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Will someone please help me find my utilization sweet spot?

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CreditDunce
Valued Contributor

Re: Will someone please help me find my utilization sweet spot?

I am so sorry to hear about your car.  I hope no one was hurt...

 

FICO 08 wants to see at least one open installment loan.  With student loans and an auto loan, you probably are not getting much of a boost with a shared secured loan.  But I am fairly sure that FICO calculates your installment utilization for each loan and overall for installment loans.  Having one more than halfway paid should be helpful.    Since you have other installment loans and paying off a shared secured loan is easy, I think I would pay it almost all off before applying for the mortgage.    The more you can have paid off (without paying it all off) the better.  You will not need a shared secured loan once you have a mortgage. 

 

Since you will still have an open installment loans, having a paid off auto loan will not hurt you.   If you need another auto loan, the new account will have a negative effect on your credit score.   HP, new account. AAoA, etc.  But there is not much you can do about it.  You may have to explain it, but your underwriter will understand.    Not ideal, but nothing to loose sleep over either.

 

There is a negative for having all of these installment loans.   All of your monthly payments count towards your DTI.  Mortgages have hard limits on how high your DTI can be after the mortgage.  If your DTI is too high, it will effect how much money the bank/credit union will be willing to loan you.   The best thing you can do is to pay off as much of your debts as you can while still having a reasonable reserve/down payment.  Talking with a loan officer may be helpful to see what they recommend you do for the next 6 months.    However, it may take some work to find a loan officer that is willing to look at your credit reports without HP your credit.

 

 

Message 11 of 17
Anonymous
Not applicable

Re: Will someone please help me find my utilization sweet spot?

Great points, CreditD.  Your last comment was:

 

"... it may take some work to find a loan officer that is willing to look at your credit reports without HP your credit."

 

Because our OP is planning for sure to go through pre-approval in the next couple months, it will necessarily mean a hard pull.  My personal feeling is, if he's going to do one mortgage-related  hard pull, then he might as well apply to several good mortgage lenders (all within the same short window).  Then he can sit down with at least 2-3 and get frank advice on what the impact is of the various issues he has, how an underwriter would see it, and what steps he can and should take.

 

I'd add that our OP should push them to be honest.  If the honest truth (for example) is that his recent tradelines are too much of ared flag unless he waits till sometime in 2016, he needs to push the loan officer to tell him so.  If he communicates by body language the opposite (please tell me I'll be fine) then the officer may tell him  what he wants to hear, so that he doesn't lose him.

Message 12 of 17
CreditDunce
Valued Contributor

Re: Will someone please help me find my utilization sweet spot?


@Anonymous wrote:

Great points, CreditD.  Your last comment was:

 

"... it may take some work to find a loan officer that is willing to look at your credit reports without HP your credit."

 

Because our OP is planning for sure to go through pre-approval in the next couple months, it will necessarily mean a hard pull.  My personal feeling is, if he's going to do one mortgage-related  hard pull, then he might as well apply to several good mortgage lenders (all within the same short window).  Then he can sit down with at least 2-3 and get frank advice on what the impact is of the various issues he has, how an underwriter would see it, and what steps he can and should take.

 

I'd add that our OP should push them to be honest.  If the honest truth (for example) is that his recent tradelines are too much of ared flag unless he waits till sometime in 2016, he needs to push the loan officer to tell him so.  If he communicates by body language the opposite (please tell me I'll be fine) then the officer may tell him  what he wants to hear, so that he doesn't lose him.


Yes, this is good advice.  The OP will not be able to avoid the HP in the end.   Multiple pulls within like 30 days (?)  will all count as one pull for credit scoring purposes (as long as they are all coded mortgage).   Good advice from an under writer could be invaluable.  It would probably mean 1 effective HP now, 1 when they pre-approve and one to finalize the loan (on each CRA).   I would hate for his middle score to be one point shy of a better rate for the final pull.  But if the OP doesn't have a good relationship with a credit union/bank, it might be his best route.

 

Heck, he might even learn he can get qualified for a great rate today! 

 

 

Message 13 of 17
Anonymous
Not applicable

Re: Will someone please help me find my utilization sweet spot?

Pulled my mother's credit report, and it looks like she's had a Capital One Card for over 10 years.. The only thing is, she has like 2 30-day lates in 2012 and 2013... If I were to add myself, would I inherit her payment history, as well? If so, then it's a no-go, as I have no derogs on my report...
Message 14 of 17
Anonymous
Not applicable

Re: Will someone please help me find my utilization sweet spot?

No one was hurt, thank goodness! I fell asleep behind the wheel after a long week of work and school! I won't be getting another car for now, as I work w/my dear boyfriend, and we can car pool! The way I look at it, everything happens for a reason. Now I am car payment free and I can save more $.. My DCU loan finally reported and my Experian score went from 738 to 740, which works! Again, thanks for all the invaluable advice!
Message 15 of 17
MarineVietVet
Moderator Emeritus

Re: Will someone please help me find my utilization sweet spot?


@Anonymous wrote:
Pulled my mother's credit report, and it looks like she's had a Capital One Card for over 10 years.. The only thing is, she has like 2 30-day lates in 2012 and 2013... If I were to add myself, would I inherit her payment history, as well? If so, then it's a no-go, as I have no derogs on my report...

Everything, both good and bad, would show up on your reports.

Message 16 of 17
Anonymous
Not applicable

Re: Will someone please help me find my utilization sweet spot?

Thanks for your input! In that case, I will NOT be adding myself - thanks again!
Message 17 of 17
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