Need Advice on Fico Score

[Anonymous]

Hi,

I need an expert advice on my credit score. My current FICO score is 726 . I am planning to purchase a home next year ( 2016 March - July ) . I am also planning to purchase a new car this year (if I get a good deal in Nov/Dec sales)

My questions are

1. How my new car purchase will affect my credit score? Will Fico score go down? If so by how many points?
2. Is it a good idea to buy a car at this time or should I wait till I bought home?
3. Assuming credit score goes down by 10-20 points. Will I get a best home loan with 700+ score?

My current credit utilization and previous back ground

1. At present I do not have any ongoing loans or balances in my total credit availability ( 6 cards around 56K credit lines)
2. I had a Paid Charge-off credit history .It was 2.5 years ago
3. I have good ongoing income. Can afford both car and home mortgage easily.

Thanks in Advance

[Anonymous]

How my new car purchase will affect my credit score? Will Fico score go down? If so by how many points?

Yes, a new auto loan would drop your score. It's impossible to say by how much since every profile is different.

Is it a good idea to buy a car at this time or should I wait till I bought home?

If you can wait, yes it would be a good idea.

Assuming credit score goes down by 10-20 points. Will I get a best home loan with 700+ score?

No, you wouldn't get the best rates. Best rates are 760 and above.

[Anonymous]

Hi Katnev.  You write: "At present I do not have any ongoing loans or balances in my total credit availability ( 6 cards around 56K credit lines)."

Two thoughts:

You would get a significant score increase from having exactly one credit card reporting a small balance.  (Right now all six of your cards are reporting a $0 balance, which is harming your score.)

You would get another significant boost from adding a four-year $500 share secure loan and then paying most of it off and keeping it open for the life of the loan.  (This is because right now you have no open installment loans at all.)  Let us know if you'd like more details on this.

[takeshi74]

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@Anonymous wrote:

I need an expert advice on my credit score. My current FICO score is 726 .

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You don't have just one score.  For one thing there are many FICO models used by creditors.  See also the Understanding FICO Scoring subforum and it stickies for more information.  Second, there are 3 major CRA's.  Typically for a scoring model you have a score with each CRA.

If you're relying on scores you always need to consider the scoring model and CRA.  You also need to consider the relevance of a given model/CRA to a creditor.  In other words, if a creditor uses EQ FICO 5 in their decision then a TU FICO 8 is not relevant.  Even an EQ FICO is not relevant.  Only the EQ FICO 5 would be relevant.

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@Anonymous wrote:

I am planning to purchase a home next year ( 2016 March - July ) . I am also planning to purchase a new car this year (if I get a good deal in Nov/Dec sales) 

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This is also covered in Understanding FICO Scoring but while many creditors use FICO 8 for credit cards (though not all do), they tend to use different FICO models for mortgages and auto loans.  If, for example, you're relying on your FICO 8's you may be disappointed when your mortage lender pulls your scores as the models used tend to generate lower numbers.

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@Anonymous wrote:

How my new car purchase will affect my credit score? Will Fico score go down? If so by how many points?

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It's impossible for us to say that X will lead to a change of Y points.  Impact isn't just a matter of tha activity but of one's credit profile as well and the specifics of the new tradeline.  I saw very little impact when we purchased out most recent car but YMMV unless your credit profile and the details on the auto loan are similar enough.

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@Anonymous wrote:

Is it a good idea to buy a car at this time or should I wait till I bought home?

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The mortage is the bigger item and your credit will determine the terms you get on your mortgage.  For best possible terms you want your credit in the best possible shape when applying for the mortgage.  I would geneally recommend getting the new car after your mortgage is finalized.  That said, one solution doesn't fit every possible situation out there. 

The general advice with home shopping is "no new credit months to 1 year prior".  That said, I think I had one or two new accounts in that timeframe prior to our mortgage app earlier this year and it had no impact.  Again, it reallly depends on your credit profile.  With a paid collection I would guess that you probably want everything else to be in the best possible shape.  You might have a bit more leeway without the paid collection.  I can't say for certain though.  I'm not a mortgage or auto underwriter.  I can only really provide a general response using what info you've provided.

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@Anonymous wrote:

I had a Paid Charge-off credit history .It was 2.5 years ago

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Hit the Rebuilding subdforum and carefully research to see if you can get this removed. 

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@Anonymous wrote:

Can afford both car and home mortgage easily.

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Make sure you're considering everything and not just the initial purchase.  The purchase of the car/home are just the start of the expenses. 

[ddemari]

I agree with what others have said. If i were in the market for getting a mortgage 12 months from  now and my score was 720, id this;

- Not apply for any types of credit, loans, etc. 

- Get my CC debt down to 3% utilization

- Good will the paid charge offs for the next year and in hopes they might remove the entry from your reports. 

I remember getting something in the mail from 5/3 Bank saying I qualify for their best mortgage rate with a 740 score. But 760 is definitely ideal to ensure you are going to get the best rate possible. If you can wait on the car, do it after the home and then you will qualify probably for even a better car loan product! good luck! 

Also, in the next year if you have a lot of credit or unused credit. you might want to strategize so when you do the loan application for home, you are not looking like someone who is over exposed. 

[StartingOver10]

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@Anonymous wrote:

Hi,

I need an expert advice on my credit score. My current FICO score is 726 . I am planning to purchase a home next year ( 2016 March - July ) . I am also planning to purchase a new car this year (if I get a good deal in Nov/Dec sales)

My questions are

1. How my new car purchase will affect my credit score? Will Fico score go down? If so by how many points?
2. Is it a good idea to buy a car at this time or should I wait till I bought home?
3. Assuming credit score goes down by 10-20 points. Will I get a best home loan with 700+ score?

My current credit utilization and previous back ground

1. At present I do not have any ongoing loans or balances in my total credit availability ( 6 cards around 56K credit lines)
2. I had a Paid Charge-off credit history .It was 2.5 years ago
3. I have good ongoing income. Can afford both car and home mortgage easily.

Thanks in Advance

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Which FICO score is this (in red)? FICO 8 or your mortgage mid score? Makes a difference. 

First thing I would do in your place is check the current mortgage scores. You can do that by pulling a 3B report here. 

Next I would go to the rebuilding section to see what could be done to get rid of the Charge Off (if possible).

Then I would wait until you close on your home before getting a new vehicle. 

[Thomas_Thumb]

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@Anonymous wrote:

Hi,

I need an expert advice on my credit score. My current FICO score is 726 . I am planning to purchase a home next year ( 2016 March - July ) . I am also planning to purchase a new car this year (if I get a good deal in Nov/Dec sales)

My questions are

1. How my new car purchase will affect my credit score? Will Fico score go down? If so by how many points?
2. Is it a good idea to buy a car at this time or should I wait till I bought home?
3. Assuming credit score goes down by 10-20 points. Will I get a best home loan with 700+ score?

My current credit utilization and previous back ground

1. At present I do not have any ongoing loans or balances in my total credit availability ( 6 cards around 56K credit lines)
2. I had a Paid Charge-off credit history .It was 2.5 years ago
3. I have good ongoing income. Can afford both car and home mortgage easily.

Thanks in Advance

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Get the house 1st.

A car loan will have an adverse effect on your score - potentially for a year. Also, it increases your debt which increases your debt to income ratio (DTI) and this, in turn, can reduce the mortgage loan amount you can get.

I want a new car and thought about getting one this fall. However, I don't need a new car and decided to hold off a year. Unless you need a car, holding off puts you in a better position for a mortgage and perhaps keeps funds available for a higher downpayment, closing costs/moving expenses or paying points to reduce interest rate.

Good luck

[Anonymous]

Hi All,

Appreciate everyone’s valuable advice and suggestions. I just bought my Fico scores here. Does these scores make any change in your suggestions? Also please Advise any new suggestions/comments.

EQ - Mortgage

827 - Score 8

794 - Score 5

EQ - Auto

824 - Score 8

822 - Score 5

Trans - Mortgage

742 - Score 8

741 - Score 4

Trans - Auto

765 - Score 8

756 - Score 4

Experian - Mortgage

726 - Score 8

744 - Score 2

Experian - Auto

750 - Score 8

744 - Score 2

Best Regards

[Anonymous]

Quick note.  You indicate that you have two different mortgage-specific scores for each credit bureau: a FICO 8 mortgage score and an earlier model FICO mortgage score.  Unless something has changed recently, I believe almost no mortgage lenders are using FICO 8.  You should have exactly three mortgage-specific scores, one from each credit bureau, using older FICO models.

You can simplify your score review by looking at basically six scores:

FICO 8 Standard

      TU

      EQ

      EX

FICO Mortgage Scores

      TU

      EQ

      EX

You can ignore all the other scores right now, because they have nothing to do with what you are looking to do (buy a home).

The FICO 8 Standard Scores are the ones that say FICO 8 and are not associated with "Auto" or "Bankcard Enhanced."  These are worth looking at because they are the scores that almost all credit monitoring systems give in their regular monthly updates: Credit Check Total, myFICO, etc.  (Here I am ignoring Vantage based scoring systems like Credit Karma, Credit.com, etc.)  As you continue to make progress month by month toward your home purchase, you may see updates on these scores.

The FICO mortgage scores are the ones (for your purpose) that are the most important.  You will want to look at all three and give especial consideration to what the "middle" score is.

My advice is to repost those six scores (organized in the way I describe above) and it may be easier for people to help you out.  Good luck!

[Thomas_Thumb]

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@Anonymous wrote:

Hi All,

Appreciate everyone’s valuable advice and suggestions. I just bought my Fico scores here. Does these scores make any change in your suggestions? Also please Advise any new suggestions/comments.

EQ - Mortgage

794 - Score 5

Trans - Mortgage

741 - Score 4

Experian - Mortgage

744 - Score 2

Best Regards

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Ok - It is the middle mortgage score that is used by loan officers. For you that would be 744 (highlighted above). That is a good score but still below 760 - so you have room to improve for best rates. An Auto loan a few months before the mortgage is likely to drop your score.

My recommendation is still - get the mortgage 1st

You may want to lock in a rate soon for 90 or 180 days... if you can, because the Fed is still indicating an increase before year end.