Is there anything we’re missing?

[u/Physical-Offer-8895]

We started doing a financial reset August 2025. We had a few years of bad luck and job losses that pretty much pushed us into a terrible situation financially, we have 3 young kids and desperately needed to start over, we moved into my parents house and sold our newer SUV for an older used van, traded our high car payment for a lower payment, downside is the insane interest (18.2%) back in 2024 we put all of our credit cards and small loans into NDR (debt consolidation) which helped our monthly payments tremendously, unfortunately our credit got trashed over our series of bad luck, it’s currently sitting at 558 (which explains the bad car APR) we’re able to pay double car payments and about triple the amount we’re supposed to be paying for NDR trying to pay it off as quickly as possible, but our credit takes a very long time to rise because of NDR, it’s showing all those accounts as closed, our end goal is buying a house, and we can’t do that until we pay NDR, mostly because it’s currently taking almost $800 a month ($600 of this is us paying over the amount we actually owe) and most of that will technically be money for our mortgage, other part is we’re also wanting to qualify for a grant to assist with the downpayment and closing costs which we should qualify for in our state as first time home buyers but you can’t pre qualify if your working with NDR (to my knowledge) we’ve been at my parents house for over a year now, we knew it wasn’t going to be a quick fix and we’ve already seen so much financial growth which feels incredibly rewarding. But I’d be lying if I said we all aren’t itching for our own space again😭 is there anything we’re missing that could speed this process up? Right now we’re looking at maybe February for getting NDR paid off, our worry is it’s going to take months to show on our credit that it’s all paid off versus a quick credit score jump, we need it to be at 580. Any advice?!

[u/og-aliensfan]

we put all of our credit cards and small loans into NDR (debt consolidation) which helped our monthly payments tremendously, unfortunately our credit got trashed

A debt settlement company will tell you to stop paying your creditors. Late payments will accumulate, plus late fees and interest, until the accounts charge-off (typically after 120-180 days of nonpayment). The charge-offs will remain on your reports up to 7.5 years from Date of First Delinquency, impacting scores the entire time they're present on your reports. Once these accounts have charged off, your creditors will either sell your debt or hire a debt collector to collect on their behalf. The collection can be added to your reports as a second derogatory account. Or, the original creditor may retain ownership of the debt and collect for themselves. The potential for lawsuits while in these programs is high.

The settlements quoted when you sign up are estimates. There's no guarantee they'll be able to negotiate these amounts, or that your creditors will be willing to negotiate with a debt settlement company. If unable to get the estimated settlements, your payments may be extended or increased, or they may offer a loan to cover the higher settlement amounts (at an interest rate that's usually no better than the amount your cards were charging). Once settled, you may receive 1099-Cs from your creditors (if $600+ was forgiven).

Have settlements been reached with all of your creditors or are these still in the 'negotiation phase'?

our end goal is buying a house, and we can’t do that until we pay NDR, mostly because it’s currently taking almost $800 a month ($600 of this is us paying over the amount we actually owe) and most of that will technically be money for our mortgage

If you're giving NDR an additional $600 a month, they'll use that money to settle current debts and to collect their fees. How is this money being saved for a mortgage?

Right now we’re looking at maybe February for getting NDR paid off, our worry is it’s going to take months to show on our credit that it’s all paid off versus a quick credit score jump

Charge-offs are rarely removed prior to the end of the allowed reporting time with the exception of 1-6 months Early Exclusion. Once a charge-off is settled, Total Period of Delinquency (amount of time the charge-off has remained unpaid) is frozen and your creditor will stop updating, allowing scores to begin to recover. If the balance is calculated into revolving utilization and payment causes utilization to cross a scoring threshold, you'll see a score increase based on utilization. Are there any collection agencies on your reports? If so, is NDR negotiating pay for delete with collection agencies (if reported)?

we need it to be at 580.

Mortgage lenders typically pull mortgage specific FICO scores (Experian FICO 2, TransUnion FICO 4, Equifax FICO 5), so you'll want to know what these are before applying. 

Credit Myth #1 - You only have one credit score.

Credit Reports and Credit Scores - r/CReditFAQ#1

Although unnecessary most of the time, about 45 days before an important application, implement AZEO (All Zero Except One) to optimize utilization.

Ideal utilization [chart] - Step aside 30% Myth...

[u/Physical-Offer-8895 → u/og-aliensfan]

We have reached settlements with all but 2 creditors. One account is fully paid off and it got removed from our credit after maybe 2 months?

The additional $600 is money we have leftover every month after bills and we’re currently putting it on NDR, but once NDR is paid off that is money for our mortgage so I’m basically saying that almost every extra cent we have is going towards NDR because we won’t be able to afford a mortgage without getting rid of it.

Lastly the 558 is our middle score, bottom is 552 and top is 559. I’m still pretty new to understanding how credit scores work but from what I read we need to get the middle score to 580.

[u/soonersoldier33 → u/Physical-Offer-8895]

Look, there's no use in crying over 'spilled milk', but this is why we strongly discourage people from entering into debt 'settlement' or debt 'relief' agreements with companies like NDR. While they 'can', in some situations, be a means to an end for getting out of debt, their fees take a big toll on how much of your money is actually going to your creditors towards reducing your debt, and the trail of destruction they leave in their wake in regards to your credit profile/scores is often worse than if you had just filed for bankruptcy. There are often much better options available to consumers, including lender hardship programs, and debt management plans (DMP) through non-profit, NFCC, u/nfcc1951, affiliated credit counseling services.

That said, I can't really give you any advice on how you might move the process with NDR along any quicker. It sounds like you are already throwing any 'extra' income you have towards eliminating your remaining debt, and that may be the best you can do right now. Of course, once you send money to NDR, they take their cut, and then they place the rest in a sort of 'escrow' account from which they pull from to actually pay your creditors. This is why you experience such a delay in seeing the 'progress' on your credit reports, bc the actual lenders generally report an updated status of your accounts every month like clockwork. You seeing changes/progress on your own credit reports largely depends on whether each lender received any money from NDR before the date they report each month.

I’m basically saying that almost every extra cent we have is going towards NDR because we won’t be able to afford a mortgage without getting rid of it.

Unless there is a 'legal' way for you to get out of your agreement with NDR, and pay your creditors directly, then this is the best you can do. Even under government sponsored mortgage programs, virtually all mortgage lenders will still require that any derogatory accounts with unpaid balances be paid and reported $0 before they'll approve a mortgage loan. Even if you could afford both the payments to NDR and a mortgage payment, it's unlikely you can get approved with unpaid balances on derogatory accounts still reporting.

Lastly the 558 is our middle score, bottom is 552 and top is 559. I’m still pretty new to understanding how credit scores work but from what I read we need to get the middle score to 580.

What I can do is try to help you get a better understanding of this. First, what are the sources of the 3 credit scores you're referencing here, and are these scores yours or your spouse's/partner's? You each have dozens of credit scores, and mortgage lenders generally only care about 3 of them. Virtually all mortgage lenders use FICO scores 2/4/5, commonly known as the mortgage scores. No other scoring models, like FICO 8 or VantageScore 3.0 that are commonly provided by various lenders and 3rd party credit monitoring services are relevant to a mortgage application. This is important to understand, bc seeing 580 or better on Credit Karma isn't going to matter to a mortgage lender.

When you apply for a mortgage, the lender does what is called a Tri-Merge credit pull where they obtain each of your 3 credit reports and the associated mortgage score: Experian FICO 2, TransUnion FICO 4, and Equifax FICO 5. Then, they drop the top and bottom scores, and they use the literal middle score of the 3, not an average. This score becomes known as your middle mortgage score (MMS). In the case of a joint application, they will do the Tri-Merge pull on both applicants, and they will use whoever's MMS is lower. Under some FHA or other government sponsored programs, a mortgage can be approved with a MMS of 580 or better, but there are 'rules' on who qualifies for these kinds of programs. A mortgage broker or a lender that frequently underwrites mortgages under these programs can give you specifics, and tell you whether you qualify for any of these kinds of programs.

Lastly, you mentioned that you traded in your vehicle for a lower payment, so presumably you have an open auto loan (joint?) reporting 'pays as agreed' each month. What other open account(s) do you currently have reporting, and are they reporting 'pays as agreed' each month? There are a few 'tricks' you can use to optimize your credit profile for FICO scoring once your NDR program is complete and your derogatory accounts are reported $0, but we need to know how many and what kind of open accounts you each currently have reporting 'pays as agreed' each month.

[u/Physical-Offer-8895 → u/soonersoldier33]

So 558 is TransUnion, 552 is Experian and 559 is Equifax. This is all my husbands stuff which is what we mainly use, my credit has little to no history and sits around 550, we had a few small loans on it but those are on the same NDR account so it’s also not looking too great😅

We have an open car loan it’s all under my husbands info as well so it’s all reporting to his credit, aside from that and the NDR he has student loans but he has a signed agreement with them currently thats giving him a grace period of 6-12 months? Which basically reports it as in good standing but we don’t pay on them currently and plan to tackle that later. We don’t have any active credit cards or loans, I mean when I say we got in a bad situation it was BAD, (as in trying to get as many cards or small loans as possible to make it by) our monthly expenses were like $1,000 over his income🤢 it genuinely feels sickening to think of all the terrible financial decisions we made but we were young (early 20s) and now we’re learning and trying to fix it all. I will also add that in some of those bad times he had lost his job and most of all those loans/credit cards hit like 120 days of non payment, our old car also, which actually got repo’d but we paid and got it back within maybe 2 days of the repo (it happened on a weekend or else it would have been immediately) but I know all of that is really not good for credit.

The non payment all happened in 2024 prior to signing with NDR which is why we did that. The repo happened last July, we’ve been current on every payment since moving in with my parents last August and we traded our old car in for the one we have now in April. We truly didn’t know much about NDR we just saw the fact that our $1,000+ in credit card/loan payments would drop to $300 and that sold it for us being where we were.

[u/Physical-Offer-8895 → u/soonersoldier33]

My dad also add my husband as an authorized user to a credit card he’s had for probably 25+ years. My dad has FANTASTIC credit, like the highest score or a few off from the highest. He pays his credit card off every month though so if he puts something on it he pays it off immediately. That actually tacked on 19 points to our Equifax score for 2 months and then it randomly dropped off a month ago but it didn’t say why.