topic Re: Best use of cash to improve credit score for refinancing in Understanding FICO® Scoring

Best use of cash to improve credit score for refinancing

Scully1 — Sat, 05 Jan 2013 03:39:39 GMT

Discover 13,400 balance/14,000 credit limit

Target MasterCard 12,430 balance/12,800 limit

Jcpenney MasterCard 4,500 balance/5,500 limit

Home Depot 3,500 balance/21,000 limit

I have a 720 FICO. I've worked really hard to never be late. Sold an asset and now have $12,000 to pay down debt. What will give me the biggest bump in my score? I am hoping to refinance my mortgage.

Re: Best use of cash to improve credit score for refinancing

llecs — Sat, 05 Jan 2013 04:01:23 GMT

No matter which you pay, utilization would be the same if you use 100% of the avail $$$. However, FICO likes more $0 balances than accts w/ balances. If I had that and for max points, I would PIF JCPenneys and Home Depot. The remaining $4k would be split evenly between the other two. My answer would be different if any of these were closed or if there were any other revolving accts max out not mentioned.

Re: Best use of cash to improve credit score for refinancing

JM-AM — Sat, 05 Jan 2013 04:25:21 GMT

Your score is not stopping you from refinancing.

Seems your DTI will have the most impact. Paying down the debt will lower your DTI.

Right now this is an assumption that you would be over DTI. If you move yourself over to the mortgage board and gave some additional information, others will offer opinions on what you need to refinance.

Re: Best use of cash to improve credit score for refinancing

pdog661 — Wed, 09 Jan 2013 00:47:57 GMT

Scully1 wrote:
Discover 13,400 balance/14,000 credit limit
Target MasterCard 12,430 balance/12,800 limit
Jcpenney MasterCard 4,500 balance/5,500 limit
Home Depot 3,500 balance/21,000 limit

I have a 720 FICO. I've worked really hard to never be late. Sold an asset and now have $12,000 to pay down debt. What will give me the biggest bump in my score? I am hoping to refinance my mortgage.

Here is what I would do: new balances in red

Discover 11,200 balance/14,000 credit limit

Target MasterCard 10,240 balance/12,800 limit

Jcpenney MasterCard 0 balance/5,500 limit

Home Depot 0 balance/21,000 limit

This could be a good bump to your score. You currently have 2 maxed out cards in FICO's eyes. Total payments will be 12,390 and your UTL move from 63% UTL to a 40% UTL.