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Increased utilization - mortgage score impact

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Anonymous
Not applicable

Increased utilization - mortgage score impact

Messed up when I paid a bill yesterday.  I used a card that will be reporting at the close of business tonight.  My concern is that it's a low limit card of $700 and it will show a balance of $382 after previously reporting at zero.  I'm in the middle of the mortgage process and am prequalified for FHA.  My middle score is sitting at 607 with the others being 582 and 609.  My LO told me that my credit cannot change or it will impact my DTI ratio and disqualify me from getting my loan. I'm sick to my stomach now at the hit i could take.  Thoughts anyone? I have 3 other cards that are reporting at zero.  I just received a CLI on one that will report after 5/5.  Hoping that mitigates any damage from my bill payment....also hoping it won't clear until after the weekend but it was for ComEd and they seem to clear stuff quickly :-(

4 REPLIES 4
Anonymous
Not applicable

Re: Increased utilization - mortgage score impact

Forgot to add that I’m an AU on a card with a $7.5k limit and balance of $890. I was using this card as my “balance” reporting in the AZEO method.
Message 2 of 5
SouthJamaica
Mega Contributor

Re: Increased utilization - mortgage score impact


@Anonymous wrote:

Messed up when I paid a bill yesterday.  I used a card that will be reporting at the close of business tonight.  My concern is that it's a low limit card of $700 and it will show a balance of $382 after previously reporting at zero.  I'm in the middle of the mortgage process and am prequalified for FHA.  My middle score is sitting at 607 with the others being 582 and 609.  My LO told me that my credit cannot change or it will impact my DTI ratio and disqualify me from getting my loan. I'm sick to my stomach now at the hit i could take.  Thoughts anyone? I have 3 other cards that are reporting at zero.  I just received a CLI on one that will report after 5/5.  Hoping that mitigates any damage from my bill payment....also hoping it won't clear until after the weekend but it was for ComEd and they seem to clear stuff quickly :-(


Quickly make an online payment and pray.


Total revolving limits 741200 (620700 reporting) FICO 8: EQ 701 TU 704 EX 685

Message 3 of 5
Anonymous
Not applicable

Re: Increased utilization - mortgage score impact

Using an AU card with AZEO is generally not recommended.  The one card that reports a balance should be:

 

(1) A true credit card (not a charge card)

(2) A card in your name (not an AU card)

(3) A card with a balance of at least $5

(4) A card with a credit limit of < 34.5k

 

For the mortgage models you may well have been ok, since they are typically a bit more AU friendly than are later models than FICO 8 or 9.

 

As touches the low limit card ($700) that will soon be reporting $382, there are two ways that may hurt you.  The most serious way is that you now have a card that has an individual utilization of > 51%.  FICO cares about individual U.  CLI's on other cards won't help you with this factor.  The other way you might be penalized is that you will have one more card reporting a positive balance.  The mortgage models (especially EQ) do not like this.

 

Your loan officer has indicated that your scores cannot change at all.  If they pull the scores after the $382 balance appears on your reports, you will be certain to lose points.  I'd say that there is a high chance that your middle score will go from 607 to under 599.

 

There are two ways you may be ok.  First, the $382 transaction may not go through completely by tonight.  And therefore that card may still report $0 next week.  Second, even if the $382 balance reports to the bureaus, by the time it appears in their databases, your lender may have pulled your credit for the last time (and hence the lender will see the $0 balance).

 

If I understood your initial post right, the billing cycle for that card will not close until tonight.  Is there a way you can rush a payment to the CC issuer so that the balance is rendered < $0 in the next few hours?  You'd need to talk to the CC issuer and ask them to see if that is possible.  It might require a wire transfer or something like that, and as I write it is 1:11 pm Friday, so banks might close a couple hours.

 

Other folks may have better advice.

Message 4 of 5
Trudy
Valued Contributor

Re: Increased utilization - mortgage score impact

Not sure how the payment was made but when I make payments online I usually have the option to cancel within 24 hours.  I suppose other ways of payment may also allow(?) 

That will leave your bill unpaid or maybe you can pay the way you intended to.  If you have that option then your card shouldn't be charged?

Good Luck.

FICO - 8: 05/05/23
Message 5 of 5
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