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AZEO and mortgage application

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boog13
New Contributor

AZEO and mortgage application

Hi all,

I am planning to apply for a mortgage in the beginning of May but I have a question about the AZEO method. I have all my credit cards paid down to $0 with the exception of one card with $5. I checked CCT and it's saying my total revovling debt utilization is at 0%. Does AZEO work using total utilization or individual card utilization? The $5 balance is on a capital one card with a CL of $500.
11 REPLIES 11
me12345
Frequent Contributor

Re: AZEO and mortgage application


@boog13 wrote:
Hi all,

I am planning to apply for a mortgage in the beginning of May but I have a question about the AZEO method. I have all my credit cards paid down to $0 with the exception of one card with $5. I checked CCT and it's saying my total revovling debt utilization is at 0%. Does AZEO work using total utilization or individual card utilization? The $5 balance is on a capital one card with a CL of $500.

That may just simply be the way CCT picks it up since its less then 1%, it may just be rounding down....

 

What does it show your scores are?

 

Thanks,

VA & FHA down to 550...
Licensed Senior Mortgage Loan Officer in the states of Arizona & California
Specializing in VA, FHA, USDA & Conventional loans. My company is also licensed in 12 states, Arizona, Colorado, Nevada, California, Oregon, Washington, Utah,
Alaska, New Mexico, Texas, Illinois and Florida
Message 2 of 12
boog13
New Contributor

Re: AZEO and mortgage application

It currently shows my score at 668. I will purchase my 3B scores when the student loan I just paid off updates at the beginning of May.
Message 3 of 12
homeloanexpert
Established Contributor

Re: AZEO and mortgage application

Been doing home loans for 30 years and in my experience, I can't tell you how important it is to make sure you strategically charge and pay down your credit cards to 10% utilization. Never over 30% and NEVER $0. Make sure you if you charge on your credit cards through the month, pay your payment at least 5 days prior to your statement posting or cutoff date. This way it insures the balance being reported is the balance you want.

 

Many times, I have been contacted by frustrated borrowers after having seen their scores drop after following the bad advice of inexperienced Loan Officers. What were they told? Pay off your credit cards to $0. Bad move!

 

I recommend always keeping a small balance on each card. Why? Simple. Other than the obvious utilization factor, even if you pay off to a $0 balance, we lenders are required to hit borrowers with a minimum $10.00 payment per credit card anyways.

 

Please feel free to PM me if you have any questions. I am licensed in 25 states including AZ.

Best Wishes!

Branch Manager - Specializing in FHA, VA, USDA, Conventional, Jumbo, Portfolio and Non-QM Loan Products.
Message 4 of 12
iv
Valued Contributor

Re: AZEO and mortgage application


@homeloanexpert wrote:

 

Many times, I have been contacted by frustrated borrowers after having seen their scores drop after following the bad advice of inexperienced Loan Officers. What were they told? Pay off your credit cards to $0. Bad move!

 


True... having a $0 revolving balance on all lines is bad for scores.

 

However:

 


@homeloanexpert wrote:

 

I recommend always keeping a small balance on each card. Why? Simple. Other than the obvious utilization factor, even if you pay off to a $0 balance, we lenders are required to hit borrowers with a minimum $10.00 payment per credit card anyways.


Not true... having 100% of revolving lines reporting balances (regardless of amount) is also bad for scores.

 

Keeping just one, or at least only a small % of active revolving lines with balances is better.

 

EQ8:850 TU8:850 EX8:850
EQ9:847 TU9:847 EX9:839
EQ5:797 TU4:807 EX2:813 - 2021-06-06
Message 5 of 12
boog13
New Contributor

Re: AZEO and mortgage application

I currently have only $5 revolving credit reporting on my capital one card (cl is $500). I also have a $238 dollar chargeoff reporting from a old secured Wells Fargo card. How much do I need to have reporting on that capital one card for a good score increase?
Message 6 of 12
iv
Valued Contributor

Re: AZEO and mortgage application


@boog13 wrote:
I currently have only $5 revolving credit reporting on my capital one card (cl is $500). I also have a $238 dollar chargeoff reporting from a old secured Wells Fargo card. How much do I need to have reporting on that capital one card for a good score increase?

You do have other open cards, yes? (If it's your ONLY open card, then AZEO isn't really an option.)

 

If so, having the others at $0, and that one card at $5 is about as optimal as you can get for the related score factors.

 

 

Compared to that chargeoff, though... the effect of AZEO/low util is tiny.  How old is "old"? Is that your only negative?

 

 

EQ8:850 TU8:850 EX8:850
EQ9:847 TU9:847 EX9:839
EQ5:797 TU4:807 EX2:813 - 2021-06-06
Message 7 of 12
boog13
New Contributor

Re: AZEO and mortgage application

I have 2 credit cards and 2 charge cards. All of them have a zero balance with the exception of the $5 balance on the capital one card.

Negative items on TransUnion
- one collection
-wells Fargo chargeoff from 5years ago
-nfcu paid chargeoff
-lates on car two years and older

Negative Experian
-one collection agency
-frontier communications collection
-wells Fargo chargeoff
-paid nfcu chargeoff
-lates on car two years and older

Negative Equifax
-frontier communications collection
-wells Fargo chargeoff
-paid nfcu chargeoff
-lates on car two years and older

Equifax is my highest score.

Looking at credit check total and seeing the usage saying 0 scared me. I know 0 utilization is not good but I wasn't sure if the $5 balance was enough.
Message 8 of 12
iv
Valued Contributor

Re: AZEO and mortgage application


@boog13 wrote:

Looking at credit check total and seeing the usage saying 0 scared me. I know 0 utilization is not good but I wasn't sure if the $5 balance was enough.

Any non-zero balance is enough. (As long as the lender actually reports it.)

 

Ignore the charts, graphs, and derived stats from the monitoring services in most cases.

Very frequently, they don't match with what the scoring models actually do.

 

What matters is the raw data on the reports, and the actual scores.

 

As I'm sure you know, having those collections, chargeoffs, and lates fall off (or getting them good-willed off, etc) will have much more of a positive effect than AZEO vs non-AZEO can possibly have. (But if you're a few points away from a cutoff for something, or from better a rate tier...)

 

EQ8:850 TU8:850 EX8:850
EQ9:847 TU9:847 EX9:839
EQ5:797 TU4:807 EX2:813 - 2021-06-06
Message 9 of 12
boog13
New Contributor

Re: AZEO and mortgage application

So does it work by counting overall utilization or per card utilization? My card utilization is 1% but over is less than 1%.
Message 10 of 12
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