How to increase FICO Score?

My FICO is currently 542, which knocked me out of a mortgage loan. There are 2 debts in debt collection I can pay off, and a credit card that was not mine. However, when I called to make pymt on cc for my spouse, they would not accept pymt unless I was put on account. Thus I am stuck with a cc on my report that I used one time ($20.00) and paid my part in full. I would make offer to cc company for 1/2 to see if they accept, but can’t find paperwork on them and no phone number. The rest of the collection accounts are medical bills that mortgage consulatant said would not count against me for a long.

Here is the question of my day…….If I pay those 3 things off, do you really think my score would improve, and, he also said that another problem is a lack of credit since I have not applied for new credit in over 5 years, but how can I justify getting a secured card when I don’t want a credit card to begin with???

Any help would be greatly appreciated!

I started with a FICO of 520. After a year and a half of paying down and such, I looked into a home loan for the ‘halibut’, and my FICO was up to 670.

Now that I’ve paid off 5-6 debts and closed other accounts, I can imagine it is up more now in the last year.

You can justify getting the SECURED card as this is something for real emergencies. Not for luxuries, new clothes, iPods, meals out or such. Think of it this way: If your home had a leak, a fire, termites…. something, you’d need money for the repair/insurance deductible/hotel accommodations during times of real trouble. That is one way *I* would justify having such a card. Yes, your score would indeed improve.

There are mortgage companies out there that do something called manual underwriting and they in no way look at your fico score to determine if your get the mortgage or not. They actually do the leg work to see if you paid your rent on time, paid your phone bill, your electric, etc. So if everything is good there, you can be approved. One company I know of is Churchill Mortgage which is advertised and endorsed by Dave Ramsey, a favorite of this blog.

As for the secured card, I have to disagree with wyldceltic, this is not a good idea for emergencies.. The last thing you want to do in an emergency is borrow money against your own account and then have to pay interest on the amount you borrowed from yourself….. Instead of getting one of those high interest, high fee cards, it’s better to just build up an emergency fund and have it sitting in an account somewhere.. Just my 2 cents..

BUT… if you cannot get any other card, because your income is low and you have a ‘past’ and no one will let you take up their offer, THEN what? On the card that is not yours, file a dispute with the the credit agency that you pulled your credit, Experian, Trans Union or ?? (I forget the 3rd)

At best they will remove it from your report, or they will research it and send you contact information so you can get it resolved.