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@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,
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!
@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.
@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?
@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...)