High Utilization on Some Cards and Mortgage

[MrChairman]

I am currently in the process of applying for a mortgage. We are getting our house built through Ryan Homes. I have about 3 cards that are considered "maxed out". I wanted to know if I pay these down to about 70-80% utilization, would I see a significant increase in score. I will also be paying off a installment loan with a $115 payment within the next 60 days. My mid score is currently a 634. I am attempting to get to 650-670 range by March. Any input is greatly appreciated.

[jandj80]

I got about 35 points going from 100% to 77%. (3700 total to about 2900). 

[jandj80]

The installment loan might hurt you when you pay it off, cause if its been being paid for a long time, its helping your AAoA. I lost a few when we paid off a car loan that we had for 4+ years. If you can pull credit for approval prior to that showing closed I would do so. 

[MrChairman]

I have only been paying on this installment loan for about 6 months. Its for a couch. It will help improve my DTI ratio as well.

[getmycreditright]

If that installment loan is your only one, paying it off can adversely impact your score (credit mix purposes). To get points quick, paying down your credit cards will do the trick. Although you'd probably need to pay them down closer to 50% in order to see a sizeable score bump.

[MrChairman]

I have 4 installment loans total. 2 personal loans 2 auto

[getmycreditright]

In this case, paying it off probably won't yield much of a score increase. I would go after those credit cards with everything I've got. I know it's probably tough as you're trying to save for the home as well, but getting your utilization down will give you a nice boost. 

[beb86]

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@jandj80 wrote:

The installment loan might hurt you when you pay it off, cause if its been being paid for a long time, its helping your AAoA. I lost a few when we paid off a car loan that we had for 4+ years. If you can pull credit for approval prior to that showing closed I would do so. 

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This is incorrect. A positive account will stay on your CRAs for at least 10 years after it is closed.

[beb86]

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@getmycreditright wrote:

If that installment loan is your only one, paying it off can adversely impact your score (credit mix purposes). To get points quick, paying down your credit cards will do the trick. Although you'd probably need to pay them down closer to 50% in order to see a sizeable score bump.

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This is also incorrect....having a pd/closed installment is the same as an open installment for credit mix purposes.

[beb86]

best bet for a score boost is to drop to below 35% and even more so at 10%