@Anonymous wrote:
Hi! By "paying off credit cards" did you pay them entirely? I am trying to get a mortgage and while my regular Fico score is in a great range, my mortgage score is much lower. I am nervous to pay my credit cards off completely as I was told that the monthly payments will help to improve my score over time, whereas if I pay in full it will give them a minor boost and then they will stay at that score. I don't know what to do! Thanks
It's possible that a mortgage officer may have told you this. If so, it is untrue.
The FICO mortgage models like it best when exactly one of your credit cards is showing a small positive balance with all of your other cards reporting $0. If all or most of your credit cards are reporting a positive balance, you are being penalized for certain, possibly more than just a bit.
The loan officer's advice is reasonable if you are talking about a long-term run-up to the mortgage -- i.e. if you have another 12 months to go. Then it can make sense to use your cards naturally, allowing many of them to report balances, This is a bad approach in the 40 days before your score is pulled (whether for pre-approval or final underwriting).
I suggest you do not rely on my advice alone, but head over to the Understanding FICO Scoring forum. Tell them what you had been told, and then what I told you, and then get some more feedback. Thomas Thumb and Revelate know a lot about the mortgage models, as do other folks there, and they should be able to ket you know if I am right.
