In the process of applyying for a FHA loan, and going through the final stages of underwriting my FICO dropped below the FHA limit of 620. My credit card balances
were at 79% of credit limit. The underwriter suspended my loan file, until futher notice,
ie my scores rebound above 620. My Equifax score went from 659 to 605, TU 723 to
680, Experian 654 to 580. These scores drops are criminal in my book, when it was only a matter of approximately 6000 of credit card usage. No late payments, just utilizing the credit I had available to me. DONT MAKE THIS MISTAKE.
My broker is in the process of doing what is called a Rapid Rescore, which is basically you pay the credit account off, or down to say $5 to keep it open. Then forward the Rapid Rescore vendor a snapshot of the update account showing you've paid it down to the current balance of $5. The vendor calls the credit bureau, and presents documentation that you have paid the vendor, and the present balance is $5. Then
the credit bureau will recalculate your FICO score based on the new debt to credit
ratio. This generally takes about 48 to perform the Rapid Rescore.
Hopefully, in a week my loan will be back in underwriting, and I can move forward, but
don't make this mistake. Don't use credit if your in the process of buying a house,
or close to settlement day. Because the underwriter will run a final credit report
just prior to closing day.
