My Credit is Down the Tubes

Question: Dear Luise: I have a bad credit score. I am falling behind in my bills, etc. I have a second mortgage on my home. My home is appraised at 200,000 of which 77,000 is my own cash I put down. I cannot really afford my home. My question is if I sell it, can put about 80,000 cash down on something else more reasonable? I have been told I will not be able to get a mortgage because of my credit score. The large down payment means nothing. I will be lucky if to get into an apartment complex. Is this true? My credit score is under 550. K.

Answer: Dear K.: After you have sold your home and caught up on all of your bills, I would take those questions to various mortgage companies to see if any of them can find a way to work with you.

If not, negotiate with an apartment manager to pre-pay the first six months rent to see if you can get past their fear of renting to you.

In the meantime, put the equity you get out of the sale of your house into something that is not available to you, like a CD, and make a commitment to yourself that you will never use any of it and will only add t it.

If you keep your credit clean for a certain number of years…I think it may be seven, you can have this negative history erased from it. At that time you will be able to buy again. Blessings, Luise

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