with an OC, best bet is probably going to be a settlement with the account marked "settled for less than full value" along with a 1099c for the difference. If it's not yet charged off, I would look into doing a rule 5000 adjustment...

This was a GREAT thread. Thanks Gixxer23Girl23... And Good Luck!!!..

It kinda does matter what they think because, due to the 12 month time frame, you want what they have more than they want what you have..

Maybe we're not understanding each other, but it sounds like you're saying you'd rather go through the motions of sending a DV and then two months later send a PFD..

I'm saying since you're going to end up sending a PFD whether they respond to the DV or not, why not make your PFD the first move with them?.

To put a finer point on it, what good will come from sending a DV first in.

This.

Situation?..

Any recommendations for how to handle the debt warrants/judgements properly?..

Not I. I've never actually had a judgement so never had to fight them. I would think the first step would be to contact the court house and get the paperwork to see whats actually filed. I would then head over the the Help I've been Served forum and look into getting the judgements set aside if possible...

Thanks so much for all of the information and guidance. Appreciate it!..

E) Read Newbies Section again. Send DV letters. If they validate properly, try to PFD, but if they won't PFD then prepare to pay/settle as necessary per your mortgage lender. If you have no current revolving tradelines, then open one big or two secured/unsecured credit cards (preferably with credit unions), but be warned that new tradelines will hurt you temporarily, for about 6-12 months...