Looking to boost my FICO 2,4,5 Score

Anonymous · ‎08-13-2017

Sorry for the cross post in the mortgage forum, but was told this may be a better place for this.

Hello all, the wife and I are getting ready to buy our first house, will be a new construction, price somewhere between 430-450k. I will be the only one on the mortgage but the wife will be on the title.

Salary: 102k per year

Annual Bonus: 1-20% but figure 10%

Stock Awards: 4500-10k (100% vest in 5 years, 20% vest in 1 year)

Daughter pays $400 a month for her car and some of her insurance premium

Debts:

Discover CC: $800 balance (not my card, but i'm a user so it affects me) - $1400 limit

Capital 1: $400 balance - $1200 limit

Am Ex Blue Every Day Card: 0$ balance - $1200 limit - Just got.

Car 1: $638 month - 25k balance (I pay 640)

Car 2: $328 month - 17k balance (I pay 350)

Ashley Furniture: $3200 balance - $4k limit - Deferred Interest will be tacked on in October.

Care Credit: $3955 balance - $4,500 limit

We'd like to start the contract at the end of October and delay the build until it can complete in October and I get another bonus.

The wife is getting part of an inheritance of roughly $11,000 by September 15th and another small portion of 2-4k in December. I'll be getting my annual bonus of $10k (minus taxes so figure $7500) on September 15th. My Fico 4,5,2 scores are between 634 and 672 as of 8/7/17. There are some late payments from 3+ years ago, 1 collection that I'm disputing (may offer to pay and have them remove the tradeline but its $385 to Progressive Ins.) Other than that, nothing but on time payments for the last 2.5 years. I'm thinking my hits are coming from my utilization, but i've been told on the home page of myFico that if I just pay $367 ish a month towards it I will get a bigger bump than paying it off completely. I'd like to look at getting the biggest bang for the buck and pay down this debt. My thoughts were to pay off the Ashley and Care Credit with my bonus, using the wife's inheritance to pay towards the daughter's car. With her paying me $400 and my $350 that should pay it off in 5-6 months. I could then use all that extra cash flow to pay off the other CC's and I should be sitting with much higher scores when it comes time to close...roughly 700 ish i'd imagine.

Am I wrong in this assumption?

HeavenOhio · ‎08-13-2017

You're going to want to shape up your scores before applying for any kind of loan. And you'll want to keep them in good shape until you close.

The Ashley and Care Credit cards are hurting your scores big time. From a purely financial standpoint, you're going to want to pay down Ashley to avoid the deferred interest. From a scoring standpoint, all of your credit card balances are too high and should be lowered.

It's correct that all cards having a zero balance will ding you. The best scenario is that one card reports a small balance (between $5 and 8.9% of its limit) with the rest reporting zero. This balance should come from new charges. You aren't required to pay interest to achieve this.

Is your AMEX reporting yet? If so, I'd charge a small amount to it every month, let the balance report, and pay it off. Pay the rest of your cards to zero ASAP. The reason I'm suggesting that you choose the AMEX to show a statement balance is that you're going to need to pay the other cards to zero to stop interest from accruing and reset their grace periods.

SouthJamaica · ‎08-13-2017

@Anonymous wrote:
Sorry for the cross post in the mortgage forum, but was told this may be a better place for this.

Hello all, the wife and I are getting ready to buy our first house, will be a new construction, price somewhere between 430-450k. I will be the only one on the mortgage but the wife will be on the title.

Salary: 102k per year
Annual Bonus: 1-20% but figure 10%
Stock Awards: 4500-10k (100% vest in 5 years, 20% vest in 1 year)
Daughter pays $400 a month for her car and some of her insurance premium

Debts:
Discover CC: $800 balance (not my card, but i'm a user so it affects me) - $1400 limit
Capital 1: $400 balance - $1200 limit
Am Ex Blue Every Day Card: 0$ balance - $1200 limit - Just got.
Car 1: $638 month - 25k balance (I pay 640)
Car 2: $328 month - 17k balance (I pay 350)
Ashley Furniture: $3200 balance - $4k limit - Deferred Interest will be tacked on in October.
Care Credit: $3955 balance - $4,500 limit

We'd like to start the contract at the end of October and delay the build until it can complete in October and I get another bonus.

The wife is getting part of an inheritance of roughly $11,000 by September 15th and another small portion of 2-4k in December. I'll be getting my annual bonus of $10k (minus taxes so figure $7500) on September 15th. My Fico 4,5,2 scores are between 634 and 672 as of 8/7/17. There are some late payments from 3+ years ago, 1 collection that I'm disputing (may offer to pay and have them remove the tradeline but its $385 to Progressive Ins.) Other than that, nothing but on time payments for the last 2.5 years. I'm thinking my hits are coming from my utilization, but i've been told on the home page of myFico that if I just pay $367 ish a month towards it I will get a bigger bump than paying it off completely. I'd like to look at getting the biggest bang for the buck and pay down this debt. My thoughts were to pay off the Ashley and Care Credit with my bonus, using the wife's inheritance to pay towards the daughter's car. With her paying me $400 and my $350 that should pay it off in 5-6 months. I could then use all that extra cash flow to pay off the other CC's and I should be sitting with much higher scores when it comes time to close...roughly 700 ish i'd imagine.

Am I wrong in this assumption?