Raising My 600 Credit Score After Late Payments

Reader Question: "I am seriously considering purchasing my first home in 2010. Unfortunately, my credit score is a bit below 600 and my credit report is full of late payment history. I have successfully paid off all balances just recently. At this point, what steps should I take to begin raising my credit score? Thanks."

It sounds like you're off to a good start, simply by paying down your balances. You might want to check your reports again, just to make sure they reflect the pay-offs you've made.

Keep in mind, however, that the history of late payments will stay on your credit reports for up to seven years from the last default. So they will have a negative impact on your scores for some time. But that negative effect will lessen over time, provided you do everything else right. This means paying all of your bills on time, maintaining low balances on your credit cards, etc.

If your credit score is 600 right now, and your late payments are far in the past, there's a chance your score has "bottomed out" at 600. This means it will continue to increase in conjunction with (A) the amount of time that passes, and (B) the proper use of credit going forward.

Here's an article + video on our blog that's worth a look:
How to Raise Your Credit Score Fast

As already you seem to realize, a 600 credit score is too low for mortgage qualification -- at least by most lenders' guidelines. I don't even know if you could get an FHA loan with a 600 score, plus or minus. But don't despair! If you follow the plan presented in the article and video I've linked to above, you should be able to improve your 600 credit score steadily over time. The only thing I cannot answer (or anyone else for that matter) is how long it will take.

Related Q&A sessions:

• I cannot get my credit score over 600
• How can I raise my score from 499 to 750?

I hope this helps you out, or at least points you in the right direction. Good luck breaking through the 600 barrier. I'm sure you'll do just fine in the long run.