Improve FICO Quickly

[Anonymous]

Hello all - My current FICO score is 718 as of August.  I want to buy a house next year and I think I'm going to need a much higher score to do that.  I've been researching several topics on credit, debt to income ratio, etc to better educate myself on the subject. I currenly have two CCs with balacnes that are close to the limit, which are really hurting my FICO score:

CC #1 - 3882  28% APR!  balance with a 4500 limit = 86% utilization rate (will not lower my APR)

CC #2 -  6562   11% APR balance with a 7100 limit = 92% utilization rate (will not increase my CL)

I was at a 95% utilization rate on my CCs last month, but now have that down to 90%.  Still very high, but I'm working on it.

22,000 car loan with 18,000 owed (trying to sell the car and pay off the loan) This is more for debt to income purposes rather than score as I don't think selling the car will improve my score.

So to summarize, I want to pay off my high APR CC first.  I thought increasing my credit line might help my credit utilization %, but it dosen't look like that's an option and I don't want to apply for a new CC if I don't have to.

Aside from those items is there anything else I should focus on? Tips, tricks that will really increase my FICO?

Thanks in advance!

Message Edited by fisher_1 on 09-01-2009 09:29 AM

[donkort]

Hello there,

I would think that your FICO score of 718 (if it's your middle score) will qualify you for most mortgages--though possibly not at the highest interest rates.  My mid-score is 715, and they approved me for a mortgage, even with $13,000 of credit card debt and $60,000 in student loans.  It's the minimum monthly payments that matter most to the bank when it comes to your debt. 

Obviously, your income matters as well, which you didn't mention.  Banks usually want you to have the gross income to devote less than 40% of that income toward payment of your monthly debt.  This means, if you make $4,000 a month before taxes (I would say about an average salary for a person who has been employed a while), that the bank would want your combined monthly debt to be about $1,700 or so. 

I'm a layman--but it seems to be that the quickest way to raise your FICO score is to decease your credit card utilization considerably.  Under 40% would be great; under 30% would be ideal.  Even increments of 10% (i.e., 85% to 75%) might help a litltle. 

Correct me, anyone, if I'm wrong.  I would like to offer as accurate advice as possible.

Good luck in your search for a home.

Don

[donkort]

Yep...get rid of the high-interest cards first!

[Jazzzy]

I agree with the posters who urge you to lower your credit card debt. I hate to pay interest, so I would be paying the maximum I could on the higher interest rate card while paying the minimum on the other card. Once you get the high APR card to zero, you can pay aggressively on the other card.

Your instinct to sell your car is likely right on. You need a good FICO score to buy a house, but you also have to have your other debts worked down. If you own a car with a big payment when you try to buy a house, that will mean less house for you.

Also, if you are within a year of applying for a mortgage, you want to be careful of applying for new credit. If you can get along without more credit, you don't need the ding of having a new account and a new inquiry on your CR.

Sounds as if you are thinking things through. Your FICO is certainly high enough to get a mortgage, but it's good to try to maximize that FICO in order to get the best interest rates available to you.

[Anonymous]

Thank you to everyone for your help.  It sounds like I'm on the right track.  I make just under 65k a year. Like everyone else; I'm so tired of CCs and all their crap. I'm at the point where I despise them!  I definitely agree that opening another credit line is not in my best interest in regards to applying for a mortgage in the future. Once I get through graduate school I'll have more money to put toward the CCs.  I'm paying tuition out of pocket right now, which is making things tight.

Message Edited by fisher_1 on 09-02-2009 04:35 AM

Message Edited by fisher_1 on 09-02-2009 04:35 AM