Bad Credit but lots of cash- How to proceed? - Posted by Leonard Applebaum

Posted by James Prince on August 18, 2003 at 19:20:22:


In my experience, unless you can get all of the chargeoffs removed completely from your credit report (not just showing as being paid off) it will take a couple of years to get your credit score anywhere near the 700’s which is around where you need to be for a NO DOC loan. I am assuming you are not currently employed and that is the reason for requesting a NO DOC loan is that correct? If you want to ever qualify for better mortgage loans, the debts will have to be paid… but if you want to start investing NOW, use your money to do a cash offer, and make arrangements with the collection agents to pay back the rest.

Bad Credit but lots of cash- How to proceed? - Posted by Leonard Applebaum

Posted by Leonard Applebaum on August 18, 2003 at 06:42:46:

My situation is somewhat complicated but here is a summary:
After completing a 7 year ownership of a NOO duplex in Denver, with average returns of 200% per year (NOT a typo!: Two hundred percent!: Denver’s market was white hot during the 90s. I bought my property for 49K in '93 on a $6,500 down owner-carry, and sold in 2000 for $150k after one refi in '97). Moved to Israel in 2000 for work, but the market here crashed and I lost my job over 2 years ago. Have lots of cash to invest but suspect my credit score, formerly 680, is now in the tank, due to approximately $25K of charged-off credit card debt on 9 different credit cards.
I am considering moving back and investing again: Two alternatives come to mind: I am respectfully requesting advice on which is the better tactic:

  1. I have enough to do an all cash deal in a certain somewhat depressed area of the US (I have researched the area in person during a two week trip to the area last fall and discovered dozens of duplexes available in the $40K to $50K range with potential returns over 20%, greater returns possible if I am willing to deal in poorer areas with properties in the $20 to $30K range). Try a 75% LTV hard money refi after one year of “Seasoned” ownership (or possibly immediately if some lender will do so).

  2. Pay off all of my approx. $25K of charged-off credit card debt first, and then use the remaining cash to get into a deal. If I do this, how long would it take to improve my score enough to qualify for a NO DOC loan?

Thank you for your help

Re: Bad Credit but lots of cash- How to proceed? - Posted by Josh-NC

Posted by Josh-NC on August 19, 2003 at 22:54:58:

Before you do anything on you old accounts and credit issues, please visit and You probably can get all the creditors to settle these debts for very small amounts AND make a condition of the settlement that they delete their tradeline from your report OR BETTER YET update them to “Pays as agreed”. You can get data from these websites to determine if collection on these debts is beyond the statute of limitations (depends on the state that governed the transaction which would be your home state at the time or determined by contract on the credit card agrrement). The debt likely is beyond the SOL and thus the creditor will have great incentive to negotiate (since they cannot otherwise legally pursue further collection).

You really would be surprised how terrible credit can be recitified by taking a pro-active approach.

I have tried similar approaches with helping others and it has worked.

Re: Bad Credit but lots of cash- How to proceed? - Posted by TP

Posted by TP on August 19, 2003 at 01:03:27:

Leonard, You should be able to settle your charged off credit card debt for 10-20 cents on the dollar. Initially they will all turn down your offer but after a while they will come around. Give them time, and do not make any partial payment unless it is for “settlement in full”. Good luck. TP