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Point Raising Strategies

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Anonymous
Not applicable

Point Raising Strategies

Hello all

 

 Before I ask my questions, I would like to thank the contributors and Mods on this board.  I have certainly learned alot.  However, with every question answered, a question is born.  Or so it seems.

 

Heres my situation:

 

 

I am planing to buy a house in the next 24 months.  My FICO pulled yesterday is 752.  

 

I have a 15 year file.  7 baddies total (30's).  The last was 11 months ago.  

4 of them will drop off next summer due to age, leaving the last 3 which occurred in late 2007, and one in feb 2008.

 

Open lines of Credit are:

 

2 major CC's, 1 classic amex, 2 store cards. $663 balance total,  5% total util.

1 Installment loan (auto lease) that will close after PIF in March. 

 

Questions:

 

What type of point increases (if any) do you expect after the 4 old 30's drop off next summer?

 

Would you expect a point decrease after the only open installment loan (auto Lease) closes after PIF in March?

 

Any point raising/maintaining strategies are welcomed Smiley Happy

 

other comments... 

My credit file does have 3 other installment loans (previous auto leases) which are all closed and PIF.

A couple of closed major CC's. 

 

 

Message Edited by TowerHill on 01-06-2009 09:55 PM
Message 1 of 15
14 REPLIES 14
marty56
Super Contributor

Re: Point Raising Strategies

Welcome to the forum.

 

How many of the CCs are reporting a balance,  I get the best result when only one CC reports a balance of 9% or less (> 0)

 

When I got my mortgage, the CSR said they like to see a clean 2 year history.

 

I am not sure about the affect of your older lates falling off your CR but IMHO I dont see a significant score increase on it since the effect of 30 day lates decay over time.

 

I am not sure if points for score mix require an open installment loan with a balance but If you do see a score decrease because the installment loan is PIF, your DTI will be lower which is a positive thing on a mortgage.

 

The top 2 mortgage rate score ranges (from MyFico) are

 

760 - 850

700 - 759

 

When all the smoke clears, you may be at 760+ but even if your arent, worst case you could refi latter if the difference in the payment will make it worth to you.

1/25/2021: FICO 850 EQ 848 TU 847 EX
Message 2 of 15
Junejer
Moderator Emeritus

Re: Point Raising Strategies

Towerhill, in addition to what Marty said about the number of CCs with balances (might see some points there by following his advice), I will also add that I don't expect you to see a point gain due to the 30s falling off for the following reasons:

1. You have other more recent baddies that are "hogging the spotlight"

2. The effect of a seven year old 30 dpd is quite minimal






Starting Score: 469
Current Score: 849
Goal Score: 850

Take the myFICO Fitness Challenge
Message 3 of 15
Anonymous
Not applicable

Re: Point Raising Strategies

Thank you both for the replies.

 

I suspected I would see a whole lot of nothing when the old 30's go away.  From What I have learned here FICO does not ding hard for those.

 

I am really concerned about the ding for (lack of) mix of credit after my only Installment loan closes.  I hope its not alot.

The only open accnts I will have at that time are 2 Major CC's, an AMEX green, and 2 store cards.  Maybe thats a good enough mix not to get a point reduction?   We shall see.

Does the "Mix of Credit" FICO script only look at OPEN accounts?  If it doesn't I should be all set because I have several Installment loans PIF and closed in the file.

 

Of course I must not forget that the mortgage approval will not be base on my FICO score alone, as mentioned. My DTI will be greatly helped with out an open installment loan. 

As far as my credit card balances.  Out of the 2 majors, one has a balance with 11% of avail credit used.  The AMEX and 2 store cards are 0 balance. 

I guess I am trying to scrape together an point gain I can get. 

bringing my CC down under 9% will happen next month, so I'll see what that will give me.

 

The three newer lates will be greater than 12 months old very soon.  Maybe that will give me a couple points?

 

Thanks for the Welcome!!

 

Message 4 of 15
Junejer
Moderator Emeritus

Re: Point Raising Strategies

Hi Tower. We have members here who don't have installment loans at all, just clean reports with a long history and scores in the 800s. Credit mix is 10% of the score, so don't go and get a loan that you don't need just for the mix.






Starting Score: 469
Current Score: 849
Goal Score: 850

Take the myFICO Fitness Challenge
Message 5 of 15
Anonymous
Not applicable

Re: Point Raising Strategies

You can be assured I wont be opening any new accounts just to satisfy FICO score models. Smiley Wink 

 

I guess I am mostly concerned with manual review come mortgage pre approval time.  My FICO today is 752, so i'm in the slot so to speak with regard to FICO score, and I suspect a few points increase over the next 20 months or so with the 3 remaining 30's aging over 24 months. 

 

When my credit IS reviewed manually I will have a good FICO, but there WILL be those pesky three 30 day lates on there mucking things up.

Is it very possible that I will be denied or have a hard time securing a loan based on (3) two year old 30 day lates even with a FICO at around 760?

 

My DTI will be healthy, and my Fiancee has a pristine report 800+ without any derogs what so ever.  Which puts more emphasis on my report due to the bank using the lower of our two middle scores.  I'm trying to be smart and giving myself 24 months to make my report look as good as it can upon manual review.

Message 6 of 15
Junejer
Moderator Emeritus

Re: Point Raising Strategies

Tower, I don't have a crystal ball, so I don't know how tight things are going to get. That said, if it were today, I don't see you having a problem getting a loan. You can explain the 30s and tell the underwriter what you have done to resolve your issues and move on. If D/I ratio is in line and you have a decent downstroke, I see no reason why you would have an issue.

You should definitely try to GW those 30s though. Can't hurt. Only cost's the price of a stamp and some time.






Starting Score: 469
Current Score: 849
Goal Score: 850

Take the myFICO Fitness Challenge
Message 7 of 15
Anonymous
Not applicable

Re: Point Raising Strategies


@Anonymous wrote:

You can be assured I wont be opening any new accounts just to satisfy FICO score models. Smiley Wink 

 

I guess I am mostly concerned with manual review come mortgage pre approval time.  My FICO today is 752, so i'm in the slot so to speak with regard to FICO score, and I suspect a few points increase over the next 20 months or so with the 3 remaining 30's aging over 24 months. 

 

When my credit IS reviewed manually I will have a good FICO, but there WILL be those pesky three 30 day lates on there mucking things up.

Is it very possible that I will be denied or have a hard time securing a loan based on (3) two year old 30 day lates even with a FICO at around 760?

 

My DTI will be healthy, and my Fiancee has a pristine report 800+ without any derogs what so ever.  Which puts more emphasis on my report due to the bank using the lower of our two middle scores.  I'm trying to be smart and giving myself 24 months to make my report look as good as it can upon manual review.


As long as you're approved automated (and with a 750+ FICO, uh ... you WILL be unless you're going conventional), the 30 day lates won't matter.

 

You will have to write a Letter of Explanation (also called an LoX) for the underwriter to review (basically, just as it sounds -- a letter giving the "whys"of why the lates occurred and what you've done to ensure it never happens again), though. 

 

But really, if you're approved automated, make enough income, and have the required down payment, you'll be good to go. In fact, if you go FHA, just having a score over 660 will get you the best rates. 750+ isn't even necessary.

 

Of course, if you go conventional, it WILL be score-driven and you'll need as much in the way of FICO points as you can get. That and at least 10-20% down. 

Message 8 of 15
tiger67
Regular Contributor

Re: Point Raising Strategies

Have you tried writing GW letters to get the lates removed?

Message 9 of 15
Anonymous
Not applicable

Re: Point Raising Strategies

I am drafting my first GW letters for the three most recent lates.  The 4 lates that will drop off this year I will leave alone and let dissapear on their own.

 

The FICO simulator is somewhat limited.  I wish it would let me modify the credit mix to see what kind of hit I will take when the installment loan closes.  The Simulator suggested I pay down my $600 dollar balance on my credit card during the course of 24 months for the best point gain.  It estimated a FICO of 752-792 if all else stays the same at the end of 24 months.  This takes into account the added "aging" and a lower credit utilization I suppose.

Instead of following that advice, I think I will pay it down sooner (like three months), and leave a tiny balance to show FICO that I use my credit.

 

I have a question regarding the FICO 1%-9% sweet spot I read alot about here.

 

Will I gain more FICO points for slowly paying down a balance over 24 months (like the simulator told me to)

       

                                                                  OR

 

Paying it down tomorrow and leave a small balance (1%-3)?

 

On one hand, it has been stated here that FICO does not have a "historical" utilization score, but only the moment the score is pulled a good credit utilization will be awarded FICO points.

 

The score simulator made it seem otherwise....

 

 

 

 

 

 

Message Edited by TowerHill on 01-08-2009 01:22 PM
Message Edited by TowerHill on 01-08-2009 01:23 PM
Message Edited by TowerHill on 01-08-2009 01:24 PM
Message 10 of 15
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