HELP!!!! MY HOME FICO SCORE DROPPED FROM 723 TO 689 AFTER UTILIZATION WENT FROM 12% to 35%.

[nomad0792]

I'm in the middle of buying a home and due to my score dropping 34 points I'm no longer eligible for the loan program.  

Why did it go down? Now I do know that you should never charge a lot of on your credit cards when you're in the middle of mortgage loan...the problem is, I had already paid a big chunk of the cards down, but before I paid AND their due dates, the credit cards reported the high balances. 

Dec. 16th - FICO - 723

Amex balance $2500 of $20,400 limit (12% utiliization)

Citibank balance $887 of $10,060 limit (8% utilization)

Wells Fargo balance $357 of $1500 limit (23% utilization)

Aggregate - $3744 of $31,960 (12% utiilization)

Jan. 21st - FICO - 689 (down 34 points)

Amex balance $7560 of $20,400 limit (37% utilization)

Citibank balance $2689 of $10,000 limit (27% utilization)

Wells Fargo balance $542 of $1500 limit ($36% utilization)

Aggregate - $10,971 (35% utilization)

Feb. 5th - FICO - 693 (up 4 points)

Amex - $2730 of $20,400 limit (13% utilization)

Citibank - $2600 of $10,000 (26% utilization)

Wells Fargo - $50 of $1500 (3% utilization)

Aggregate - $5380 (17% utilization)

So, my credit plummeted due to the UR going from 12% to 35%.

But on Feb 5th my UR went down to 17% and my score only went up 4 points. Now, I know the individual URs impact the score as well, so having Citibank at 26% on Feb. 5th probably isn't helping me. 

Since I need my score to be above a 700, I paid off my balances and now have a 3% UR.

I'm very curious and anxious to hear anyone's opinion about whether or not my score can reach 700+ with a 3% UR in the next 4-5 days.

[racer-x]

Im assuming 'UR' is utilization. ______?  What's the 'R' stand for?

Having more balances at $0 is much more important and will net scores much higher than having 5 accts with low utilization.  Hell, 1 card at 70% is better than having 5 cards at less than 20% utilization.  That's my experience anyway.  I recently PIF'd (paid in full) 5 accts but one reported at 82% utiliz, my scores still went up an average of 30 pts on all 3.

To answer your question, it depends on when your statements cut on those newly PIF'd accounts, and more importantly when they report to the CRA's.

You could always get an extension on the house perhaps? 

Your scores should easily jump above 700 with those $0 balances reporting.....question is, when will the scores report?

You should have a pretty good idea if not to the day when the bureaus will be updated.

Also, you should be able to prove to UW that you paid these accounts off and that should be acceptable for them.

My UW threw a fit over a $75 membership fee that AMEX put on me after I paid the account to $0.  Had to do a 3 way calling with bank, amex and me, show statements, proof of payment . etc....Hard to believe a $75 annual membership fee was  preventing me from buying a house with damn good credit and income.

[EW800]

I agree with Racer.  I know that I appear to achieve maximum points when I have all revolving accounts show $0 with the exception of one.  A few months ago I made an error and allowed $3 to show on a second account and got whacked just for that!!  I had to laugh in a way, thinking that FICO scoring really thought I was a higher risk because of that $3.  

I am sure if you get as many accounts as possible (other than one) to show $0, you will be looking good!  

[nomad0792]

Thanks EW800 and Racer!

"R" is Ratio...wasn't sure of the acronym.

My CCs report on the 19th, 23rd and the 30th of the month. I have to release my contingencies before they report (18th), so my mortgage broker is doing a Rapid Rescore. I'm hoping this way I won't have to ask for an extension. 

I've been reading a lot about having all but one CC at 0 balance to maximize odds of a higher score as you guys mentioned. Unfortunately, I think the balances were reported on Friday, which they all had very small balances (1-3%), but I will pay two of them to zero just in case. 

LAST QUESTION: Any chance that PIFs could negatively affect my score?? I've read that could be a possibility...hence why I didn't PIF. HOWEVER, the general consensus has been PIFs are a good thing as long as you cycle which CCs you PIF.

Thanks again guys! My fiance thanks you too!

[nomad0792]

Thanks for all the great info! Does it seem a little excessive that the score dropped so much?? I guess there's no real way of ever knowing, but I was shocked to say the least.

[racer-x]

Nomad-not excessive at all to drop that much, in the eyes of the fico god anyway.

I had a balance increase of $44 last week and dropped 5 pts.
Another member posted in the same thread (with a screen shot) of a a balance increase from $9 to $146....went from a 780's to 730's...54 pt decrease. I sh at you not.

Furthermore, i paid $20k in debt the past 3 wks, scores up a mind bliwing 30 pts....then my $44 balance increase on obe account and dropped 5.

Let us know when you figure this maddening game out!

[racer-x]

Pif's will not negatively affect your score as long as you have 1 reporting the magical 1-9% utiliz.

[nomad0792]

That's insanity! That makes absolutely no sense...unless that card had a $45 limt. 

As for the other user...54 point decrease??? BRUTAL!!

Well, congrats on paying off 20k. That's gotta feel good.

I'll post my results when I get them.

Gonna go pray to the Gods...sacrifice a small goat now. 

[racer-x]

Nomad- i have $150k in CL's. My $44 balance increase was probably .0002%. But yea, youda thought i had a $45 CL on that card.

I racked up $20k in debt in 3-4 mos at end of last year. I also knew i would be paying it all back in january, which i did.

But i paid a price for it...$32k in CLD's before i could pay them off.

Good luck, i dont see how the mortgage couldnt work with ya. If they dont, dump'em and find one that will.

[nomad0792]

Hmmm...my only guess is there are two variables or thresholds at play here. First, any balance, no matter how miniscule, triggers a drop. The 2nd variable would be how much.  

How much did the 32k balance drop your score? 22% Util?