Save for downpayment or use moneyto pay down revolving credt?

[BethJ]

I have prequalified for a home loan but I either need a 5% down payment of about $3500 or need to increase credit score about 30 points to qualify for a home loan that doesn't require down payment. Should I start paying my access out cards down in big chunks or stick with current payment e Mrs and save up for down payment?

My FICO SCORES are currently 616/626/640. This is about a 100 point increase from a year ago. :-)

[peepers]

would you qualify for a lower interest rate with a higher score?

[BethJ]

Good question. I will have to check with my lender. I do know I need the downpayment for a conventional loan and higher credit score for a Rural Housing loan.

[guiness56]

Which leads to the question, how high is your utilization?

[BethJ]

My cards are all maxxed out right now, but even with that the total of all my revolving credit is only $3,000. I'm working tons of overtime right now so I want to use it in whatever manner gets me into a house fastest.

[guiness56]

You are getting dinged individually for the cards maxed out then for a high overall utilization.  Bad, bad for the score. 

Paying down your utilization is the fastest way to boost your score.

I would at least get them down to below maxed out on each card, then while still making minimums on the others, start paying off the lowest balance first, then use that money and pay off the next, until they are all paid.  You will see your score go up.

Once paid off, have all but one report 0 balances and the other at 9% or below.  FICO does not like to see all cards reporting a 0 balance.

[BethJ]

Thank you!