@Anonymous wrote:
This month, my husband and I will be able to pay off all revolving credit and two installment loans(auto). That's about 85% for us! After that we want to purchase a home. Does anyone know how soon the credit score will go up and how much? Also, How soon would we be able to apply for mortgage? By the next month?
Hi, axhley, welcome to the forums!
Your revolving (credit card) and installment usage is calculated separately. The term for it is utilization, or util, and it's the balance owed divided by the credit limit. FICO looks at individual util for each account as well as overall util for all the accounts in each category.
What percentage util do you currently show for credit cards alone, and what is the percentage on your installment loans?
Funny things happen when you pay everything off. Most of us have found that our scores are better when one, and only one, of our credit cards reports a tiny balance, somewhere under 5% of its credit limit. So you might let one card report a balance of $10 or so. And we've also had other members report score LOSSES when they pay off their auto loan, if it was the only installment account they had. So if your only installment credit is the two auto loans, you might want to time it so that one is paid off and the other still has a balance of a couple of hundred bucks.
Your FICO scores (you have three: Equifax, TransUnion, and Experian) will rise as each creditor updates with your new balances. Most CC companies update on the date that your statement "drops" (shows up online.) Be sure that you pay the cards down or off before the statement date, or it will still report a balance. If you have an HSBC/ Orchard card, it probably reports at the end of the month, and it reports your balance at that point. And American Express reports on your statement date, but they report the previous month's balance. Your car loans probably update on their payment date.
Even once all the creditors actually send the new info to the credit bureas, you then have to wait for each of the three bureaus to update each account separately. Many of us find that Experian updates within a day of getting the information, Equifax maybe 3-4 days later, and TransUnion can take a week or more. Sometimes Equifax is the late one.
So you can see that you can really pull your hair out waiting for all those $0's to post, and your scores to then rise. Many of us subscribe to a 3-in-1 monitoring service like TrueCredit that allows you to pull all three reports as often as once a day. They also have scores and advice --do NOT pay any attention to any of them. The scores are not FICO scores, and the advice can actually hurt your scores. So use these for report access only. Once you see the new balances on all accounts on all three reports, pull both sets of your real FICO scores (all three) again, and you'll know if you're ready for a mortgage app! Mortgage companies will pull all three scores for both of you, generally going with the middle score, so you probably should know what you've got. Be sure to google FICO discount code coupon to find at least %15 off for your scores. (We don't publish the codes here as a courtesy to our hosts.)
Sorry to flood you with all this stuff, but there's a lot to this. Be sure to read Credit Scoring 101 (stickied above) and visit the Mortgages board. Also, do not apply for any new credit for at least six months before going for a mortgage; preferably a year. Good luck!
* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007
