Understanding FICO® Scoring

[Roarmeister]

I concurr on the advice already given.  And although a CS of 760 and higher is advantageous for seeking the lowest interest rate, a TU score of 740 isn't that bad either.  You are close to the median score (FICO 723).  Let the old accounts drop off naturally after they are paid.  Closing accounts early doesn't seem to net any real benefits and may actually hurt.  Paying of the student loans earlier can help because it will leave you with greater ability to pay the mortgage and allow you to have a larger payment.

Even if you get a mortgage now, you won't be dinged as severely as someone with a 680 score.  As for buying a house vs renting right now you will have to take into consideration your local market conditions.  Whether or not the market in your area has bottomed, whether you want to buy now, and if you can find what you want and the terms you prefer.  I would probably do some gardening right now while you are perusing the market place for a residence and paying off as much debt as you can.  Don't worry about the late payment baddie needing to fall off in 3 years. Looking for perfect credit before getting the mortgage, you may miss a window of opportunity.

Then when you feel comfortable, jump in with both feet.  Actually getting a mortgage adds to your debt variety and normally increases your score. Mine rose over 50 pts which included one baddie dropping off over a 3 month period just before and just after getting my mortgage.  You can get additional mortgage advise from the mortage loan forum.

[pugsly8422]

Thanks Roar.  Yeah, I figure I shouldn't comlpain with a 740 score, but with the way I think, I'm always trying to improve.  I just wish I had started about 10 years sooner.

I could definitely be paying down my student loans, but instead I put an additional $1k or so per month into my retirement.  I just figure I can, on average, gain more interest there than I would pay on my student loans.  Not to mention I can write off some of my student loan interest. 

The mortgage probably won't come along until mid to late 2013.  We're going to Vegas in late June, and I plan on propsing then.  Hopefully that will start the chain reaction ($500 wedding, backyard bbq, honeymoon to the nearest beach ), and that will eventually lead to the biggest purchase.  I just want to be sure I'm prepared for it.  She has told me she has good credit, but I've never had the luxury of actually verifying it, so I'm sure that will come into play as well.

As cheap and frugal as I am, I just want to be sure (or at least know I did all I could) I am able to get the best interest rate, especially knowing it's something I affect.

Sorry, probably a bit too much information, but there's my life story in a nutshell

[Crashem]

Are you sure you are at 4% utilization?  Remember this is reported utilization which usually means you need to pay any balance and make no new charges before a statement is generated and not when it is due.

[AndySoCal]

There are two FICO reasons that have similiar starting verbiage. The first is Too many accounts recently opened. the other one is Too many accounts with balances.  You can get the second one even if you pay the balance in full each month.  The creditor reports the balance when the statement cuts. Sometimes I will get this message if I have 4 out of six cards reporting a balance with the utilization less than 5%. Try paying some of the credit card balances before the statement date and see if that helps your score.

[Tuscani]

The only area of scoring where closing an account can hurt you is in the revolving utilization calculations. While a closed revolving account with a balance is included in utilization, a closed account with a zero balance is not.

In the area of length of credit history, closed accounts are treated no differently than open accounts. That is, the length of history on a closed acct still gets counted right along with the rest of the closed account's history. In fact, the length of credit history gets counted for every trade line on your report, regardless.

So, the only harm by closing a revolving account is to the utilization percentage, while, in the long run, a closed account will be removed from your credit file after 10 years, which could lower your score at that time due to the loss of that history.

[Quazar]

Whay is GW? Is it a form of disputing a late tradeline, or is it a bargaining technjqud.

Does it stand for Good Will? Is there a sample letter to use?

[llecs]

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Quazar wrote:
Whay is GW? Is it a form of disputing a late tradeline, or is it a bargaining technjqud.

Does it stand for Good Will? Is there a sample letter to use?

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Check these out:

Common Abbreviations

Credit Scoring 101 - great for knowing what is in your credit score and to see how your score is impacted.

What Steps Do I Take - great for learning the repair process.

and Example letters - PFDs, GWs, DVs, etc.

[pugsly8422]

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pugsly8422 wrote:

Thanks Roar.  Yeah, I figure I shouldn't comlpain with a 740 score, but with the way I think, I'm always trying to improve.  I just wish I had started about 10 years sooner.

I could definitely be paying down my student loans, but instead I put an additional $1k or so per month into my retirement.  I just figure I can, on average, gain more interest there than I would pay on my student loans.  Not to mention I can write off some of my student loan interest. 

The mortgage probably won't come along until mid to late 2013.  We're going to Vegas in late June, and I plan on propsing then.  Hopefully that will start the chain reaction ($500 wedding, backyard bbq, honeymoon to the nearest beach ), and that will eventually lead to the biggest purchase.  I just want to be sure I'm prepared for it.  She has told me she has good credit, but I've never had the luxury of actually verifying it, so I'm sure that will come into play as well.

As cheap and frugal as I am, I just want to be sure (or at least know I did all I could) I am able to get the best interest rate, especially knowing it's something I affect.

Sorry, probably a bit too much information, but there's my life story in a nutshell

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Ok, well, sorry to bump an old thread and quote myself, but I thought I would give an update.

I did pop the question, and she said yes!

I've already started looking around for a home, but the purchase probably won't be until early 2013, so it will be a little while before I apply for the loans.    Hopefully I can get into the "Very Good" status before then. 

I also wrote a letter to have the 1 delinquent account (60 day late payment in 12/2007) removed from my account.  I sent it certified, and it was received in late May.  Should I hear from them with the final verdict at some point ?  Or should I just keep an eye on my report(s) to see if it is dropped?  Do they have 30 or 60 days to make a decision?  After that, doesn't it have to be dropped?

Thanks for reading!

[webhopper]

Congrats! Hopefully you will hear back from them soon. What are your scores looking like?

[scmami]

Congrats! How exciting! GW letters are just that...goodwill of the company deciding to remove or not report something negative on your report. They are not required to respond to the GW request in a certain time period or at all. (You may be thinking of DVs)