We're looking into buying our first home (in my name only). I'm permanently disabled and bring in 25k/yearly on SSDI. The home we're looking at is in the 50-60k range (yes, it's cheap here!). I started repairing my credit last fall, and right now my FICO scores are 609(TU) and 606(EQ). We're going through the Maine State Housing Authority's first time buyer program, which requires a score of 620. The mortgage officer at the local bank said we'd give some time for my score to rise a bit more, and he'll check back with me May 2nd. The things he mentioned that would raise my score were my car loan getting closer to 1 year old, and me paying down my credit cards.
I have 2 credit cards -- one w/ a limit of 500 and one with 250 -- just paid 400 on the first and 100 on the second, and also got a new card from Capital One with a limit of 300, to build my history (keeping that line pretty much open).
Are there any quick fixes I should do first to bring my score up about 20 points?
I have a delinquent account to an old vet for 99 bucks that I want to pay off and have closed, but am worried it might affect me negatively. Would paying that off help quickly?
The loan officer mentioned if my score wasn't up to par they could request our rental history and other things to make sure we're reliable, which I have no problem with.
What are the chances of my middle score being around 620 by May 2nd? I just paid the 400 on one of the cards today.
I'm very anxious about it, as it's the perfect home for us -- and would be 200 less a month than we've been paying in rent all these years.
Credit cards are revolving credit. For ideal scoring for revolving credit with 3 open lines, you would want 2 of them to report a $0 balance and the remaining card to be at 9% or less. The closest you can get to that, the better. You're scored on both your *overall* utilization (sum of balances / sum of credit limits) as well as your *individual* utilization - so if you were using *overall* 9%, you would probably be better off with $0 on 2 cards and the entire balance on the highest limit card than you would be if you had 9% on each card.
Utilization is 30% of your score. You didn't say what your current balances were, just how much you paid down - paying off from 100% utilization to 5% can net you about 100 points, (really broad strokes - your mileage may vary). How quickly you'll see that score boost is dependent on your cards - most cards report balances once a month around when they cut the next statement. Some do it at the end of the month regardless of when the statement cuts - HSBC is one of those, I don't know who else.
The vet bill being paid should not positively or negatively affect your score. However, if you can get the vet to agree to delete reporting for payment, you could see a benefit.
I'd also hold off on applying for any new credit until you close on your house. Opening new credit less than 6 months to a year before applying for a mortgage can make it much more difficult to get a loan.
I just paid one card down to zero balance (the card with the biggest limit). Of the remaining two cards, one has 60% utilization, and the other has 30%. The money I was going to use to pay the vet, I can use to put on one of the cards to bring them under 9%. The cards are Capital One - any chance they will report that within the next month? What if I did a balance transfer on one of the cards -- then I'd have 2 cards with a $0 balance, and one with 90% utilization.
If you can tell me that would be a great help, I would do it today.
I don't know how quickly balance transfers happen. I wouldn't rely on it. I think that you're better off with those two as is than upping one of them to 90%. Vet may or may not delete, and who knows how long it will take - check out the Understanding Scoring boards for (hopefully) better advice about what to do with the two with remaining balances. I believe my Capital One reports at the statement date.