@Anonymous wrote:My wife and I are selling a rental property and then buying another through a 1031 exchange. My FICO score recently went down from 755 to 745 because I had to run up the balance on two of my credit cards, by about $9,000. It is our debt to income ratio that keeps me from having a higher score. What I'm wondering is, when we sell the rental property, and therefore dramitically reduce our debt to income ratio, will that improve my score soon after the sale? i'm hoping it does, so that when we buy the next rental property via the 1031 exchange, we'll have a better FICO score, which will help us get the best financing possible. I'm considering taking money out of my retirement savings to pay down those credit cards, to where they were when I had the FICO score of 755. But maybe it isn't necessary, if the rental property mortgage being paid off helps a lot.
Income is not reported to the bureaus, and therefore is not used in calculation of one's score.
What is calculated though is several metrics on revolving utilization, and increasing your balances can result in a drop of score. So in this case, the sale of the property would not help your score (though it would help the DTI calculation for the investment mortgage though I'm not familiar with 1031 exchange).
A temporary loan out of your retirement account would help, but there are costs associated with that typically assuming it's an explicit retirement account type.
The change in your FICO might not be worth it unless you can pay it back quickly and without penalty; I would suggest listing all of your balances and limits on your credit cards, and we'll be able to give you a plan of attack and maybe a guessimate of how much you might gain.
Also note most of the mortgages in the US are underwritten on an explicit score set, and that's not the FICO 8 algorithm which is commonly available.
