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Credit Clean Up Advice for Mortgage Application May 2017

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Anonymous
Not applicable

Credit Clean Up Advice for Mortgage Application May 2017

I've learned a lot by reading these forums and figured it was time to get some specific advice for my specific situation.  We recently sold our house and plan to purchase again in May and need to clean up my credit report before applying.  At this point I have a real good understanding of what I need to do and I've already started cleaning things up but would love some additional advice on a couple of items.  I am working on GW's for a few 30 day lates which I know will help my score.  I plan to provide much more detail as I progress and get closer to mortgage app but have a couple items I am hoping to get answers for sooner rather than later to make sure I make the correct moves now.  So here goes, I hope this is enough information as these look to be some quick, low hanging fruit.

 

CREDIT BACKGROUND

  • Age of Oldest Account - 21 Years 10 months
  • Average Account Age - 7 Years 11 months
  • 2 Revolving Visa Credit Cards Open Currently
    • $2,700 credit limit and $4,000 credit limit 
    • Both Cap1 cards and both have had credit limits increased within last 3 months
    • 26% utilization but will make sure 1 credit card is 0 and the other below 9% when I app
    • QUESTION - After the inittial HP will I get a score bump in the near future if I open a 3rd credit card, use it a few times and then keep the balance at 0?  If I don't open a 3rd card now I will not do so before mortgage app.
  • 3 Car Loans
    • 1 opened 6/27/14
    • 1 opened 11/24/15
    • 1 opened 7/16/16
      • COMMENT - Was concerned about openting this with mortgage app coming in May but had no choice as I had to have a car for work
      • QUESTION - Will this still hurt me come May morgage application or will it have aged enough?
  • 1 Medical Collection account in the amount of $105
    • Date Opened 6/1/13 - Still reporting as collection
    • QUESTION - Is best approach to pay only if PFD?
    • QUESTION - If no PFD, should I pay anyhow?
Message 1 of 4
3 REPLIES 3
StartingOver10
Moderator Emerita

Re: Credit Clean Up Advice for Mortgage Application May 2017


@Anonymous wrote:

I've learned a lot by reading these forums and figured it was time to get some specific advice for my specific situation.  We recently sold our house and plan to purchase again in May and need to clean up my credit report before applying.  At this point I have a real good understanding of what I need to do and I've already started cleaning things up but would love some additional advice on a couple of items.  I am working on GW's for a few 30 day lates which I know will help my score.  I plan to provide much more detail as I progress and get closer to mortgage app but have a couple items I am hoping to get answers for sooner rather than later to make sure I make the correct moves now.  So here goes, I hope this is enough information as these look to be some quick, low hanging fruit.

 

CREDIT BACKGROUND

  • Age of Oldest Account - 21 Years 10 months
  • Average Account Age - 7 Years 11 months
  • 2 Revolving Visa Credit Cards Open Currently
    • $2,700 credit limit and $4,000 credit limit 
    • Both Cap1 cards and both have had credit limits increased within last 3 months
    • 26% utilization but will make sure 1 credit card is 0 and the other below 9% when I app
    • QUESTION - After the inittial HP will I get a score bump in the near future if I open a 3rd credit card, use it a few times and then keep the balance at 0?  If I don't open a 3rd card now I will not do so before mortgage app.
  • 3 Car Loans
    • 1 opened 6/27/14
    • 1 opened 11/24/15
    • 1 opened 7/16/16
      • COMMENT - Was concerned about openting this with mortgage app coming in May but had no choice as I had to have a car for work
      • QUESTION - Will this still hurt me come May morgage application or will it have aged enough?
  • 1 Medical Collection account in the amount of $105
    • Date Opened 6/1/13 - Still reporting as collection
    • QUESTION - Is best approach to pay only if PFD?
    • QUESTION - If no PFD, should I pay anyhow?

^^^Good plan to get a 3rd cc now, not later.  It will be easier to manage with two at zero and 1 with a small balance. You should see a bump in your score after the initial new account ding. If you get it now you have time to recover but do it very soon.

 

What are your mortgage scores so you can track the progress from now until next May?

 

Hard to tell what impact your 3 vehicle loans are doing to you - your DTI is affected and it may reduce the amount of mortgage for which you qualify. Don't know that without knowing your gross income and your monthly debt to see how much it reduces the mortgage for which you qualify. 

 

Most mortgage lenders ignore medical collections especially this small one you mentioned.

Message 2 of 4
Anonymous
Not applicable

Re: Credit Clean Up Advice for Mortgage Application May 2017

Thanks for the response.  DTI is not an issue with the 3 auto loans.  With those and my expected mortgage payments my DTI will be 28%.  I was mostly concerened about the newness of the last auto loan.

 

I'll hold off paying the medical collection as I don't want to awake the beast if I don't need to.  Unless my future LO recommends seeing if I can PFD I'll just leave it alone.

 

Off to get another credit card I go.

Message 3 of 4
Anonymous
Not applicable

Re: Credit Clean Up Advice for Mortgage Application May 2017

I have 2 6 month old auto loans and all of my credit cards are 1-4 months old. It shouldn't be an issue on its own.
Message 4 of 4
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