Thoughts on this plan to boost credit score to qualify for mortgage?

[Anonymous]

My FICO score (TU) is 640. I am going to be applying for either a USDA Direct loan or some other type of low income/first time home buyer type of loan yet TBD. I'm trying to do all of my research and make myself as credit worthy as possible prior to officially applying for anything.

I only have one revolving credit account through Synchrony Bank (Amazon card) and my CL is $800. It's at 7% utilization. Never late. I called last week and asked for a CLI and was rejected. I have read that they require a CL of 650, so this wasn't a huge surprise. My other current accounts are my car loan (on time, no lates) and my student loans which have had lates in the past (2+ years ago) but are all current. I don't have a lot to work with to improve my credit at this point, so I'm trying to be creative...

I'm considering this scenario:

My mother is almost 70 and has impeccable credit. I am considering asking her to put me as an AU on one of her older accounts with low utilization in order to bump up my score. Once that happens, I can ask for a CLI from Synchrony again. If the mortgage process requires I drop the AU, I will still have the increased score from the higher credit limit with Synchrony. If the lender *doesn't* require me to drop the AU, even better for my score. 

Will this work in practice? It seems like it will take months for my score to naturally get to a 650 if I continue doing as I have been and I don't have that luxury.

[Anonymous]

It sounds like you are under the impression that a CLI will increase your score.  It won't.  A low utilization helps a person's score, but yours is already low.  The CLI request in fact might have resulted in a hard inquiry which would may have lowered your score further.

The AU idea is nonetheless a good idea, especially if you can convince your mother to add you to a car that is very old and for her to keep a $0 balance on it.  The mortgage models count AU cards pretty much as though they were regular cards of your own.  One of the things hurting your scores is the fact that you have exactly one card, whereas three would do you much better.  When you have three cards, you'll be able to keep most at $0 with exactly one showing a small positive balance, which will help you a significant amount.

The biggest way to help your score is to work on getting all your late payments removed.  Head over to the Rebuilding forum and they will be able to advise you about this.  You'll need to have pulled your three credit reports so you can give the people in that forum a detailed description of your derogs and your accounts in general.

[CH-7-Mission-Accomplished]

When are you applying for the mortgage loan?   Dixie is right, you are getting nailed by only having one credit card.   I would venture to guess that adding a second card might give you 20 points, and adding a third would give you another 10 points.   I am not a fan of using the SCT (shopping card trick) because I think Comenity cards are crap, but for you they make sense.   Read up on how to do it and then go to one of their huge number of sites and follow the steps.   Victoria's Secret is one popular site.   I forget the others.   But they will give you a revolving credit card without doing a hard pull, which is just what you need.

(Ignore comments about share secured loan.  You don't need it).

And do get that AU account from your parents.

I don't know where your scores will end up, but you will get a big jump.  And you will have no new inquiries.   You will need 30 to 45 days for these steps to be reflected in your credit reports.

And lastly, 7% is very low utilization, but I would just pay that balance down to $5 so you are at 1%. And leave it there.   Do not pay off that card -- you need one small balance reporting.

Good luck.  You've got this.

[Anonymous]

Thank you for the insight! I will absolutely check out the Rebuilding forum. If there is any way to get my old late school loans removed then I will be all over it! 

My mortgage loan officer (who has not pulled my credit, we have just discussed it at length) told me that there is no benefit to carrying a small balance. Admittedly, she said she is not a credit expert, but that she has taken some classes, etc. So, my Synchrony credit card reports at the end of the month. I already paid more than the minimum payment so I've met my obligation for the month. I used it the other day and spent about $100. I need to decide to either pay the balance to $0 or to leave $5 or so dollars on there. I'm getting conflicting info, so I really don't know what the best thing to do is! 

[Anonymous]

Mortgage loan officers give almost as bad advice about credit as Realtors.  Don't listen to either of them unless one of them is actually a senior underwriter analyst, too.

I have to unprogram tons of junk credit information that loan officers and Realtors give to people I help in real life.  It's a constant burden.

You want 3 credit cards minimum and it can give you a hefty boost for sure in the "Credit Mix" portion of FICO which counts for 55 total points.  Having just 1 credit card hurts you for about 20 total points there.  After you get a mortgage and close and have the keys, get a total of 5 credit cards that age together as 5 credit cards is the minimum sweet spot for FICO, but after the first 3 cards, cards 4 and 5 ding your score for 2 years as they age.

[Anonymous]

ABCD - I have been added to  2 accounts as an AU. One is a Macy's card, 20+ years old, paid in full every month. The other is Chase Freedom also 20+ years old, always paid in full, 22k limit. I also have the option to become an AU on her Kohl's account, less than 5 years old, always paid in full. Is it worth it to be added to that Kohl's account as well?