10-07-2012 11:05 AM
Hi everyone I have a quick question here. A while back I posted that I am planning on refi-ing my Mortgage because I can drop it by about 2 whole points. So what I did was put about 40k in add ons, improvements to drastically increase the value of the home, as I will take all of the equity money and pay off the credit cards I used to do all the home improvements.
Within the past 6 months, I had 786 equifax Scores and applied , received 4 new credit cards (2 with very high limits based off advice from this board), then used them to remodel, new addition add on's to my home.
Of course my UTI was about 1% before doing this, now its 80-90%. Of course by the calcualtors with my income I am about 10-15% of Debt to Income ratio( but I dont think the FICO scoring takes that into account)
So I now have 6 credit card totals, (4 within the past 6 months open). All of them I have transfered and paid down to have Zero Balances on all but 2 cards. Those cards I transfered most all the Balances to so I would get a score jump for showing usage, with Zero balances. The other 2 cards are 85-90% maxed out. I was hoping to stay below 80% so I would not get hit with a high UTI on those 2 cards. Unfortuantely, home improvements always twice much more than expected so I just could not do it.
My question is this.... Whats the best way to look "good" to my Morgage company and improve my FICO score before applying for the Refi which I plan on doing in December?
Do I need to carry Zero balances on the 4 cards or should I put like 3-5 dollars on each to show very low usage? How with Fico score that?
Also I thought of purchasing an AU tradeline to improve my UTI and jump the score a little bit, but I have heard Mortgages do not look nor care about that?
What should I do? I have 52,700 in Available credit and usuage at 41,250 all on credit cards. No other loans or debt at all. Autos paid for! No bad marks on my credit at all either other than inquires from applying a few months ago. What type of score should I expect or need?
I hope this is enough info for anyone to help. Thanks for everyones help on this board.
10-07-2012 02:45 PM
From what I can tell you have a pretty good understanding of what you need to do to get your score to the best place possible. Yes, having the lowest possible utilization on your cards will help your score. The popular theory says have 5 of your 6 cards report $0, and have the sixth card report 1-9% utilization. But it's hard to tell if that will actually get you your best score.
Here's what I think: Given your positive history (no baddies, great job), the lower you can get your utilization, the better. However, there will likely be a point where it won't matter. For example, could you get your score up by 10 points by reporting a lower utilization, perhaps. But does 10 points REALLY matter when you have such great scores already? Do what is best for your finances, pay down your balances if you can, and find the lender with the best interest rates possible. Your scores should get you a perfectly respectable mortgage rate. Good luck!
10-07-2012 03:11 PM
I'm not a mortgage expert but don't most people traditionally refi via FHA assuming you meet their loan limit criteria? Your score will likely be irrelevant as long as it's above the minimum threshold and I would be absolutely stunned if you were below that.
10-07-2012 04:11 PM
Make sure that none of your cards are reporting more than 89% usage. 90%+ of CL usage seems to get lenders very nervous and FICO may give you a pretty good ding for that.
10-07-2012 04:14 PM
For max utility boost, have all cards report for $0, then have one report for 9% or less. Good Luck!
10-08-2012 03:15 PM
Thank you to everyone offering advice. Before using the cards to improve my home, my UTI was about 1-2% total. So as soon as I get the refi done with the Mortgage company my UTI will go back to 1% or less instead of 80-90%.
So with no baddies at all, and just a high UTI is all that I was worried about as far as getting a strong Mortgage rate because of how it dropped my score over the past few months as I have borrowed for my home.
Hopefully then the mortgage company looks and see's that I have invested money on my home, and sees the equity I am using to pay off the cards.
10-08-2012 03:30 PM