Utilization down to 39% from 65%, but...

[jamie123]

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@KeithW wrote:

The company that I had the 60 day late with is Credit One Bank. Two years ago I tried writing a good will letter, and sending them an email. No response to either. I will give it a try again though.

We didn't want to wait until after we bought a house to get the new car, as we needed a larger car for our expanding family, and new that by the time we got our house we would have another member or two to carry around.

How accurate is the FICO score simulator? For some reason it shows that if I pay my accounts for another 19 months by scores will be up around 800! Yet if I max out all my cards, my scores would only drop by 15-20 points. This makes me think that in my case, the utilization isn't the dominant factor, either that or the simulator isn't that accurate.

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When reported lates are relatively new, like they happened within the last 2 to 3 years, lenders are reluctant to remove them. They feel that if you made a late payment that is "fresh" in their minds, it is accurate reporting and they won't remove it. The older a late baddie gets, the easier it will be to have it removed. You need to just keep sending them letters until they get tired of hearing from you. At some point they will go, "Well it is only an old 60 day late, delete it for him." Try different sob stories. It will be really worth it if you get it removed.

Don't try emails. They don't seem to get very good results.

The FICO score simulator is terrible. The reason they say that your score will soar in 19 months is probably because that 60 day late will have aged off your report! Not that paying your bills on time will make your scores climb that high. That's why I'm telling you to do whatever it takes to get that 60 day late off your reports NOW!

[KeithW]

Thank you. I will focus my attention on that.

[lg8302ch]

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@j_ayala wrote:
Well let tell you my case I paid the pay off my car or auto loan and my Fico score dropped 23 points, I down all my 5 credit card to 23 % and still dropped my score, now American Express is zero the balance and just gave 5 points? Wow , can someone explain why?

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Do you have any other installment loans? If not this could be the reason for your score to drop after you paid off your car loan.  I do not know if this could be realistic as I do not have any installment loans on my report.  Keep paying down your util and your scores come up. Fico has no memory for utilization. Also number of accounts reporting a balance has an impact. If you have 5 x 1$ reported it is not the same as 4 x 0 and 1 x 5$.   Did you add any new accounts that lowered your AAoA and new accounts that count for like 2 years, or inquiries less than a year. There are so many factors and each profile reacts differently.  Here just a few points that could help understand why. If you do not have an installment loan anymore  maybe you ended in a different bucket.. who knows. But don't give up ..keep paying down this will make the biggest difference.

[Anonymous]

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@jamie123 wrote:

You have three things working against your score:

1. For every card more than 1 that reports a balance you will lose 3 to 5 points. I'm sure that there is an upper limit to this rule and with your 9 cards reporting a balance you may have reached it. In other words, I'm not exactly sure that you will gain back points for every card that you pay off because you have so many that are reporting balances. I have lost 3 points for having a second card report a balance of $3.

2. You are getting nicked a few points for having more than 50% of your credit cards reporting balances. Once you get 7 cards paid to $0 you will pickup a few points for this. (This is what "Heavy use of credit" means.)

3. Yes, 39% utilization is too high. You will get your highest scores if you have 1 card reporting less than 10% of its credit line.

My suggestion is to pay off as many cards as you can to $0. That means start paying off the cards with the smallest balances first. You will gain points two ways with this method. You will gain points by having lower utilization and points for having less cards reporting balances.

You will acheive your highest scores once you have 1 credit card reporting a balance somewhere between 1% to 9% of its credit line. Do not pay off all your cards to $0 or your score will actually drop. You do NEED to have 1 card reporting a small balance.

If you are currently in the mortgage process DO ABSOLUTELY NOTHING except pay off your credit cards. The chances of screwing up the mortgage process is extremely high if you try messing with your reports and fixing credit issues now.

If you are not in the process of getting a mortgage in the next 6 months you need to try and get that 60 day late off your reports. Its killing your scores.

Questions?

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Perfect response jamie123!!! 

[Anonymous]

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@jamie123 wrote:

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@KeithW wrote:

Thank you for the replies.

We don't currently have a mortage as we are waiting until our middle lowest score is above 680, as requested by the lenders we talked to.

Our car loan is 5 months old, and we still still owe 45K on that, but it's at 1.9% interest and we are paying $1K/mo, so it is going down fast.

Does utilization on a car loan count negatively? I can't imagine it would, but nothing would surprise me.

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Utilization on the car loan is a minor issue as far as points are concerned but your monthly payment will count in your DTI calculation when you apply for a mortgage. You really should have bought the car AFTER you closed on the house. This is still a pretty new account at 5 months old so you are losing points for having a new account and the inquiry that was used to get this loan is costing you points. You will recover some of these points after it becomes 6 months old and all the points once it is 1 year old.

You really do need to get that 60 day late removed from your reports. It is old enough that most lenders won't be adamant that it stay on your reports, especially if your account is still open and active and you have demonstrated good payment history since then. You need to visit the "Rebuilding Credit" forum on this website and find out how to do GW (Good Will) letters. Be straight up and tell the lender that the 60 late is preventing you from receiving a mortgage. If your sob story is good enough they will remove the 60 day late. Keep sending letters as sometimes it doesn't work the first time. It is very difficult to estimate how much the 60 day late is costing you in points because it seems to affect individuals differently depending on the totality of their reports, but you can expect to pickup anywhere from 20 to 75 points if you have this successfully removed. The last baddie on your reports has a huge negative affect on your scores. In other words, the first baddie you get will usually knock your scores down the most.

EDIT: The balance on your car loan is irrelevant to your scores and DTI for the mortgage. It is the amount of the monthly payment that will matter in the DTI calculation and you can't change that. Quit paying down the car loan any faster than the normal monthly payment because the interest is only 1.9% and take the extra money and pay off your credit cards as fast as you can. Others here have stated that having more than 1 card report a balance is only a few points and not worthwhile to worry about but you need every single point you can get right now. Get as many cards to $0 as you can.

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Another stellar response jamie123. You explain everything thoroughly. How do you know the specific range of points for each category?

[jamie123]

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@beautifulblaquepearl wrote:

Another stellar response jamie123. You explain everything thoroughly. How do you know the specific range of points for each category?

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Thanks for the compliment!

Well, this is the "Understanding FICO Scoring Forum". If you hang around here long enough you will see how different credit moves affect scores. Then, I run tests on my credit scores to see if the results can be replicated if I can. (Other posters here do the same thing.) That's how I know for sure that you lose 3 to 5 points for each card more than 1 that reports a balance. I don't groom my scores with the 1 card less than 10% method all the time. I only groom my scores in preparation for an app but otherwise let quite a few of my cards report balances. Each time an extra card reports a balance I lose 3 to 5 points. Then, when I groom my scores and prepare for the 1 card less than 10% method and my extra cards start reporting $0, I pickup 3 to 5 points for each one that reports $0. People say that it is only a few points, but if you have 5 extra cards reporting it can cost you 15 to 25 points! That's a big difference.

Many people stop here to report that they say...lost 20 points for paying off their car loan. After a while you learn that if you pay off your last installment loan the expected point loss will be anywhere from 10 to 30 points depending on your individual report. I try to quote what "most" people report as to points lost or gained but their can be outliers in both directions because everbody's credit is different.

We are all here trying to improve our scores and if you don't at least try and estimate how many points a person is expected to lose or gain by a credit move is it really worthwhile to be here? I don't quote exact points but a range. That is far and above what you will find at any other credit website. And hey, I'm usually pretty accurate if I do say so myself!

[Anonymous]

My advice, don't obsess over your score right now. Obsess over paying off debt. Pay your highest balances off and work your way down until it is all paid off and your utilization is just your monthly spend waiting to be paid in full.

Fine tune your score about two months before your mortgage app, at that point worry about how many cards report a balance and such.

An underwriter will always like you better if you have less total debt anyway.