Loan Officer on FICO & Settlement
Date: Thu, 03/11/2010 - 20:07
I had lunch with a friend of mine who is a mortgage loan officer today. We were talking in generic terms about how difficult it is becoming to get a mortgage blah blah blah. I asked her if she had seen credit reports with settlements and if they were different from credit reports with bankruptcies score wise after like 2 years.
She said that the credit reports of people with settlements pretty much recovered in about 2 years or less as long as they had at least two tradelines without lates for that period. She said that some people recovered their score in the 13th month if it appeared the 6 months of late were an anamoly to their history. She said it appeared that FICO was forgiving of a one time event, but if the people had lots of sporadic lates before the big default then the score was not as forgiving.
As for bankruptcy, she said that it absolutely destroys the report for many years and mortgage guidelines don't care what your score is you can not get a mortgage for at least 3 years after a bk, but on a settlement it doesn't matter as long as you have the score requirement met. She used to work at a bank and said the same thing about a car loan - bk no way for certain time, settlement doesn't matter as long as score high enough.
Now keep in mind that no one really knows how FICO works, but she sees credit reports every single day and can attest to the scores she sees with the activity on the reports. She said that if she ever got into trouble she would do the default and then settlement option with keeping at least 2 items open like car and a credit card to rebuild.
She said that the credit reports of people with settlements pretty much recovered in about 2 years or less as long as they had at least two tradelines without lates for that period. She said that some people recovered their score in the 13th month if it appeared the 6 months of late were an anamoly to their history. She said it appeared that FICO was forgiving of a one time event, but if the people had lots of sporadic lates before the big default then the score was not as forgiving.
As for bankruptcy, she said that it absolutely destroys the report for many years and mortgage guidelines don't care what your score is you can not get a mortgage for at least 3 years after a bk, but on a settlement it doesn't matter as long as you have the score requirement met. She used to work at a bank and said the same thing about a car loan - bk no way for certain time, settlement doesn't matter as long as score high enough.
Now keep in mind that no one really knows how FICO works, but she sees credit reports every single day and can attest to the scores she sees with the activity on the reports. She said that if she ever got into trouble she would do the default and then settlement option with keeping at least 2 items open like car and a credit card to rebuild.
