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HELP! I need a ONE point increase for Mortgage loan approval

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Anonymous
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HELP! I need a ONE point increase for Mortgage loan approval

I need a ONE point bump in my Equifax FICO 5 score to be approved for a mortgage program. I have the option to pay off a consumer finance account with a balance of around $1500 (current line of credit is $7300). I'm sitting at 24% UTL on this card. Will paying it to zero help increase my MORTGAGE score? I have four other cards reporting balances, so this would not bring me to a zero utilization overall. According to the simulator, it increases my Equifax FICO08 score 20 points, but I don't know if this will have any affect on my MORTGAGE score. Right now, this score is my mid, so I'm trying to get this one increased. The only other option is to increase my TU04 +12 points, but this one hasn't budged at all in months, even as I've been paying down revolving debt. HELP!

Message 1 of 9
8 REPLIES 8
reckedhim
Frequent Contributor

Re: HELP! I need a ONE point increase for Mortgage loan approval

What's the utilzation like on your other cards?  Can you pay those off?  From what I read, it's best to have only one card reporting a balance.

Message 2 of 9
Anonymous
Not applicable

Re: HELP! I need a ONE point increase for Mortgage loan approval

Please ignore the credit simulators. They can't predict ALL the factors that go into different scenarios.

Mortgage scores rely HEAVILY on revolving debt. The best scoring comes when you pay off ALL your cards to $0, and leave one reporting a balance that is 1-9% of your limit.

If you can't do that, then it's best to get your total utilization down to 20% of your limit. The other key is you don't want a high balance reporting individually on the cards either.

If you go to the Understanding Your FICO score board, they can provide you with concrete answers to get your score up.
Message 3 of 9
Anonymous
Not applicable

Re: HELP! I need a ONE point increase for Mortgage loan approval

Unfortunately, I'm in a timecrunch here as I have to apply for the mortgage by the end of this month at the latest (having a new construction home built). This consumer finance card's statement will be closing by 7/15, so I need to make a decision quickly whether I should put all my eggs in one basket and pay this to zero. I don't have the means nor the time to pay down the other additional cards. I guess my question is, will bringing this card from a 24% UTL to 0% give me that 1 point that I need? Thank you- I appreciate your help/feedback!

Message 4 of 9
Anonymous
Not applicable

Re: HELP! I need a ONE point increase for Mortgage loan approval

 
Message 5 of 9
ejm201
Valued Member

Re: HELP! I need a ONE point increase for Mortgage loan approval

THANK YOU for sharing this. I have talked to many "LOs" and they never say hey, pay off all balances and leave one card at 1-9%. I can definitely do that by mid August. Smiley Happy Of course timing is everything and like the OP, trying not to lose out on home that is HARD to come by in a place where you pay higher rent than what your mortgage can be easily(live in MD). Wish there was a simulator on the model that counts. I don't know ANY lender using the FICO 8.

Message 6 of 9
Anonymous
Not applicable

Re: HELP! I need a ONE point increase for Mortgage loan approval


@Anonymous wrote:

Unfortunately, I'm in a timecrunch here as I have to apply for the mortgage by the end of this month at the latest (having a new construction home built). This consumer finance card's statement will be closing by 7/15, so I need to make a decision quickly whether I should put all my eggs in one basket and pay this to zero. I don't have the means nor the time to pay down the other additional cards. I guess my question is, will bringing this card from a 24% UTL to 0% give me that 1 point that I need? Thank you- I appreciate your help/feedback!


It is your only shot and if it is a point you are after, bringing one card down to zero should boost it.  Keep us posted on results.

Message 7 of 9
Anonymous
Not applicable

Re: HELP! I need a ONE point increase for Mortgage loan approval

 So I paid off the card, and my Equifax report updated. My FICO 8 score went up four points. Checked my FICO 5  Mortage score and it DIDN'T MOVE! Now, I'm just waiting for it to post on my TU account and see if I get any change. I need 12 points increase for TU-not holding my breath Smiley Sad Going to talk to my LO tomorrow to see if there are any other options. 

Message 8 of 9
Anonymous
Not applicable

Re: HELP! I need a ONE point increase for Mortgage loan approval

What is the limit and balance on the other four cards? It could be that you paying off the card did not put you into a lower utilization threshold which would cause no increase in score. For example, say you are at 28% utilization overall and the card you paid only brought you to 26% utilization. You wouldn't see that much of a boost because you haven't crossed a threshold. 

 

Credit card utilization is two-fold. FICO looks at individual credit card utilization and total/aggregate utilization. I'll let someone else confirm, but if you can't do afford to pay all of your cards down to $0 with the exception of one, then I think the next best thing to do is to try and get your individual utilization down if it's high. 

 

FICO individual credit card thresholds are 8.9%, 29.9%, 49.9%, 69.9% and 90%-which means you're maxed out. Meaning you will either get dinged if you go above those percentages, or you get a boost when you go below those percentages. 

Message 9 of 9
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