topic Re: Fico 5, 4, 2 score is 579, 577, 602. Questions on improving score in Mortgage Loans

Fico 5, 4, 2 score is 579, 577, 602. Questions on improving score

PMHNPinOHIO — Sat, 18 May 2024 14:29:22 GMT

As the title said, what can I do to help my scores? My wife and I are expecting our first child and will be looking to get a bigger home in the next twoish years. A little background on my credit;

3 collections totaling 2100 dollars. Requested pay for delete this month, got it in writing and paid, just hasn't been updated to credit bureaus yet.

2 auto loans charged off. One in 2019 for 1k with Ford. Paid in full. The other Toyota in 2023, July I believe. 2k, paid in full also (has not been reported as paid yet. I talked to all 3 bureaus and it will reflect in June apparently).

Kikoff account since late 2022. 2500 utilization. 200 dollars remaining balance.

Self credit builder account. 492 balance remaining. 25 dollars paid per month. Second one due May 31

Discover secured card. 200 limit. 0 balance.

Student loans 34k. 330 per month payment. No lates.

Mortgage is 538 per month. No lates.

No clue what DTI would be but it would have to be low. I only have 838 per month spent between SL and Mortgage.

I now make 12-13k per month as a Nurse practitioner, have been taking control of the finances (my wife was previously, I guess I didn't learn after the first charge off). I understand it's not a sprint, it's a marathon and that's okay. Just trying to see what improvements I could start making. Thanks.

Re: Fico 5, 4, 2 score is 579, 577, 602. Questions on improving score

Thomas_Thumb — Sun, 19 May 2024 22:15:11 GMT

If you only have the one $200 secured credit card, it needs to report a small monthly statement balance - under 9% of the card's CL (recommend between $3-$15). Why?

Fico penalizes profiles that show " NO recent revolving account activity". The algorithm views a $0 reported balance as no activity. The no activity penalty can be up to 30 points.

Fico also penalizes for elevated revolving utilization. A reported balance above 29% UT on a card can drop score. Additionally, an aggregate revolving UT above 9% can hurt score. With only 1 card, aggregate and card UT are the same so card should report under 9%.

Key points:

1. Only reported statement balance matters. You can charge $150 on the card during the month - just make a progress payment to bring the balance down to under 9% but above $0 before the statement cuts.

2. Pay statement balance before the due date. No need to carry over a balance from one billing period to the next.

3. Recommend increasing CL on the secured card to $500 for more spend flexibility while maintaining a low UT%

The big points will come when the last negative is removed. Looking forward to some updates as your file cleans up.

I would normally suggest getting a couple unsecured credit cards to bolster revolving credit. However, given you want a new mortgage near term, that's not advised. As a general rule, don't add new accounts within 12 months of a planned mortgage application. The primary exception would be adding a CC to improve credit mix IF the profile didn't have any open revolving accounts.

Re: Fico 5, 4, 2 score is 579, 577, 602. Questions on improving score

PMHNPinOHIO — Mon, 20 May 2024 00:15:12 GMT

Is the kikoff credit account viewed the same as the secured card? Because the balance on it is less than 9 percent now. So should I still leave 5ish bucks on the discover card also? The statement closes in 8 days so I was wondering and want to keep my scores growing lol

Re: Fico 5, 4, 2 score is 579, 577, 602. Questions on improving score

Thomas_Thumb — Mon, 20 May 2024 18:39:17 GMT

I don't know how the Kikoff credit account is viewed by Fico. Do you have a credit report? If so, how is the account described?

If you don't need any new credit in the next 3 months, test impact of both accounts vs 1 account reporting small balances on score.

Re: Fico 5, 4, 2 score is 579, 577, 602. Questions on improving score

VAMortgageGuy — Mon, 20 May 2024 19:21:38 GMT

Based on your scores, it appears the collections and charged off accounts are reporting every month. If that is the case, you should see a pretty decent bump in your scores once the collection accounts are deleted and the charged off account update to show paid, zero balance.

Re: Fico 5, 4, 2 score is 579, 577, 602. Questions on improving score

PMHNPinOHIO — Mon, 20 May 2024 19:24:42 GMT

The kikoff account is reported as a revolving account.

Re: Fico 5, 4, 2 score is 579, 577, 602. Questions on improving score

TrapLine — Mon, 20 May 2024 19:34:15 GMT

Understand your view on the matter or credit. You are almost at a point where you can take a bow.

No doubt you are "pulling yourself up by the boot straps" and it should hopefully start showing!

Yes, credit is not a marathon and often when you need it most it is slow as a turtle. Reminds me it took eight years to get a Citi Bank Card after the big fall. Suspect you will find a faster path!

Best wishes on your hard efforts!