50k for paying off collections? or Down payment on a Flip?

Question

Hey guys im a newbie, and saving money to get into real estate flipping. I have a low 600's score and completing my second year of work history to qualify for a loan, i wanted to ask this comunity for some guidance. should i pay 1k to fix my credit with a credit repair company who may help me settle and pay off debt from my earlier 20's or save that cash and learn how to make more money and find a way to start flipping homes once my 2 years of work history are complete. Loan officers tell me that its vital for me to have a solid 2 years of continues work history for a loan. Should i be focusing on creative financing and not even worry about credit?

Doug Lee · Answer

You don't need a debt repair company.  Find out from the CC company what the total pay off is.  Then negotiate it down and make sure they provide a letter that's stating it's paid in full with whatever terms you negotiate.  Usually you can a ridiculously low number and they will settle.  I forget what the percentage is... 25%?   50%?

Tim Johnson · Answer

Yes, you need to repair your credit and get rid of credit card debt. If you can't do this first, dreams of flipping homes will quickly become nightmares.

No, you don't need any credit repair company. Many of these are complete scams. There are countless good articles on how to work on this yourself. If you must seek guidance and counseling - and there's NOTHING wrong with that, check out the list of approved credit counseling agencies HERE. Many of these are free.

Best wishes.....

Nina Hayden · Answer

Lots of wonderful suggestions and advice here.

You need to learn finance and how to avoid mishandling money again.

There is a forum that has tremendous insight and help.  It’s Myfico.com

I subscribe to it as I keep tabs of my credit score. Credit is everything!  I am sure some have done it with poor credit or mediocre credit, but there is something else about having high scores and most importantly, being fiscally knowledgeable and responsible.  No way in hell would I ever do business with someone that lacks this.

Good luck!

Wilburt King · Answer

Get a second job, borrow from family, use a  good credit card... what ever is necessary to pay-off negative credit obligations!  A 700 Fico will open countless doors to purchase opportunities via bank, hard money or owner financing at much lower rates.

Nathan Gesner · Answer

Pay off debt. Invest from a foundation of financial strength.

Alecia Loveless · Answer

@Antonio Sosa Hi Antonio. Agree with the others try to negotiate with whoever you have debt with to make a one time lower payment to pay it off in full if you have some money saved up. Paying off these debts should start to help raise your credit score immediately once the paid off credit cards or paid off loans or whatever have time to show up on your next months credit score. I typically get three different credit scores emailed to me for free from three different reporting agencies at various times each month.

Then make sure that no matter what you are paying your bills on time each month because late bills are a sure way to lower your credit score.

Also carrying more than 30% of your credit limit on a credit card will lower your credit score. So if you have a $10,000 limit then if you have more than a $3000 balance on it from one month to the next it will affect your credit score negatively which is why it is important to pay off your card balance each month if at all possible.

Then once your credit score improves you can get better interest rates and offers all the way around for buying properties to flip or rent or whatever you want!

Hamp Lee III · Answer

Don't use a credit repair company!

Go to NACA.com and check out their loan product for first-time homeowners:

NACA was formed in 1988 and provides an affordable option for potential first-time buyers:

✅ No down payment

✅ No closing costs or fees

✅ No mortgage insurance

✅ No consideration of credit score

✅ Below market fixed interest rate

I wish you all the best.

Autumn Williams · Answer

Hey Antonio! I would definitely work on fixing your credit first. I would, also, avoid a credit repair company. Are the lenders/loan officers you're working with not helping you? A good lender should be able to let you know what you need to do to improve your score. I am in Michigan, but the lenders on my team run scenarios for my clients to show them what they need to do to improve their scores and about how long it will take.

Blake Novotney · Answer

Hey Antonio,

Creative financing is great, but it's a whole different can of worms. If you get your credit and financial status in better shape, locking in long-term debt with conventional 30-year financing is a much more attractive option and will be easier for you to get started that way.

50k for paying off collections? or Down payment on a Flip?

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