topic Re: Get under 9% util or pay off student loans? in General Credit Topics

Get under 9% util or pay off student loans?

Anonymous — Fri, 19 Sep 2014 17:03:33 GMT

Hi, I'm 23 and looking for the best way to increase my score for a mortagage in about 1-1.5 years. My current myfico is 734 (733 last month), but chase just pulled me a few weeks ago at 717. I was hovering around 740 for a while (no baddies and always @ 0% util) until I let a bunch of money sit on my discover IT card so I'm guessing it's hurting my score.

Revolving:

Amex Blue Cash: 12.4k (zero balance)

Chase Freedom: 13.5k (zero balance)

Chase Hyatt: 7k (zero balance)

Discover IT: 11.3k (7k balance @ 0% apr)

overall util is 7k/44.2k @ 15.9%, with the discover IT card 7k/11.3k @ 61.9%

Installment:

Sallie Moan student loans (ranging from 2-6%, all deferred until I graduate at the end of the year) @ 21k

I was wondering:

1. What should my first action be? I have the money to pay the cards off but I've just been letting it sit there

because of the 0% apr. Get my overall util under 9% and discover IT util under 30%?

2. How much will it hurt me if I still have 15-20k of student loans when I apply for a mortgage?

3. I heard that you need 3 credit cards and a store card for max score, should I apply for a store card?

4. What is more important? My myfico score that I get from discover or the 717 from whichever of the 3 bureaus that

chase pulls me from?

Thanks!

Re: Get under 9% util or pay off student loans?

Revelate — Fri, 19 Sep 2014 21:48:56 GMT

Welcome to the forums!

Generally speaking installment debt only factors into DTI calculations (mostly): if you need to clear room on the DTI calc then paying off the student loans make sense but this is the only scenario where it does; outside of that, both for FICO improvement and for financial reasons once those 0% promotional APR's end, paying off the credit cards makes sense.

Airstriking the revolving utilization is a quick fix, doesn't need to be done now but I would certainly do so before tackling the student loans.

Re: Get under 9% util or pay off student loans?

CreditDunce — Sat, 20 Sep 2014 03:46:13 GMT

@Anonymous wrote:
@Anonymous, I'm 23 and looking for the best way to increase my score for a mortagage in about 1-1.5 years. My current myfico is 734 (733 last month), but chase just pulled me a few weeks ago at 717. I was hovering around 740 for a while (no baddies and always @ 0% util) until I let a bunch of money sit on my discover IT card so I'm guessing it's hurting my score.

Revolving:
Amex Blue Cash: 12.4k (zero balance)
Chase Freedom: 13.5k (zero balance)
Chase Hyatt: 7k (zero balance)
@Anonymous IT: 11.3k (7k balance @ 0% apr)
@overall util is 7k/44.2k @ 15.9%, with the discover IT card 7k/11.3k @ 61.9%

Installment:
@sallie Moan student loans (ranging from 2-6%, all deferred until I graduate at the end of the year) @ 21k

I was wondering:
1. What should my first action be? I have the money to pay the cards off but I've just been letting it sit there
because of the 0% apr. Get my overall util under 9% and discover IT util under 30%?
2. How much will it hurt me if I still have 15-20k of student loans when I apply for a mortgage?
3. I heard that you need 3 credit cards and a store card for max score, should I apply for a store card?
4. What is more important? My myfico score that I get from discover or the 717 from whichever of the 3 bureaus that
chase pulls me from?

Thanks!

1. Be sure to pay the CC's off before the intro rate expires. Otherwise, not important before you app for something else

2. Just DTI. If you have enough income, it will not be an issue. If you get a car loan, it will be handled the same.

3. The NextGen FICO model likes to see a store CC. NextGen is not used by most mortgages. I haven't seen anything that implies FICO 04 or FICO 08 care about store CC's. If the store card makes financial sense, you could get it now. But it will probably slightly lower your score for the mortgage app. I don't think it will lower it enough to stop you from getting the best rates, though.

4. Neither. Discover is FICO TU-08. Chase uses an internal score and FICO 08, also. Mortgages use FICO-04/98 scores. The easiest way to get your EQ-04 score is by having a checking account with DCU (it will cost you a HP to join). I don't know of a good way to see your EX and TU 04 and/or 98 scores (unless you live in Penn.)

The different FICO versions are confusing. If you haven't read the sticky on the different versions, I would recommend you do so:

http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/The-many-flavors-of-FICO-Editions-versions-and-variations/td-p/1197617

Here are a couple of posts that explain where to get the free scores from and who uses them:

http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Where-to-obtain-FREE-monthly-FICO-scores/td-p/2555469

http://ficoforums.myfico.com/t5/General-Credit-Topics/Free-Fico-scores-from-Barclay/m-p/2552457#M179124

Be thinking about where you wish to apply for a mortgage. If there is a CU you like, it might be worth while to join now and build some history before applying for a mortgage.

I would also read up in the Mortgage forum. I am not sure how many years of employment banks want to see now before they will approve a mortgage.

Re: Get under 9% util or pay off student loans?

takeshi74 — Mon, 22 Sep 2014 13:38:07 GMT

@Anonymous wrote:
What should my first action be? I have the money to pay the cards off but I've just been letting it sit there
because of the 0% apr. Get my overall util under 9% and discover IT util under 30%?

Utilization matters even if you have an intro offer. 62% is very high.

@Anonymous wrote:
I heard that you need 3 credit cards and a store card for max score, should I apply for a store card?

A store card may provide some slight benefit but it's not worth getting one for scoring purposes IMO.

@Anonymous wrote:
What is more important? My myfico score that I get from discover or the 717 from whichever of the 3 bureaus that
chase pulls me from?

Whatever scoring model the creditor you're applying to uses. The creditor isn't going to care what score Discover provided to you.