topic Raise FICO Score 60 points by October 2021 in Mortgage Loans

Raise FICO Score 60 points by October 2021

ATLOMM — Thu, 13 May 2021 15:11:50 GMT

Hi All,

I am super new here and learning so much. I am trying to purchase a home and would like to raise my FICO Mortgage Score by 60 points. I am currently at 622 middle mortgage fico. I settled all my charged-off credit card debts in April of this year. These were settled for less than the total amount, but I was not able to get a pay for deletion from any of them. I have now opened to secured credit cards that I keep at zero balance and was wondering what else I could do. I have a car loan that is paid on time and was wondering if I could pay x2 the monthly mortgage and if that would make a difference. Also since I just recently paid quite a chunk to settle the debt, do you think the credit card companies will at least reflect the amounts paid to reduce the credit utilization amount? I am also planning on putting down 15 % to 20% on the loan.

Sorry for all the questions, I am new and trying to learn how everything works.

Re: Raise FICO Score 60 points by October 2021

Anonymous — Thu, 13 May 2021 15:26:03 GMT

It can take up to 60 days or so for the balances to reflect a $0 balance on those COs, but yes eventually they will update and your utilization will drop if they were reporting balances.

Since you already have secured cards and no other baddies to rectify, it's going to be a time dependent progression. Continue to pay all bills on time and keep utilization low, mortgage scores are heavily weighted by utilization.

Re: Raise FICO Score 60 points by October 2021

Anonymous — Thu, 13 May 2021 16:12:55 GMT

I agree. Also, you could also gain a decent score boost by keeping a small balance on one of your credit cards, and have a $0 balance reporting on the rest of your cards. For best results keep your credit card utilization between 1%-9% of your total available credit.

Re: Raise FICO Score 60 points by October 2021

ATLOMM — Thu, 13 May 2021 16:16:13 GMT

Do you think doing this it could increase up to 40 points between now and October if I keep a 5 percent use rate on one of my zero balance cards?

Re: Raise FICO Score 60 points by October 2021

wife2froggy — Thu, 13 May 2021 16:32:23 GMT

I wouldn't make the 2x payments, to be honest. Installment loan balances don't weigh nearly as much as revolving credit. Keep that cash in your account until the broker tells you what to do with it. Once you're ready to go through the approval process they'll tell you exactly what do to with your money (but paying extra on that car won't help)

Use one credit card at no more than 3-5% and let it report. Having one report vs no reports is good.

You may be asked to wait 1 year post last late payment to be approved for a mortgage.

Re: Raise FICO Score 60 points by October 2021

ATLOMM — Thu, 13 May 2021 16:43:10 GMT

Ok that makes sense. Is CO considered late payment? It's been more than a year since last late otherwise and co-settled April. So are you saying wait until April to start with the new construction or can I start new construction in Novemberish if we won't close until May 2021.

@wife2froggy wrote:
I wouldn't make the 2x payments, to be honest. Installment loan balances don't weigh nearly as much as revolving credit. Keep that cash in your account until the broker tells you what to do with it. Once you're ready to go through the approval process they'll tell you exactly what do to with your money (but paying extra on that car won't help)

Use one credit card at no more than 3-5% and let it report. Having one report vs no reports is good.

You may be asked to wait 1 year post last late payment to be approved for a mortgage.

Re: Raise FICO Score 60 points by October 2021

Michizane — Thu, 13 May 2021 19:15:54 GMT

@ATLOMM wrote:
Ok that makes sense. Is CO considered late payment? It's been more than a year since last late otherwise and co-settled April. So are you saying wait until April to start with the new construction or can I start new construction in Novemberish if we won't close until May 2021.
@wife2froggy wrote:
I wouldn't make the 2x payments, to be honest. Installment loan balances don't weigh nearly as much as revolving credit. Keep that cash in your account until the broker tells you what to do with it. Once you're ready to go through the approval process they'll tell you exactly what do to with your money (but paying extra on that car won't help)

Use one credit card at no more than 3-5% and let it report. Having one report vs no reports is good.

You may be asked to wait 1 year post last late payment to be approved for a mortgage.

For me Wells Fargo and the second lender only counted actual the late payments and not the CO since you could have a CO reporting monthly till paid.

Other thing to consider is that your mortgage score is penalized for new accounts/inquiries within a year atleast. So your scores will be weighed down by the new credit card account for atleast a year. I was told that a personal loan I opened last December also brought my score down (as per both lenders). Luckily I was still at a 666 middle score and both lenders preapproved me for conventional but I have to put down atleast 5%...and my interest rate is not the best (it was still lower than FHA for me with Wells Fargo).

Re: Raise FICO Score 60 points by October 2021

ATLOMM — Thu, 13 May 2021 19:21:07 GMT

@Michizane wrote:
@ATLOMM wrote:
Ok that makes sense. Is CO considered late payment? It's been more than a year since last late otherwise and co-settled April. So are you saying wait until April to start with the new construction or can I start new construction in Novemberish if we won't close until May 2021.
@wife2froggy wrote:
I wouldn't make the 2x payments, to be honest. Installment loan balances don't weigh nearly as much as revolving credit. Keep that cash in your account until the broker tells you what to do with it. Once you're ready to go through the approval process they'll tell you exactly what do to with your money (but paying extra on that car won't help)

Use one credit card at no more than 3-5% and let it report. Having one report vs no reports is good.

You may be asked to wait 1 year post last late payment to be approved for a mortgage.

For me Wells Fargo and the second lender only counted actual the late payments and not the CO since you could have a CO reporting monthly till paid.

Other thing to consider is that your mortgage score is penalized for new accounts/inquiries within a year atleast. So your scores will be weighed down by the new credit card account for atleast a year. I was told that a personal loan I opened last December also brought my score down (as per both lenders). Luckily I was still at a 666 middle score and both lenders preapproved me for conventional but I have to put down atleast 5%...and my interest rate is not the best (it was still lower than FHA for me with Wells Fargo).

Thank you this is helpful. I haven't had any late payments in about a year and a half. Just the CO's with have all be settled for less with the last done in April. No new Credit Cars or inquiries and don't plan to do any of that ever or atleast not before we close on a home. The only inquiry I have in the last 4 years is one discover card from Feb 2020.

I wanted to know though, does anyone have a ideas or strategy for me to use to continue to raise my scores 60 points by October?

Re: Raise FICO Score 60 points by October 2021

Anonymous — Thu, 13 May 2021 19:26:19 GMT

@ATLOMM wrote:
Do you think doing this it could increase up to 40 points between now and October if I keep a 5 percent use rate on one of my zero balance cards?

It would depend on your overall data points. I can't guarantee 60 pts but you will definitely see score gains over time as long as you maintain on time payments, don't open any new lines of credit between now and then, and keep your utilization low

Re: Raise FICO Score 60 points by October 2021

wife2froggy — Thu, 13 May 2021 19:37:09 GMT

Honestly, your mortgage loan expert is the best person to give this advice. They can run your credit and then run multiple scenarios to tell you what you need to do to be where you want and what they need for approval.

Re: Raise FICO Score 60 points by October 2021

Michizane — Thu, 13 May 2021 19:52:42 GMT

@ATLOMM wrote:
@Michizane wrote:
@ATLOMM wrote:

Thank you this is helpful. I haven't had any late payments in about a year and a half. Just the CO's with have all be settled for less with the last done in April. No new Credit Cars or inquiries and don't plan to do any of that ever or atleast not before we close on a home. The only inquiry I have in the last 4 years is one discover card from Feb 2020.

I wanted to know though, does anyone have a ideas or strategy for me to use to continue to raise my scores 60 points by October?

Sorry, I read your comment like you had 2 new secured cards. If you haven't opened any new accounts within a year you should be good. The main strategy TBH is to practice AZEO, maybe be an auth user on a spouse's card that is old and with perfect history (helped my score a bit), no new accounts in atleast a year and minimum delinquency. So start relentlessly sending out goodwill letters now that you have time...you might get a positive result on something. And pay down some of your loans if you have nothing else to do (especially as you get closer to loan app), since they are pretty low impact, it is not a priority.

Re: Raise FICO Score 60 points by October 2021

4sallypat — Thu, 13 May 2021 20:47:53 GMT

@wife2froggy wrote:
Honestly, your mortgage loan expert is the best person to give this advice. They can run your credit and then run multiple scenarios to tell you what you need to do to be where you want and what they need for approval.

^^^

Yes, this is 100% true.

Last year we were in the mid 600s and we found a mortgage broker who helped us for 6 months - every month coaching us on what to pay down.

We followed his advice and concentrated on the debt that has bigger impact (credit cards/revolving debt) than our car loan or installment loan.

Now we are in the mid 700s and qualify for the lowest 2.75% 30 yr conventional loan. Unfortunately the market shifted and we can't get an offer accepted...

So it pays to connect with a mortgage broker willing to help you in the long run.

Finding one is tough in this market as they are in a rush to get people financed and homes sold.