100% Credit Utilization on secondary loan

[Anonymous]

Hello, 

My wife and I recently sold our house, and since we've sold it when the payoff on the primary mortgage was completed it became considered a closed account and dropped our credit by 80 points. We have a second mortgage which is only about $7200, its also paid off, its in good standing as well on our credit report, The myfico.com report we pulled shows the credit utilization for that loan at 100% with a red dot. I've had a few lenders tell me if I dispute that loan, it will effect credit history percentage and work against me. I'm wondering if I should dispute it. Any thoughts ?  Everything I've read says you should keep your credit utilization below 30%, but where this isnt a credit card I was not sure.  

[donkort]

If you can prove it's paid off, then you don't have 100% utilization any more.  I wouldn't want that "red dot" if I don't deserve it.

You would, then, have zero utilization absent any other account.

I'm flabbergasted they took off 80 points for paying your mortgage.  They only took off 20 points from my credit report when I paid my own mortgage.

I sense that you might have to add a credit card or two to your account, and pay them off in full on time, always, for a little while. 

[Anonymous]

Sorry, worded that wrong, we sold our house, we didnt pay the loan in full ourselves. 

Yeah thats exactly what were doing, I have my name as an authorized user on 2 other credit cards and my secure debit card just changed to a full fledge credit card. We have a car and 3 credit cards we pay on time. My medium score is 599, wondering if that loan is keeping it below the 620 mark. 

[donkort]

I don't sense that this is true----but was it a "short sale?"

[Anonymous]

Normal sale of a house through a realtor, got a new better paying job 50 miles away. 

[donkort]

I believe you should inquire into the exact nature of that $7,200.   If you were never late with it, then you really shouldn't have a 599 score.

Do you have collections/charge-offs/lates in other accounts?  Maybe some that are rather old?  I might take a look at your credit reports to make sure there's not some account that's not yours.

[Anonymous]

Yes we have 2 credit cards that have been charged off, were aware those are killing our credit, but anything to get us above that 620 mark is helpful. I was thinking the 100% utilization on this loan might be messing up those percentages they calculate. Those are the only derogatory accounts ( 2 chargeoffs and 1 sold mortgage) 

[Anonymous]

And just noticed that at the top in the myfico.com it says Revolving Utilization % 104 for all three credit bureaus

[donkort]

Yep.   I think that would help.  If you paid off the $7,200, then you have no utilization. 

What would help even more, though, is if you pay off the charge-offs if you could, preferably with a "pay for delete" provision as part of that payment.  

How old are the charge-offs? 

I would also check the "Statute of Limitations" for your state.  If it's beyond the Statute of Limitations for debt within your state, the charge-off people cannot sue---but the charge-off remains on your credit report for 7 years from your first 30-day late (also known as the Date of First Delinquency), paid or unpaid, unless you make arrangements via payment for the account to be deleted.

[Anonymous]

Both charge offs are about 2 years old I think. I live in Maine, Maine has a 6 year statute of limitations. We were going to pay the higher card off but got some bad advice to lower our debt first by paying down a car instead. We paid $10,000 on the car, then the lender said our score didnt change. He mentioned they can overlook chargeoffs when they do their calculations with underwriting. Obviously he was mistaken and we couldnt use it to pay down our credit cards instead.