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Regular Contributor
92235
Posts: 140
Registered: ‎03-30-2010
0

Help me increase my score

I am looking into buying a house in about 1.5 years. My current scores are TU 703 and EQ 681. Both bureus have the same info except the EQ has 2 inquiries. I would like to get my scores as high as possible so that I can get the lowest rates available. Please let me know what you think I should do to get a 750 or higher. I think the biggest things that are hurting me are; I have a collection that is falling off the first few months of next year, my AAoA, and my oldest credit line. My AAoA is only 2 years and my AAoA is 3.3 years. I also don't have any installment loans on my report. Would getting a car loan help me out enough in a year? I do need a newer car. I think when my collection falls off I should get a huge boost in score because it is my only derog. I have no missed payments at all. My util is only 2%.

 

Orchard - 3.4 years - 0/$300

Wells     - 3 years     - 83/$3200

HSBC    -  1 year      - 0/$1500

Amex     -  .5 years   - $0/Charge

Valued Contributor
mauve
Posts: 2,487
Registered: ‎02-18-2010
0

Re: Help me increase my score

If your reports are from here, you can run the "buying a car" scenario in the "Next steps" tab.  I'd assume that the lower number in the range is what you can expect. 

 

Other than that, I'd wait for the collection to fall off and I'd let accounts age. 

 

The "Next Steps" tab also has a "Best course of action" option that lets you see what you can expect from your scores if you pay on time and pay down any debt for the next 24 months.  That should also give you a ballpark idea of where you'll be in 1.5 years. 


Starting Score: EQ 583 TU04 619 EX 592 (lender pull) 2010
Previous High Score: EQ 700 TU04 712 EX 726
Current Score: EQ 740 TU(Discover) 750 EX(AMEX) 747
Goal Score: 740+ all around


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Regular Contributor
92235
Posts: 140
Registered: ‎03-30-2010
0

Re: Help me increase my score

Well it does say:

 

EQ - 681 will be 751-791

TU - 703 will be 713-753

 

 

Not sure why such a huge jump for EQ, but such a small bump for TU. Also does that factor in the collection calling off and the inquires falling?

Valued Contributor
mauve
Posts: 2,487
Registered: ‎02-18-2010
0

Re: Help me increase my score

I don't know if they factor those in or not.  Inquiries will stop hurting a year after they occurred, though.

 



Starting Score: EQ 583 TU04 619 EX 592 (lender pull) 2010
Previous High Score: EQ 700 TU04 712 EX 726
Current Score: EQ 740 TU(Discover) 750 EX(AMEX) 747
Goal Score: 740+ all around


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New Member
talks1nmaths
Posts: 8
Registered: ‎02-09-2011
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Re: Help me increase my score

Inquiries remain on your report for 24 months. Do they stop negatively affecting after a year?


Starting Score (12/19/10): EX 588, EQ 585, TU?
Current Score (5/21/11): EX 652, EQ 648, TU 635
Goal Score: EQ 700, TU 700


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Moderator Emeritus
MarineVietVet
Posts: 14,116
Registered: ‎07-14-2009
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Re: Help me increase my score


talks1nmaths wrote:

Inquiries remain on your report for 24 months. Do they stop negatively affecting after a year?


Hi there.

 

For scoring purposes inquiries have no effect after one year but for 2 years potential and current lenders can see all of them and having alot of inquiries could make them a little nervous.

 

 

 

From a BK years ago to:
EX - 9/09 pulled by lender 802, EQ - 10/10-813, TU - 10/10-774

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".

New Contributor
dsrfinancial
Posts: 60
Registered: ‎05-09-2010
0

Re: Help me increase my score

Adding a vehicle loan may not be the best option for you. Yes it does affect your credit mix, but with your current scores, I can't imagine that it would help your score increase significantly enough to warrant borrowing the money (on interest) to purchase it. The one piece that people normally don't think about is DTI, or debt to income ratio when purchasing a home. This is the cost of your debts each month versus the amount of income you bring in. (Search for DTI calculators and try different scenarios including an auto payment). Adding a car payment increases your DTI back ratio and could put you in a different interest rate scenario at underwriting, or cause you to bring more money to the table. If you have great income and buy a modestly priced vehicle, it may not hurt so much, But if you're income is not as high, a higher DTI could stop you from buying the house you really want. People tend to overspend when buying vehicles and don't negotiate payments well. They can afford the payment, but they don't think about the fact that the vehicle is a depreciating asset (less valuable every day) and how it affects their ability to purchase a home later. So if you must borrow for a vehicle, by all means do so. But I wouldn't choose that as a way to simply add to my score. If it isn't dire, save the payment that you normally would pay for a vehicle each month. Showing that you are a saver is just as important to a housing lender because you dont' take on debt that isn't necessary. The flip side of that is don't wait to purchase the vehicle if you really need it. The worst thing that can happen is you put it off, and then during the mortgage process, the car you have breaks down and you have to take a car loan while in the mortgage process. You will have to weigh out whether your current vehicle can last until after you get your house keys. I hope that helps you, and I do hope you get your house! 


Starting Score: Equifax: 551
Current Score: 625
Starting Score - TU: 497
Current Score: 635
Goal Score: 720

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Regular Contributor
92235
Posts: 140
Registered: ‎03-30-2010
0

Re: Help me increase my score

It's a tough call. I made about $33,000 last year before taxes. I would expect about the same this year plus a couple thousand. My current car is an '01 focus with about 110,000. The problem is a deliver pizzas in the evening time and I can't have the car die on me. I want a used car in the $12,000 range with about $5000 down. As stated above I don't have any other debts. I do have about $300 a month in child support though. I would say my take home is about $2300/mo. If I got a car loan for $8000 on a 4 yr note it would be $185/mo or 5 year would be $150/mo. Of course I would pay it off in about 3. Thanks for reminding me that DTI is important in a mortgage. I would have tried for a 3 yr, but that would put me at $241/mo.

 

I am looking for a rather inexpensive place for about 100k which on a 20 yr loan would be $632 plus insurance/tax, or 30 yr $506. I am currently paying $650 renting a place smaller than I could have for the 100k home. I have never had a problem paying rent in the past 3 years I have lived there. So either way I go I wouldn't have much of a change of expenses.

New Contributor
dsrfinancial
Posts: 60
Registered: ‎05-09-2010
0

Re: Help me increase my score

Wow. That makes it pretty easy to relate to. We have pretty much the same situation. I am in the 32 - 33k income area. I am divorced, so no wife's income to rely on. I just bought a $12k vehicle with $1k down and payments a little over $300.mth. My interest rate is high due to credit issues, but I will never pay that amount of interest because I will retire the loan early. The one thing that sticks out is the $300 in child support. That goes into the DTI and I know for conventional and FHA mortgage loans this could cause you not to qualify at the best rate, or even at all. Your calculation is probably similar to mine. I have about 400 in payments per month with the car payment and 4 small credit card obtained to build credit. Adding a $500 - 600 mortgage and the DTI was within guidelines but still close. I can't add anymore payments or I may be over. So with the $300 child support and no car payment yet, you want to be extemely careful. Run the calculators to see where you stand. I don't think you should put the 5k down on the vehicle. Remember the salesman can work the numbers to make sure you still pay more than what you want and a good bit of that 5k is going to fund his paycheck. Go for $1k max down and keep the other$4k on reserve (for emergencies) if you must finance the car. Or look around for a good used car that you can get for 5k and avoid adding to the DTI altogether. Also with FHA, you would need 3.5% down which you already have if you finance $100k or less. Make that $4k your downpayment for the home, and see if the seller will help with the closing costs. Since you drive for a living, you may opt for the vehicle with the payment because it may come with a warranty, etc. You can weigh that all out, but don't let it prevent you from getting an appreciating asset (homes do go up in value - just not recently:smileyhappy: because a car is just the opposite. Also, how long have you worked the 2nd job? In order for that income to count in underwriting for the mortgage, I think you have to show it on your taxes for at least two years.


Starting Score: Equifax: 551
Current Score: 625
Starting Score - TU: 497
Current Score: 635
Goal Score: 720

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Valued Contributor
mauve
Posts: 2,487
Registered: ‎02-18-2010
0

Re: Help me increase my score

I would NEVER walk into a dealership without financing in hand.  Or money.  That is, assuming I was buying at or through a dealership. 

 

http://consumerist.com/2007/03/dealerships-rip-you-off-with-the-four-square-heres-how-to-beat-it.htm...

 


dsrfinancial wrote:

Wow. That makes it pretty easy to relate to. We have pretty much the same situation. I am in the 32 - 33k income area. I am divorced, so no wife's income to rely on. I just bought a $12k vehicle with $1k down and payments a little over $300.mth. My interest rate is high due to credit issues, but I will never pay that amount of interest because I will retire the loan early. The one thing that sticks out is the $300 in child support. That goes into the DTI and I know for conventional and FHA mortgage loans this could cause you not to qualify at the best rate, or even at all. Your calculation is probably similar to mine. I have about 400 in payments per month with the car payment and 4 small credit card obtained to build credit. Adding a $500 - 600 mortgage and the DTI was within guidelines but still close. I can't add anymore payments or I may be over. So with the $300 child support and no car payment yet, you want to be extemely careful. Run the calculators to see where you stand. I don't think you should put the 5k down on the vehicle. Remember the salesman can work the numbers to make sure you still pay more than what you want and a good bit of that 5k is going to fund his paycheck. Go for $1k max down and keep the other$4k on reserve (for emergencies) if you must finance the car. Or look around for a good used car that you can get for 5k and avoid adding to the DTI altogether. Also with FHA, you would need 3.5% down which you already have if you finance $100k or less. Make that $4k your downpayment for the home, and see if the seller will help with the closing costs. Since you drive for a living, you may opt for the vehicle with the payment because it may come with a warranty, etc. You can weigh that all out, but don't let it prevent you from getting an appreciating asset (homes do go up in value - just not recently:smileyhappy: because a car is just the opposite. Also, how long have you worked the 2nd job? In order for that income to count in underwriting for the mortgage, I think you have to show it on your taxes for at least two years.


 

 


Starting Score: EQ 583 TU04 619 EX 592 (lender pull) 2010
Previous High Score: EQ 700 TU04 712 EX 726
Current Score: EQ 740 TU(Discover) 750 EX(AMEX) 747
Goal Score: 740+ all around


Take the myFICO Fitness Challenge

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