cancel
Showing results for 
Search instead for 
Did you mean: 

New Member - Need Guidance

Highlighted
Member

New Member - Need Guidance

Hello,

 

I just registered today, I'm closing on a house in 15 days, Mortgage was approved a week ago or so.  I'm concerned because I have high credit card utilization this month ($302 balance on $500 limit), and am scared my mortgage will be denied due to this.  I am going to pay the entire card off, but that won't be reported until a few days prior to close.  As you can see from my signature, my scores are well below 620, although I am going VA loan route.  I'm assuming my lender is pulling the "Home Mortgage" scores.  Do I need to be afraid?  The only thing that has changed in my credit is my CC utilization, which I can pay off.

Starting FICO 8 May 2018: EQ: 587 | TU: 582 | EX: 576
Current FICO 8 June 2018: EQ: 592 | TU: 580 | EX: 599
Message 1 of 8
7 REPLIES
Member

Re: New Member - Need Guidance

okay so instead of waiting, I have paid off all but $25 of the card, so that puts my credit utilization at 5%.  This should improve my scores a bit, correct?

Starting FICO 8 May 2018: EQ: 587 | TU: 582 | EX: 576
Current FICO 8 June 2018: EQ: 592 | TU: 580 | EX: 599
Message 2 of 8
Community Leader
Valued Contributor

Re: New Member - Need Guidance

Welcome, @pursell1911. Smiley Happy

 

There's an excellent chance that your scores will improve, particularly if this is your only card. Of course, the card has to report to the bureaus, For most cards, that occurs on or just after the statement cut date. After that, the computers need a few days to communicate.

 

Which bank is your card with? Some banks will report if you call in and ask them to. But many steadfastly refuse to do that.

Message 3 of 8
Member

Re: New Member - Need Guidance

@HeavenOhio - Yes, this is my only card, and it is with Credit One.  This card / company is not the greatest, but it will do for now.  Credit One appears to be reporting monthly to the bureau's.

 

I spoke with my Mortgage Lender, he said they will not need to pull credit again, so I should be just fine, which is a huge relief.  Thanks for the response!

Starting FICO 8 May 2018: EQ: 587 | TU: 582 | EX: 576
Current FICO 8 June 2018: EQ: 592 | TU: 580 | EX: 599
Message 4 of 8
Super Contributor

Re: New Member - Need Guidance

It sounds like you may be going from 60%+ aggregate utilization to under 8.9% utilization, which is ideal. You could very well stand to see a 50-60 point gain on your FICO scores from this. While you said you're approved already and the lender doesn't need to pull again, perhaps them pulling again would be beneficial if it could yield you a better interest rate with that significant score gain. I'd ask your lender their opinion on this.

You could also call your CCC and request an off cycle reporting to attempt to get that new/ideal utilization reported now rather than having to wait until your statement close date, which may be soon or could be up to 30 days from now... Only you know when that usually is.
Message 5 of 8
Member

Re: New Member - Need Guidance

oh wow, I didn't realize credit utilization could cause such a large swing in scores.  This is excellent news!  Yes, my interest rate is pretty high, so I will take your suggestion to reach out to CCC and see if they would be willing to report sooner than my close date.

 

Thank you!

Starting FICO 8 May 2018: EQ: 587 | TU: 582 | EX: 576
Current FICO 8 June 2018: EQ: 592 | TU: 580 | EX: 599
Message 6 of 8
Regular Contributor

Re: New Member - Need Guidance

     Okay, I’m going to be the Grinch on this thread because I see some things that I do not understand. As such, I will interject. You said: “I'm closing on a house in 15 days, Mortgage was approved a week ago or so.  I'm concerned because I have high credit card utilization this month… my mortgage will be denied…

 

     I ask: Are you sure your mortgage was approved? A preapproval is not a mortgage approval and the actual process is long - usually MUCH longer than a week or so. Now since I don’t know when you applied and whether you went through the full process, I will assume you did and that was a long time ago. In that case all that will happen is that you will have a “soft” pull just prior to closing. Your broker and mortgage processor should have told you not to make any large changes. Assuming this additional single card utilization did not change too much (in other words you had say a $200 balance last month and now it is $302); there will be no significant affect to your mortgage (even though your score may change a little).

 

     “I'm assuming my lender is pulling the ‘Home Mortgage’ scores”. If you mean your FICO mortgage scores (FICO 2, 4, and 5) – you are correct. However, they would have already pulled those before they “approved” you for the loan. Do not confuse the initial approval as a final mortgage loan. From what you are stating it seems like it may be a preliminary approval and not a full mortgage loan guarantee.

 

     To find out your status check to see if they got your VA Certificate of Eligibility (COE) – they should have sent you a copy if you requested. Did you send in your bank statements for several months and 1040s (if applicable) for a couple years? What about employment verification signature forms and proof of available funds (CD, Money Market Accounts, IRAs, Cash, etc.)? Did you already fill out Title Insurance data and get a “Cost to Close” statement? Did they ask for and receive your NFCU or USAA (as a vet I assume you bank with one of these) “Proof of Insurance” certificate? And much more?

 

     Once the underwriters have approved your mortgage loan, they fully understand that your scores will fluctuate prior to closing. They simply don’t want to see large changes. If all you have on all your CLs is $500 (and say you had $0 when you were approved on this one card) then you may see a significant mortgage score change (FICO 2, 4, and 5); but if all you had is $500 total CL then you were probably in a higher risk category to start and want to re-evaluate if you can truly afford the mortgage.

 

     You say; “As you can see…my scores are well below 620, although I am going [the] VA loan route.” I’ll be square with you: Your scores are low. However, the VA is not a lender, they just guarantee the loan a private lender issues. The VA has criteria; but each lender has their own requirements which may be equal to or higher than the VA’s. So as a fellow vet, I say do what we learned in the military – be proactive.

 

     How do you do that in this situation? First scour the mortgage section of this forum and then the easiest is (assuming you have a loan interest rate lock) is to delay your closing. You may have to pay a few more bucks, but since you are already “going to pay the entire card off” SOON, that delay will solve all your worries.  If that isn’t possible, then offer to put a few more percentages (buck - greenbacks) down. If that doesn't work, then post on the MyFICO mortgage board and ask for a PM. There are a number of VA brokers on there (I’m not one of them) but I personally know one that I have used in the past – he’s good. Rules do not allow me to mention his name, but he has told me he can work wonders for those in just your situation. If that doesn’t work – well as we say: “Check six, then burners and out!” Under no circumstances “be afraid.”

 

Y

Current FICO 8 Scores:
EQ 792 (01/22/18), TU 799 (01/24/18), EX 824 (01/25/18)
EQ 794 (02/28/18), TU 801 (02/28/19), EX 820 (02/28/19)
EQ 794 (03/29/18), TU 799 (03/29/18), EX 812 (03/29/18)
EQ 789 (05/06/18), TU 797 (05/06/18), EX 809 (05/06/18)
EQ 797 (05/28/18), TU 806 (05/28/18), EX 814 (05/28/18)
Message 7 of 8
Member

Re: New Member - Need Guidance

Yes, mortgage has been approved, started the process over a month ago.  I have submitted all documentation the lender needs (paystubs, COE, about 100 other things).  Mortgage was submitted to underwriter about a month back, underwriter requested I clean up a few things which have been taken care of.  My mortgage lender said we are all good.

Starting FICO 8 May 2018: EQ: 587 | TU: 582 | EX: 576
Current FICO 8 June 2018: EQ: 592 | TU: 580 | EX: 599
Message 8 of 8