topic Re: Mortgae score improvement in Understanding FICO® Scoring

Mortgae score improvement

Anonymous — Sat, 07 Jan 2017 01:23:12 GMT

I'm looking to improve primarily my mortgage scores

I have extra cash.....what should I use it for...

1. Pay down student loan balance. $370,000/330,000
2. Pay down car lease $12,000/22,000
3. Pay down car loan $20,000/22,000
3. Pay off one of the car loans

I guess also what I'm asking is.....will my score go up paying off a loan, paying down multiple loans, etcc....

Does the mortgage score calculate them seperately as far as utilization per loan?

Or do they calculate together lIke full amounts of all loans

Re: Mortgae score improvement

Anonymous — Sat, 07 Jan 2017 03:08:57 GMT

How much extra cash do you have that you feel comfortable using for paying installment debt down? You might well need a LOT (e.g. 150k or so) before that would make much of an impact.

There may be much better ways of preparing for a home purchase than paying down installment debt. We can advise you better if we know things like:

How many credit cards do you have?

What is your current CC debt and what is your total CC credit limit?

Do you have any derogs (lates, collections, chargeoffs, liens, judgments, etc.) on your reports?

What are your current mortgage scores?

When would you ideally like to buy a house? (Best guess.)

Re: Mortgae score improvement

Anonymous — Sat, 07 Jan 2017 03:17:48 GMT

Well everything is pretty much handled that way. I'm 5 points away and need those 5 points by 3 months.....
It's 675 and I need 680

Just letting one cc report small Balance
Have settled c/o and sending GW letters...

So the only thing I can really change is my loan balances at this point which is why I asked the question in my original post.....lol

Re: Mortgae score improvement

Anonymous — Sat, 07 Jan 2017 03:22:06 GMT

And if it's going to cost 150k, I may as well just go with a 20% down payment.....lol

Can anyone answer the questions I asked??

Re: Mortgae score improvement

Anonymous — Sat, 07 Jan 2017 03:43:56 GMT

It's unfortunate that you settled the collection rather than doing a pay for delete. A PFD would have gotten the collection removed entirely. The old mortgage models do not reward you for paid collections in the same way that (say) FICO 9 does. A paid collection on your reports is still punished quite a bit.

The answer to your question about paying down your installment debt is not entirely simple. That is because it is possible that FICO might score student loan differently (separately) from other kinds of installment debt. Possible, not certain. Right now we do not have an absolute certain answer to that, though we hope to get an answer that this year with some carefully crafted test scenarios.

Let's suppose that FICO does not score SL debt differently from (say) auto or other kinds of installment debt. This is probably the case -- but as I say we do not know yet. In this case, it means that your HUGE SL debt will dominate all your other loans. Paying the car loans down won't help you, because your total aggregate Amount Owed compared to the Original Amount Borrowed of all your loans will still be so high.

But... let's suppose in contrast that FICO does score the two kinds of debt separately. In that case, paying your other non-SL loans down quite a bit, while still keeping them open, might well give you the scoring bonus you are looking for.

The problem with trying this second thing (hoping that the FICO mortgage models score SL differently and so choosing a paydown strategy) is that (a) we do not know that the mortgage models score SL differently and (b) if they don't score it separately, then you will have wasted a bunch of cash that you might have used toward a down payment.

This is why I was trying to find out if there were other ways I could help you, rather than the paydown method.

Re: Mortgae score improvement

Anonymous — Sat, 07 Jan 2017 03:46:20 GMT

Credit cards are your fastest way to boost your score. I don't know what cards you have or how long you have had them. But the fastest ticket to incresing your score is to pay down your credit cards. If you have done that, request credit line increases. As far as the loans, they won't give you the fast boost. I found out the hard way that getting loans and paying them off early doesn't do much for your score. The cards are the way to go. The ways your scores will go up is increasing your available credit, by increasing the limits, and/or paying down the balances. If you're only 5 points away, it should be easy.

Re: Mortgae score improvement

Anonymous — Sat, 07 Jan 2017 04:05:06 GMT

Another reason not to pursue the paydown approach is that the evidence we do have suggests that the EQ and TU mortgage scores don't benefit from paying down installment debt. Thus, even if you had 300k of spare cash, you could pay all your loans down including the student loan and still get no help with those two scores.

Re: Mortgae score improvement

Anonymous — Sat, 07 Jan 2017 04:15:49 GMT

Really....oh geez. Wish I had talked to u guys earler....lol

Bout 2 months ago I payed about 60k down on my studnet loans, cuz the stupid score simulator said it would go up by 15 pts.....smdh

I guess I'll try the creditch line increase ....

And I hope we are talking about the mortgage score and not fico 8/9

Re: Mortgae score improvement

Anonymous — Sat, 07 Jan 2017 04:18:06 GMT

Will the credit line increase help my score even though the cards hold zero balance

Re: Mortgae score improvement

Anonymous — Sat, 07 Jan 2017 04:35:45 GMT

@Anonymous wrote:
Will the credit line increase help my score even though the cards hold zero balance

No. It will not. CL increases help lower one's utilization only when you have a sizable CC debt. You have paid down your credit cards and already have a 1% util.

Our friend Stakknchpz missed your comment a while back when you said that you had a small balance on one card and $0 on all the others.

That's correct, right?

Re: Mortgae score improvement

Anonymous — Sat, 07 Jan 2017 06:42:08 GMT

Yes thats correct......

So basically that means I can't do anything ;(

Re: Mortgae score improvement

Revelate — Sat, 07 Jan 2017 08:47:31 GMT

Duplicate thread, please don't cross post between different boards.

Thank you,

--Revelate, myFICO moderator