@Anonymous wrote:
My husband and I would like to get pre-approved for a mortgage through the VA in Oct. Right now, I have a FICO 8 mid score of 764 which is good but I only have 1 Bank of America Visa credit card reporting that just hit 2 years old with zero late payments. My husband has added me as an authorized user to his Bank of America Visa card (10 years old with zero late payments) and also his Best Buy store card (8 years old with zero late payments) which if they both report, should give me 3 trade lines. I've been reading that I need to have 3 trade lines to even qualify for the mortgage. My question is, will these 2 AU cards count as trade lines for me or will I need to open 2 more cards in my name? I really do not want or need another credit card, and I'm worried about the negative effect opening a card will have on my credit so close to wanting to get pre-approved for a mortgage. Also, I've read about alternative forms of credit, but the only other bill in my name is car insurance which I can provide years of on time payments. A little more info - we gross 112k annually, the only debt we have is credit card debt which is <30% utilization (roughly 5k), and have 6k for a down payment. I'm hoping that someone can steer me in the right direction!
The scores a mortgage lender will look at are not Fico 8 scores, they are your mortgage scores: EQ Fico 04 (also known as EQ Fico score 5), TU Fico 04 (also known as TU Fico score 4) and EX Fico 98 (also known as EX Fico score 2). These scores often differ considerably from Fico 8 scores.
Based on what you have said, addition of the above mentioned AU accounts are likely to boost your Fico mortgage scores IF both don't report balances. If both report balances AND your personal card reports a balance, that could hurt your score. Why?
Fico looks at three factors relative to revolving accounts:
1) Aggregate utilization all cards combined - this includes AU cards when calculating scores based on Fico mortgage algorithms. For top scores you need to have utilization under 9%. If your personal card is under 9% on its own but the AU cards bump up aggregate utilization to the mid 20s, they will hurt your score.
2) Number and/or % of open accounts reporting a balance. If you have only one card it is best for it to report a small balance rather than no balance for best score. If you add a couple AU cards to the mix, your score will suffer if both AU cards and your card all report balances. Make sure one of the AU cards reports a zero balance by paying off charges before the statement cut date. I do believe it is best for you to show activity on your individual account regardless of the AU accounts because the AU accounts don't show how YOU handle credit.
3) Individual card utilization - For any card that does report a balance, keep the reported amount under 29% of the card's credit limit. Some may say keep it under 9% but, I data I have seen shows under 29% on an individual card is fine as long as aggregate is under 9%.
In answer to your question, if you are looking at getting a loan within 90 days, I'd forego any new accounts. If you were more than 6 months out I'd suggest you pick up two more cards: an AMEX or Discover and another bank card.
Fico 9: .......EQ 850 TU 850 EX 850
Fico 8: .......EQ 850 TU 850 EX 850
Fico 4 .....:. EQ 809 TU 823 EX 830 EX Fico 98: 842
Fico 8 BC:. EQ 892 TU 900 EX 900
Fico 8 AU:. EQ 887 TU 897 EX 899
Fico 4 BC:. EQ 826 TU 858, EX Fico 98 BC: 870
Fico 4 AU:. EQ 831 TU 872, EX Fico 98 AU: 861
VS 3.0:...... EQ 835 TU 835 EX 835
CBIS: ........EQ LN Auto 940 EQ LN Home 870 TU Auto 902 TU Home 950
