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AU with high utilization but oldest TL - should I drop it before applying for a mtg?

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daddiggingout
Regular Contributor

AU with high utilization but oldest TL - should I drop it before applying for a mtg?

Next month I plan to ask NFCU to start the mtg loan process.  At the moment, I have no positive open lines of credit, a five year old auto repo and an AU AMEX with perfect payment history but a 45% utilization.  If I drop this AU TL I will have absolutely nothing on my credit report except for the one terrible derogatory of a 2009 repo.  So, do I leave the AU on my report or have it removed?

Message 1 of 6
5 REPLIES 5
Active1181
Valued Member

Re: AU with high utilization but oldest TL - should I drop it before applying for a mtg?

Could you provide more info, it would help the experts on here to provide better feedback:

http://ficoforums.myfico.com/t5/Mortgage-Loans/Do-I-qualify-for-a-mortgage-Info-that-is-needed/td-p/...

I will say though from my experience with my lender, I was asked to be removed from an AU AMEX I had and they rescored. My situation is different as originally they only asked for a LOE of who was the owner and responsible for the debt. They asked me to remove because it was my oldest TL and highest credit limit CC and felt it was skewing my score.

Are you responsible for the balance on the AMEX? If you are not, then I wouldn't remove unless the lender asks you to. I've read AU accounts are not weighed heavily by FICO but not all lenders use the latest version and it's possible your current scores may be affected by canceling the AMEX.

When I removed it dropped my scores, not significantly but if you are on the cusps of a 640/680/720 etc, it could drop you into the next tier for interest rates. Are you going conventional, FHA OR USDA?

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5/16 TU 735 EX 699 EQ 735

9/14 TU 722 EX 695 EQ 699
2/09 TU 533 EX 515 EQ 554
Message 2 of 6
daddiggingout
Regular Contributor

Re: AU with high utilization but oldest TL - should I drop it before applying for a mtg?

Active1181,

 

First off, thank you for taking the time to respond.  I currently have these scores:  TU 671, EQ 637 and EX 572.  The AMEX is my in-laws and is not my debt in any way.  However, thise TL shows perfect decades long credit on their part.  The repo has a good chance of going away in that the deficiency amount was alter, as was the DOFA.  I am disputing this currently with the CRAs and feel confident it will be deleted by next month.  The repo shows a bloated $10,092 and actively reports as late every month even though it is five years old. 

 

We are going for a VA loan if all goes well.  My income, bank statements, taes, rental history and years in field are all great, so it is only this last bit of figuring out whether to drop this AU or not.  I wanted to do everything before approaching NFCU as they have little tolerance for LOEs from what I have found in researching them as a credit union.  I had hoped to get a definitive answer on the boards so I could walk in without raising eyebrows regarding why we needed our in laws help with the AU to begin with. 

Message 3 of 6
Active1181
Valued Member

Re: AU with high utilization but oldest TL - should I drop it before applying for a mtg?

I would have to let one of the experts answer here, Shanethemortgageman, Dallasloanguy as they would know more.

There isnt one answer unfortunately as there are other factors here that may be specific to you, for them to accurately answer and provide you with an answer, take a look at the link I provided in my first response and post those answers here and you'll get a quick response. Without knowing what is the price of the home your considering, income, years employed, total debt, etc., makes it difficult to say if it couldn't affect you or not.

Also keep in mind that you cannot have any disputed accounts on your CR when you apply for a mortgage, they will have to be pulled out of dispute or paid off. Sometimes these can take 30 days to come off so just a word of caution. As I mentioned, I would stay on as an AU, once your going through the mortgage process your LO may be able to better answer what the next steps would be, I would think they would disregard and ask for a LOE from you stating your inlaws are responsible for payment etc.

Good luck! Smiley Happy
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5/16 TU 735 EX 699 EQ 735

9/14 TU 722 EX 695 EQ 699
2/09 TU 533 EX 515 EQ 554
Message 4 of 6
ShanetheMortgageMan
Super Contributor

Re: AU with high utilization but oldest TL - should I drop it before applying for a mtg?

It sounds like if the AU account was removed, your scores would decrease quite a bit.  I'd say stay on it for now, and let an underwriter make the call if they want it removed or not.  Doesn't really sound like an ideal situation for NFCU, they tend to be pickier than other VA lenders on some aspects.

Free Mortgage Advice & Pre-Approvals (FHA, VA, USDA, Fannie, Freddie, Non-Prime, Construction, Renovation/Rehab, Commercial) since 2002
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Message 5 of 6
daddiggingout
Regular Contributor

Re: AU with high utilization but oldest TL - should I drop it before applying for a mtg?

Thanks guys I will leave it until my lender tells me to remove it.  As far as NFCU goes, I have heard horror stories and amazing success stories.  For not unlike FICO, the NFCU tends to keep things mysterious!Smiley Indifferent

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