My wife and I plan to get our first house in the next 90 days. For mortgage purposes, we’d both like to bump our Equifax credit scores 10-25 points to 680 minimum. We don't have any shared credit. Our credit score situations are as follows:
Me: Today’s Equifax score is 659. I have a chapter 7 bankruptcy discharge 10/2002. Post-bankruptcy, I have re-established my credit. I have a paid auto loan and another auto loan that’s been open 12 months (no late pays). My revolving utilization is currently reported as 60-70%. That includes an “authorized user” on a closed Chase account (opened 2005) with a balance and 6 other open accounts, including 4 with balances (Dell, Discover Direct Rewards, Juniper, Wamu). I “de-authorize user’ed” myself last week on the Chase account, concerned that the balance was contributing to my utilization, but the closed credit limit was not. I will pay my revolving accounts enough to reduce my utilization below 50% within the next two weeks, and below 33% within 15-30 days. I have a 30-day late pay on 3 revolving accounts (all from February 2004). Last week, I sent 1) goodwill letters to the creditors asking to remove the late reporting, 2) a dispute letter to the CRAs disputing the late reporting, 3) a dispute letter to the CRAs regarding a pre-bankruptcy revolving account that is reporting as collection/charge-off instead of “discharged in bankruptcy”, and 4) a dispute letter to the CRAs regarding a $59 collection from 11/2002. I have no other post-bankruptcy collections.
Can I reasonably expect a credit score increase of at least 21 points within 90 days from these actions, particularly the reduced utilization from above 50% to below 33%? Is there something else I should be doing?
Wife: Today’s Equifax score is 670. Wife has a 10-year+ credit history. She is 13 months into her first auto installment loan. She has multiple revolving accounts with a 3 year+ history. She has five 30-day lates, all from February 2004. Last week, she sent goodwill letters to the creditors asking to remove the late reporting and dispute letters to the CRAs regarding the late reporting. She has no collections, bankruptcy, or other derogatories. Her main issue is utilization, which has been between 55-75% for at least 2 years. For the first time in at least 2 years, she dropped below 50% utilization (to 45%) within the last 45 days. She has one closed revolving account with 72% utilization. We haven’t paid it off because the interest rate remains lower than some of our other accounts, and we’ve been trying to pay off the higher interest accounts first. We could pay it off within the next 30 days.
Will dropping below 50% overall utilization increase her credit score at least 10 points in the next 90 days? Assuming the 30-day lates remain on her report, will they affect her score less when they turn 3 years old in February? Is there something else she should be doing?
I’m unsure if the closed revolving account balance is contributing to her overall utilization, but not contributing to her overall credit limit. If so, perhaps we should pay it off to reduce her utilization.
Within the next 90 days, it might be possible to reduce her overall utilization from 45% to 38%. I do not think we can get it below 33%. If we’re moving into our first house in the next 90 days, we might have better ways to allocate the funds we might otherwise spend reducing her utilization to 38%. Now that it is below 50%, does it matter credit-score wise if her utilization is closer to 38% than 45%?
I’m making some assumptions here that the “magical” utilization percentages are below 50%, below 33%, below 25%, and below 10%. Is that substantially correct?
Thanks for your responses. If you have general questions about bankruptcy, I can probably answer them. I’ve been a practicing bankruptcy attorney for over 5 years.
