My husband and I are looking to buy a larger home (3 kids...

[Anonymous]

My husband and I are looking to buy a larger home (3 kids in 2 bedrooms is getting cramped!), so we'll be looking for a mortgage soon. The mortgage broker said they usually use the person with the higher earner's credit score, which would mean my husband's score will count more than mine.

Eight years a medical crisis put us over the edge financially. We've paid down $25K in credit card to $14K. No bankruptcies, no charge offs, but we did have some creditors close accounts several years ago. Many of the old delinquencies will fall off in 2008, but we can't wait that long for a new home.

My Scores: EQ 672 / EX 708 /  TU 699

My husband's : EQ 661 / EX 677 / TU 694

We have the following debt:

BOA  $6917 (husband's name I'm AU)

Chase $1308 (husband's name I'm AU)

Chase LOC 4433 (husband only)

HH Gregg 845 (husband only)

Capital 1 250 (my name only)

I'm currently paying and extra $700-1000 payment over the minimum due.

My question: Every month I pay extra to credit cards, but I'm wondering what is the best strategy to pay off debt to improve our credit scores. Does it matter which card I pay the extra to? Should I work on one first and then move to another or spread the payments across multiple credit lines? Since my husban'd score will carry more weight, should I put money on his accounts first?

Should I try writing a goodwill letter to those that have derogatories, even if they are old and closed with a zero balance? (One was a car lease that has long since expired.)

How badly will a delinquent mortgage payment in the past hurt our chances for financing?

Thank you for any advice you can provide!

[Tuscani]

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Sillygirl wrote:

My husband and I are looking to buy a larger home (3 kids in 2 bedrooms is getting cramped!), so we'll be looking for a mortgage soon. The mortgage broker said they usually use the person with the higher earner's credit score, which would mean my husband's score will count more than mine.

Eight years a medical crisis put us over the edge financially. We've paid down $25K in credit card to $14K. No bankruptcies, no charge offs, but we did have some creditors close accounts several years ago. Many of the old delinquencies will fall off in 2008, but we can't wait that long for a new home.

My Scores: EQ 672 / EX 708 /  TU 699

My husband's : EQ 661 / EX 677 / TU 694

We have the following debt:

BOA  $6917 (husband's name I'm AU)

Chase $1308 (husband's name I'm AU)

Chase LOC 4433 (husband only)

HH Gregg 845 (husband only)

Capital 1 250 (my name only)

I'm currently paying and extra $700-1000 payment over the minimum due.

My question: Every month I pay extra to credit cards, but I'm wondering what is the best strategy to pay off debt to improve our credit scores. Does it matter which card I pay the extra to? Should I work on one first and then move to another or spread the payments across multiple credit lines? Since my husban'd score will carry more weight, should I put money on his accounts first?

Should I try writing a goodwill letter to those that have derogatories, even if they are old and closed with a zero balance? (One was a car lease that has long since expired.)

How badly will a delinquent mortgage payment in the past hurt our chances for financing?

Thank you for any advice you can provide!

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Welcome... Sounds like you are on the right track. I assume you have read the Scoring 101 thread?

Yes, you should try a GW letter on any baddies. It doesn't matter how old they are or if they are closed.

[CreditBob]

First, do not be late on your mortgage payments ever!!! The balances on your revolving accounts (credit cards), are having an impact as far as the reason your score is lower. The scoring system looks at all the revolving accounts (credit cards) combined. Here is what you can do. Is there anyway that you can pay each credit card account down to 1-10% of it's useage??? because when that bhappens you score will go up anywhere from 25 or more fico points. Second, request that the creditors of all your credit cards increae the line of credit so the useage goes down towards less than 10% of the linbe of credit to be used. Do not use your credit cards except use each account once evry six months just to make sure the account does not go inactive. You can charge a candy bar or maybe $ 5.00 worth on each account. Do not apply for any new credit. the credit bureaus computer system will lok at what you have applied for or done in the last 12 months. Go to this site and click on get started http://www.bankrate.com/brm/fico/calc.asp?lpid=BKRATE29  Please let me know how this goes for you.

[CreditBob]

My Scores: EQ 672 / EX 708 /  TU 699

My husband's : EQ 661 / EX 677 / TU 694

Your score is in alittle beter shape than your husbands. Both of you have one thing in common and that is you have balances on your credit cards. If both of you pay them down to less than 10% this is what I estimate your fico (credit) score to be

YOUR SCORE    EQ 698-710       EX  715-730    TU     710-730

YOUR HUSBAND's SCORE     EQ  685-700     EX   687-702    TU   710-725

So pay down the cards and see what happens.

[Tuscani]

Hold on.... CreditBob

If you want the best score only using your card once every six months is ill-advised. You want to carry a balance every month that is within the optimal util range of 1-9%. The FICO estimator you keep posting is a general guide only. You should take what the estimator tells you with a grain of salt as it is usually not as accurate as you might think. Does that mean the estimator is bad? NO. But, it's unlikely that the only thing that changes on your reports in the future is what you put in the estimator.

[Anonymous]

Sounds like you are the right track in getting that debt paid off and getting into that new home.

There a re major methodology's to paying off Debt.
1. Pay the Highest APR First until gone
2. Pay the lowest Balanced first and roll those payments to the next lowest balance.

the biggest bang is getting the utilization on the revolving under 10% both overall and on each CL.

Keep in mind they will roll the First mortgage and the HLOC into a new loan if you sell the house. I hope that you have 20% equity to roll into your new mortgage - this will make the process much easier.

Message Edited by Timothy on 06-18-2007 07:15 AM

[Anonymous]

We have gotten our financial act together (contribute to retirement plans, have established a savings account, not relying on credit to make ends meet, etc.), so I'm confident that this is just a matter of slow and steady payments. But I know that the utilization is killing us.

Unfortunately, I have no way of paying a large chuck of cash to pay down to improve my untilization. I just have to do things the slow way. The Chase LOC is a personal line of credit, not a HELOC. We will have some proceeds from the sale of our current home, but had planned to use those to pay off the credit cards. Should we not do that? Should we use it as money down and continue paying on the credit cards as normal?

[Anonymous]

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@Anonymous wrote:

We have gotten our financial act together (contribute to retirement plans, have established a savings account, not relying on credit to make ends meet, etc.), so I'm confident that this is just a matter of slow and steady payments. But I know that the utilization is killing us.

Unfortunately, I have no way of paying a large chuck of cash to pay down to improve my utilization. I just have to do things the slow way. The Chase LOC is a personal line of credit, not a HELOC. We will have some proceeds from the sale of our current home, but had planned to use those to pay off the credit cards. Should we not do that? Should we use it as money down and continue paying on the credit cards as normal?

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You want a 80% LTV (loan to value) to get a prime rate and avoid PMI.

Discuss this with your originator- I guess it all depends on "some proceeds" means.

[Anonymous]

Our mortgage broker planned to do a 80/20 Fixed to avoid PMI. He's actually the one that suggested paying off the credit cards since they will have a much higher interest rate and it would still allow our budget even more breathing room with the new mortgage payment. One of the reasons I have been focused on paying so much was to see how we could manage financially with the greater outlay. Its approximately how much our mortgage will increase. We'll definitely discuss it with him as we get closer. Thank you for all of the advice!

[Anonymous]

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@Anonymous wrote:

Our mortgage broker planned to do a 80/20 Fixed to avoid PMI. He's actually the one that suggested paying off the credit cards since they will have a much higher interest rate and it would still allow our budget even more breathing room with the new mortgage payment. One of the reasons I have been focused on paying so much was to see how we could manage financially with the greater outlay. Its approximately how much our mortgage will increase. We'll definitely discuss it with him as we get closer. Thank you for all of the advice!

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Your welcome and good luck -

Sounds like you are not just adding a bedroom- more like a major upgrade.