Advice from mortgage company credit repair company

[AZgal15]

The mortgage company I have been working with as I move towards buying a house recently bought a credit repair company so they can help their customers in house for free to maximize their credit scores for mortgages.

I was their first customer to use the service as we are trying to get my middle mortgage score to go up 4 points to get the next level of lower mortgage rates. They called me yesterday to give me my recommendation on what to do and they told me to decrease the debt owed on my credit card from 2100-> under $600. I told them it was already below $600 since they pulled my credit 6 weeks ago. Then they told me that as long as I keep it under $600 and all my other credit cards under 30% utilization each that my mortgage score will rise those 4 points in 2 months. I asked if they wanted me to pay off all cards but one to maximize my score (that's what I had learned in the forums) but they said no that all my current cards should continue  having a balance just to be under 30%. They told me NOT to pay off all but one of my credit cards. 

I'm just curious if anyone understands this recommendation under the mortgage score model (it's my equifax mortgage score that needs to rise the 4 points)? I was sure that maximizing score meant all zero but 1 with low util %.

[StartingOver10]

Sounds like the credit repair person is not very knowledgeable especially since you are their first consumer to try their new program. The fact that they gave you advice from reports 2 months old rather than have you pull current reports with current balances shows they don't understand the dynamic nature of the reports and scores.  Does this credit repair organization have access to one of the good simulators that mortgage co's use? Doesn't sound like it. 

The advice you get here has been tested over time. It is true that we don't have access to the actual formula to tell you if you do X then Y points will occur, but we do have experience with optimizing scores. Some of the more detailed oriented members constantly test data points and post regularly about the effects of paying off cc's and installment loans.  

If I were in your shoes, I would follow the utilization advice here and then when you can show your score jumps - let the credit repair person know what you have achieved. 

Leaving balances on all of your cards reduces your score (as we all know). Optimize your score by paying off everything but one cc and have that balance in the 1% to 9% range. 

[NRB525]

OP, how many cards, what are their limits, which of them have balances at the time of that 6 week old report and what balance amounts? Percentage of limit?

And now? How has each card changed?

Have you ventured to get the 3B reporting here at myFICO, to see for yourself what the mortgage scores likely are?

[SouthJamaica]

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@AZgal15 wrote:

The mortgage company I have been working with as I move towards buying a house recently bought a credit repair company so they can help their customers in house for free to maximize their credit scores for mortgages.

I was their first customer to use the service as we are trying to get my middle mortgage score to go up 4 points to get the next level of lower mortgage rates. They called me yesterday to give me my recommendation on what to do and they told me to decrease the debt owed on my credit card from 2100-> under $600. I told them it was already below $600 since they pulled my credit 6 weeks ago. Then they told me that as long as I keep it under $600 and all my other credit cards under 30% utilization each that my mortgage score will rise those 4 points in 2 months. I asked if they wanted me to pay off all cards but one to maximize my score (that's what I had learned in the forums) but they said no that all my current cards should continue  having a balance just to be under 30%. They told me NOT to pay off all but one of my credit cards. 

I'm just curious if anyone understands this recommendation under the mortgage score model (it's my equifax mortgage score that needs to rise the 4 points)? I was sure that maximizing score meant all zero but 1 with low util %.

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I'm not pretending to know the answer to your question but my experience, was:

1. for awhile i tried the practice of keeping very small balances across the board, just so something reported... overall utilization 1 to 3%.. that seemed to help my scores

2. then i tried the advice of keeping all but one at zero..... also overall utilization 1 to 3%...  that seemed to have no effect one way or the other on my scores

3. then, not on purpose, i let my overall utilization go up to 12%... that seemed to cost my scores 5 or 6 points....

So based on my personal experience, it doesn't matter if you have all but one at zero, or have all or many with low balances reporting, so long as your overall utilization is less than 10%

[Thomas_Thumb]

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@SouthJamaica wrote:

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I'm not pretending to know the answer to your question but my experience, was:

1. for awhile i tried the practice of keeping very small balances across the board, just so something reported... overall utilization 1 to 3%.. that seemed to help my scores

2. then i tried the advice of keeping all but one at zero..... also overall utilization 1 to 3%...  that seemed to have no effect one way or the other on my scores

3. then, not on purpose, i let my overall utilization go up to 12%... that seemed to cost my scores 5 or 6 points....

So based on my personal experience, it doesn't matter if you have all but one at zero, or have all or many with low balances reporting, so long as your overall utilization is less than 10%

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SJ - Agree with the aggregate UT as critical (although I belive the threshold is 9%).  Maintaining AG UT under 6% is typical for "high achievers"..

Again, key factor is maintaining aggregate utilization (all cards combined) under 9%. As long as AG UT is maintained low, I am unaware of an adverse scoring effect associated with an individual card reporting a utilization up to but still under 30%.

Number of cards reporting a balance may make a difference but that is profile dependent. Can't say how the OP's profile will react to this factor. The OP would need to test. Default advise for "optimal scoring" on Fico mortgage is one card only..

[NRB525]

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@SouthJamaica wrote:

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@AZgal15 wrote:

The mortgage company I have been working with as I move towards buying a house recently bought a credit repair company so they can help their customers in house for free to maximize their credit scores for mortgages.

I was their first customer to use the service as we are trying to get my middle mortgage score to go up 4 points to get the next level of lower mortgage rates. They called me yesterday to give me my recommendation on what to do and they told me to decrease the debt owed on my credit card from 2100-> under $600. I told them it was already below $600 since they pulled my credit 6 weeks ago. Then they told me that as long as I keep it under $600 and all my other credit cards under 30% utilization each that my mortgage score will rise those 4 points in 2 months. I asked if they wanted me to pay off all cards but one to maximize my score (that's what I had learned in the forums) but they said no that all my current cards should continue  having a balance just to be under 30%. They told me NOT to pay off all but one of my credit cards. 

I'm just curious if anyone understands this recommendation under the mortgage score model (it's my equifax mortgage score that needs to rise the 4 points)? I was sure that maximizing score meant all zero but 1 with low util %.

---

I'm not pretending to know the answer to your question but my experience, was:

1. for awhile i tried the practice of keeping very small balances across the board, just so something reported... overall utilization 1 to 3%.. that seemed to help my scores

2. then i tried the advice of keeping all but one at zero..... also overall utilization 1 to 3%...  that seemed to have no effect one way or the other on my scores

3. then, not on purpose, i let my overall utilization go up to 12%... that seemed to cost my scores 5 or 6 points....

So based on my personal experience, it doesn't matter if you have all but one at zero, or have all or many with low balances reporting, so long as your overall utilization is less than 10%

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Is this in mortgage scoring, or FICO 08 for credit cards? OP is trying to optimize mortgage scoring.

[2b2rich]

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@AZgal15 wrote:

The mortgage company I have been working with as I move towards buying a house recently bought a credit repair company so they can help their customers in house for free to maximize their credit scores for mortgages.

I was their first customer to use the service as we are trying to get my middle mortgage score to go up 4 points to get the next level of lower mortgage rates. They called me yesterday to give me my recommendation on what to do and they told me to decrease the debt owed on my credit card from 2100-> under $600. I told them it was already below $600 since they pulled my credit 6 weeks ago. Then they told me that as long as I keep it under $600 and all my other credit cards under 30% utilization each that my mortgage score will rise those 4 points in 2 months. I asked if they wanted me to pay off all cards but one to maximize my score (that's what I had learned in the forums) but they said no that all my current cards should continue  having a balance just to be under 30%. They told me NOT to pay off all but one of my credit cards. 

I'm just curious if anyone understands this recommendation under the mortgage score model (it's my equifax mortgage score that needs to rise the 4 points)? I was sure that maximizing score meant all zero but 1 with low util %.

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Ok, here is the problem I have with them telling you that.  I don't know how many credit cards you have reporting, but each one of them that has a balance when your report is pulled, will show a monthly payment amount (which will not be there if the balance is zero) and even if those are min payments of $25, they all add up and are calculated into your D2I ratio as far as amount of loan you're approved for.

I can't understand why they would tell you not to pay them all off before running the report again.  I don't see how it could hurt your score by doing so and your score determines what kind of interest rate you can lock in.  The higher the score, the better chances of a favorable rate.

[AZgal15]

Thanks all. I thought it was weird advice. The other weird thing about using a report they pulled 6 weeks ago was that there are 2 accounts now or will be reporting soon that weren't reporting then and my middle mortgage score has already risen to the score we were looking for.

I've been diligently watching my reports and pull my 3B monthly to review almost monthly. Currently I have 8 cards (5 cc and 3 store). 3 of them have no balance. Of the 5 with balances 3 have util <14%, 1 at 24% and 1 at 70%. My amazon card has util at 70% due to Christmas shopping but I am paying off most of that card tomorrow so it has <20% util before statement close. I will also throw some money at the 24% util card to bring it down below 20%. That would leave me $5000 to pay off in 4 paychecks to get to the goal of all balances 0 but 1 card at 4%. Totally doable. My current util is 14% ($6388.17 out of $43,000 available). 

I'm doing everything possible to keep that middle mortgage score where it is or a few points higher for cushion for the next few months. I hope to formally apply for a loan in March.  

[NRB525]

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@AZgal15 wrote:

Thanks all. I thought it was weird advice. The other weird thing about using a report they pulled 6 weeks ago was that there are 2 accounts now or will be reporting soon that weren't reporting then and my middle mortgage score has already risen to the score we were looking for.

I've been diligently watching my reports and pull my 3B monthly to review almost monthly. Currently I have 8 cards (5 cc and 3 store). 3 of them have no balance. Of the 5 with balances 3 have util <14%, 1 at 24% and 1 at 70%. My amazon card has util at 70% due to Christmas shopping but I am paying off most of that card tomorrow so it has <20% util before statement close. I will also throw some money at the 24% util card to bring it down below 20%. That would leave me $5000 to pay off in 4 paychecks to get to the goal of all balances 0 but 1 card at 4%. Totally doable. My current util is 14% ($6388.17 out of $43,000 available). 

I'm doing everything possible to keep that middle mortgage score where it is or a few points higher for cushion for the next few months. I hope to formally apply for a loan in March.  

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Good information, and it would be helpful to see what happens when you get those 3 high utilization cards to all be below 20%, what the mortgage scores do there.

Then when you proceed to all zero except 1 at 4%, what that looks like in the mortgage scoring.

Your data, which I presume has no lates, charge offs or BK in the past, would be a good set of data to see how the mortgage scores do (or little do) change with these updates.

[Anonymous]

The advice you are getting in this thread is spot-on.

Bottom line is that you cannot hurt your score by paying off your cards (but leaving one reporting a small amount).  Furthermore, you will likely get a significant score boost because you will be doing two things:

*  Going from a total utilization of 14% to 1-6%

*  Going from 5 out of 8 cards reporting a balance to 1 out of 8

Ignore the credit repair people in this respect.

You mention that you hope to formally apply for a loan in March.  You might mean apply for pre-approval (so that you can begin seriously making offers) -- in this case you might not be closing on a particular property until the summer.  Or you may mean that you know the specific property and want to begin formal underwriting in March with the goal of owning it in April.  Can you clarify?

BTW, you are very much doing the right thing as far as your changes to your profile.  If you are sure you want to spend all the money to buy all your scores every month, then of course do that.  But you may want to consider saving yourself that expense and waiting till March to buy them again.  If you need a tool to tell you what your reports look like on a weekly basis, Credit Karma is free and may save you a lot of money.