New to the forums...Need advice

[Anonymous]

I went to purchase a newer car last week and was shocked at my credit score...a 657!!  I purchased my first home two years ago (by myself) with a credit score of 720+, in fact, my interest rate on my home is 4.0%!! 

Here is the low down. I dont know what all information you may need, so please let me know what I left out.

I have many old credit cards, but have only opened 4 new cards since the purchase of my home. (Most of my credit cards were from 2002-2006 (college years) and have not been used since). I only use two (Lowes - home renovations, and Bank of America - school purposes) on a regular basis.
The cards that have been opened since the purchase of my home are: Best Buy (no balance - never a late payment), Havertys (no balance - never a late payment), Lowes (balance: $2200, currently being payed off bi-monthly, paying well over monthly minimum), Bank of America (balance $3300, currently being payed on - used for school, I get tuition reimbursement for my masters degree through work so it always has a hefty balance).
I have had my Chase Bank card for years now. At the time my credit was ran, it had a balance of $905, but it has since been payed off. Also, my Victorias Secret card had a balance of approximately $300 at the time my credit was ran, but has since been payed off. My Victorias Secret card is the only card that had deliquent payments on it. (I just forgot. I cut up the card the day I payed off the balance). 

My boyfriend and I live together, so we split all of the bills. *Sigh*. If only the creditors saw it this way. LOL.

The home I purchased was a modest $125,000 - well within my means. I still owe $116,000.
I also owe $14,900 on my car.

My credit report said I have 78% of my credit remaining? (Not sure if I said that right....)

The people at the car dealership said my credit score was low because of my home loan (debt to income ratio?). If this is true, I cant help but feeling like I'm being punished for owning my home instead of renting.


Other than paying down my credit card debts, is there anything else I can do to increase my credit score?
Also, how long after my debts are payed off should I see my credit score increase?

Thank You

[llecs]

Welcome to the forums!

Wow. 4%! Funny, we just got our at 4.75% and already we are getting refi offers, at 5%+. LOL.

First off, you might be comparing apples and oranges per your scores. Your lender very likely pulled your FICO scores and pulled all 3. He/she would have chosen the middle of the 3 as a basis for your rate, maybe (depends on the loan product), but certainly for PMI and so on. If it was 720+, and that's on your tri-merge, then it is 720+, with one score being below 720 and another above 720, with mid mid at 720(+). However, car lenders may or may not use the same score. Many use a FICO score, but they'll use an auto-enhanced FICO score specific to the auto lending industry. You'd have to check with your auto lender to see what they pulled. This score is more weighted towards your past car borrowing experience.

You can also pull your two FICO scores (you cannot buy your EX FICO from anywhere) from here to see how close they match to your mortgage-pulled FICO scores.

Let's assume you did drop 70 points over the past 2 yrs. It's possible. You'd want to pull your reports from annualcreditreport.com to take a look. Look for any added bad accounts, lates, etc. You'd also want to look for any dropped account that may have been old and helped. Sometimes loosing old history is a score-killer. Your utilization might be higher too. If your balances are up as is your utilization on those CCs, then you can wind up taking a big score hit. For best results, pay all CCs but one to $0 and get the remaining to report a balance of under 9% of that CL. CC utilization is a HUGE part of FICO scoring.

You mentioned 78% "remaining". Services like freecreditreport or creditchecktotal use that terminology. Make sure you ignore those scores since they are not FICO scores. FICO looks at percentage used, or 22% if reporting accurately. I bet you can hit 30-35 points if you do as suggested above.

Debt to income ratio (DTI) isn't a part of FICO scoring because income isn't reported on your credit reports. If your lender said that DTI was a part of scoring, and assuming they were knowledgeable about the score they used, then maybe they didn't pull a FICO. However, lenders do look at DTI because they want to know if you have the ability to pay the monthly payment.

Don't worry so much about installment and installment utilization (eg. mortgage and car). It is a very tiny part of FICO scoring. In other words, I bet if you paid off your car tomorrow, your score wouldn't change. Just focus on your CCs. Your mix is great. And you are on the right track.

If those lates on that one CC came after your mortgage, then that would be a source of the drop too. You can always send a GW letter asking for them to remove the lates.

[Anonymous]

Thank You!

I went to annualcreditreport.com like you said. I had one adverse account listed *Victorias Secret card I had discussed* It had pay status as 30 days past due. I paid that whole card off this week. I was shocked to see that it said estimated date that this item will be removed 3/2018! Does that mean it will damage my credit score until 2018? Is there anything I can do about that? The high balance on this card was only (ever) $462, and it was only $42 past due. On my report it showed no other deliquent pay in the previous 24 months, although this card was opened in 10/2004, so I dont know about the previous years. This was the only adverse account on my credit report.

I paid off that balance, and my chase card. So now I only have two CCs (Lowes $2300 and Bank of America $3200). So I thought I had a payment plan to have my Lowes card paid off in 5 months, and my Bank of America card paid off by Febuary 2012.

On my way to a better credit score. Thanks for your help