Getting ready for a mortgage...

[Anonymous]

My wife and I plan on applying for a VA home loan in about 6 months.  According to MyFico my current Mortagage middle score is 642.  In this period we're working to remove all dereogatory trade lines and hopefully get a substantial bump in scores.

My question is this:  I definetly won't be applying for new credit, but should I also cease using credit during this time?  I'm paying down a $3400 balance transfer to my PenFed Pathfinder, but all other cards are reporting a zero balance.  Should I love strictly from a budget and put the cards away until the process is over?

Any and all advice is welcome!

[me12345]

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@Anonymous wrote:

My wife and I plan on applying for a VA home loan in about 6 months.  According to MyFico my current Mortagage middle score is 642.  In this period we're working to remove all dereogatory trade lines and hopefully get a substantial bump in scores.

My question is this:  I definetly won't be applying for new credit, but should I also cease using credit during this time?  I'm paying down a $3400 balance transfer to my PenFed Pathfinder, but all other cards are reporting a zero balance.  Should I love strictly from a budget and put the cards away until the process is over?

Any and all advice is welcome!

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Not necessarily...

You don't say what your credit line is, but optimum is having all lines reporting Zero except one, and that one should be under 9% for the balance...

Of course you can use them all you want during the month, as long as they are paid in in full before the statement is cut.

Thanks,

[Anonymous]

Questions: What (and how many) are your derogs.? Will they disappear in 6-months? In other words, do you have a 78-month old CO (that will go away in a few months) or is it 12-months old (that will stay for a long while)? What is your CL on your $3,400 account balance? Is it $40K or $4K? That is a big score difference. What is your DTI? That’ll affect how much you can borrow and at what interest rate. You ask should you use credit during your rebuilding time? Do you need too? That $3,400 balance (no matter what your limit) will show up as a large monthly bill to a mortgage lender. If you don’t need to use credit (keeping your accounts open/active), I would suggest you pay that down as fast as you can (unless you are Bill Gates with a really huge income). Finally, you ask should you live by a budget until the process is over. I suggest again, that you live by a budget always – now and when it is over. It’ll save your credit later when you want a new pool, furniture, car or something.

Give us more information and we may be able to help you further.

Y

[Anonymous]

Thanks for the info.  It will be AZEO from here on out.  As for the Pathfinder card, the limit is $9500 with a current balance around $3200, so the util. is at about 34%.  I'm working hard to get that down over the summer.  We've already knocked it down by $2000 since March.