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Can this situation hurt my FICO score? I want to apply for a USDA loan in a couple of months.

Contributor

Can this situation hurt my FICO score? I want to apply for a USDA loan in a couple of months.

I have this post in the mortgage loans section but it was suggested I move it here.  Here is the post:

 

I have a Sears credit card with a $986 balance but if I don't pay it off by November 30th I will be charged about $200 interest because last year on Black Friday I purchased a washer and dryer that I needed and took the 1 year, no interest no payments.  I am wondering if it will hurt my credit score if the $200 interest will be added to the balance.  It is possible I could borrow the money to pay it off but I don't know if that is a bad thing to do because won't that look bad as well to the lender because I will have to pay it back to the person I borrowed it from. 

 

I am not putting anything on my credit cards and now have a total balance of $3,900 of credit card debt that includes the Sears credit card.  I just don't want my credit score to go down because I apply for a loan in the next couple of months.  I have worked hard to get my credit scores up to the low to mid 700's and I had a bankrupcy in 2003. 

 

Thank you for all your replies.

Message 1 of 14
13 REPLIES
Moderator Emerita

Re: Can this situation hurt my FICO score? I want to apply for a USDA loan in a couple of months.

Well, it depends on your currrent util on that card, and your current overall revolving util.

What's the CL on this card?

What's your total combined CL on your cards? (the actual CL's, not the amount available.)

Your current util on your Sears card is $986/ CL. If the interest is added, it will be $1,186/ CL.

Your current overall revolving util is $3,900/ total combined CC CL's. it will change to $4,100/ total combined CC CL's.

Your scores might not change if the individual and total utils don't change appreciably. We tend to see score jumps when util crosses certain thresholds such as >9%, >49%, >74%, and so forth. (There are plenty more thresholds between 10 and 50%, btw. These are just examples.)
* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007
Message 2 of 14
Contributor

Re: Can this situation hurt my FICO score? I want to apply for a USDA loan in a couple of months.

My credit line is $1,850 and that is the problem.  My current FICO scores are 703 and 718 (I don't know Experian) and I don't want the score to do down because I will be charge $200 in interest and that would make it 63% of the credit line. 
Message 3 of 14
Moderator Emerita

Re: Can this situation hurt my FICO score? I want to apply for a USDA loan in a couple of months.

Going over 50% on one card isn't great, but it isn't necessarily fatal, either. The other question is what would happen to your overall util.

Both individual account util and total util are important for scoring.
* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007
Message 4 of 14
Contributor

Re: Can this situation hurt my FICO score? I want to apply for a USDA loan in a couple of months.

Ok I will spell it all out.  I have 5 credit cards which includeds Sears which as I stated has a credit line of $1,850 and now has a balance of $980 but in a couple of weeks the balance will be around $1,180.  On the second credit card I have a $4,000 credit line with a balance of $931, the third card has a credit line of  $1,800 with a balance of $560, the forth card has a credit limit of $5,000 with a balance of $777 and the last card has a credit limit of $3,050 with a balance of $700.

 

That is a total of $15,700 total credit line (I have other credit lines from Dept stores with no balance on them) but currently I owe $3,948 and in a couple of weeks it will go up to $4,148 when I get the interest charge to me on my Sears card.

 

After seeing the whole picture do I have anything to worry about as far as my score going down? 

 

Thank you for all your help!

Message 5 of 14
Contributor

Re: Can this situation hurt my FICO score? I want to apply for a USDA loan in a couple of months.

Oh one other thing- in my FICO report it states I have 21% for utilization.  Is that bad?
Message 6 of 14
Senior Contributor

Re: Can this situation hurt my FICO score? I want to apply for a USDA loan in a couple of months.


weathergirl77 wrote:
Oh one other thing- in my FICO report it states I have 21% for utilization.  Is that bad?

21% UTIL is not bad. It could be better, but it is not awful.

 

As for letting one account go to 60%+ UTIL - you will be OK. Just focus your efforts on getting the balance on that account < 50% ASAP. You don't want your other issuers seeing that and taking AA.

Message 7 of 14
Contributor

Re: Can this situation hurt my FICO score? I want to apply for a USDA loan in a couple of months.

I figured out what I am going to do.  I am able to work some OT so I am going to pay the full interest and a little more so it will be at 50% where it actually is now.  Do you think this will help?

 

Thank you for all your help!

Message 8 of 14
Super Contributor

Re: Can this situation hurt my FICO score? I want to apply for a USDA loan in a couple of months.


creditwherecreditisdue wrote:

weathergirl77 wrote:
Oh one other thing- in my FICO report it states I have 21% for utilization.  Is that bad?

21% UTIL is not bad. It could be better, but it is not awful.

 

As for letting one account go to 60%+ UTIL - you will be OK. Just focus your efforts on getting the balance on that account < 50% ASAP. You don't want your other issuers seeing that and taking AA.


Anything over 9% utilization is bad.  It's an indication trouble may looming and the cardholder overspent. 

Message 9 of 14
Regular Contributor

Re: Can this situation hurt my FICO score? I want to apply for a USDA loan in a couple of months.

weathergirl, everything folks have told you here is correct. That said, if you've planned on how to pay off the additional interest coming due such that your balance/utilization on that card will stay where it currently is and no worse, then this should keep your scores relatively close to where they are now. If there's a lag between when your additional interest posts and when you pay it (and ultimately when that stuff shows up on your CR), it's possible that your scores would drop some but they should rebound when your CR updates with the payment.

 

I still think for the purpose of your USDA app, you should be ok. I would actually suggest, though, that you keep your LO informed of what has transpired and what your plan is. They can provide you with good advice, too.

 

Sorry if I hijacked the CC board and reverted this thread back to mortgages momentarily...

Message 10 of 14