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Paying off CC, but mortgage and auto loan on the horizon

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Anonymous
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Paying off CC, but mortgage and auto loan on the horizon

Hello,
 
I'm about to pay off both my wife's and my own credit cards.  We've got scores in the mid-700s (not quite 760, but close).  The goal is to prepare ourselves for home ownership.  However, at the same time, my wife's car is getting old and unreliable and we'll need to get her a new vehicle.
 
The question is what to do -- limp along with the current vehicle?  Go ahead and take out the auto loan?  How would that negatively affect our scores (if at all) prior to looking at mortgages in six months?  
 
Also, will paying off the cards improve our scores?  We had pretty high balances before (in the multiple thousands).
 
We've both got good base incomes, so our debt won't be a high percentage of our income.  But obviously, if an auto loan will make it harder to get a good rate on a mortgage, then we'll have to come up with a plan B.
 
Advice appreciated!
 
THANKS!!!!!
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Anonymous
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Re: Paying off CC, but mortgage and auto loan on the horizon

Paying off the CCs will help you more than the new auto loan will hurt you. If you can I'd try to get as many of your CC balances to report as $0 within 60 days of your mortgage application.

1 year would be the ideal time for a car loan before a mortgage, but with scores close to the mid 700s I doubt that will hurt you too much.

Revolving debt (ie. Credit Cards) is the biggest FICO killer outside of a derogatory TL.
Message 2 of 2
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