A Mortgage Lender's Perspective On Settled Debts?




Several years ago, I went through some personal trials that kept me from keeping my financial obligations. Three of which were credit cards with 1500-3000k limits. I was young and had no idea how to manage credit.

I basically ended up wrecking a 750 credit score by settling all three cards on the same day. I had no idea this would remain on my credit. The sad thing is, I had never been late with anything before then.

So years later, I am really working to bring up my credit. I started with secure cards and my spouse added me to their credit card account. It is going well and hope to have it at 680-700 before we apply for a mortgage loan in the spring. My spouse has impeccable credit.

My question is: How would you as a mortgage lender see this? What kind of rates would someone with that kind of history get? I have a short history, by the way. 6-7 years.

Thanks in advance for your advice.
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Edit - Debt

I also want to note that I have no debt. We keep a very low balance on the credit cards ($200-300) just to show usage and pay off everything else monthly.

Moe Bedard

Call 1-800-779-4547
Staff member
Loan Safe Mortgage
Aug 10, 2007
Southern California
Hello and welcome to the LoanSafe forum.

Most lenders really scrutinize that last 24 months of your credit history as being the most important. Hence, any past credit issues that do not involve a mortgage, foreclosure and or bankruptcy and are over 24 months, but have been taken care are not really a detriment.

If these debts were settled years ago, and you have rebuilt your credit and your scores are now higher, then almost any mortgage lender will extend a mortgage to you as long as you meet other qualifying factors.