Help please! What can I do to get preapproved

[Anonymous]

I am trying to qualify for a home loan but currently my mortgage score is only around a 520. I was rebuilding my credit and ran into some problems around May of this year while I was off of work for a couple of months. My utilization on my credit cards are currently high but will be paid off by the end of this month. Also, I will have between 10-15% to put down on the purchase of the home. Can anybody offer any help on if I pay down all of my credit cards will that help with getting me a score increase I know I need to be around 620 for the preapproval. I also have around 4 30 day lates from June and July because those accounts were supposed to be on an extension until I returned to work but were not. These accounts are currently back on track.

[CreditInspired]

First, since there can be no lates 12 months prior to applying for a loan, that puts you at 8/2020 for loan application. 

Second, to increase your scores, practice AZEO. This means all your CCs should be at $0 except 1, and that one should be <8.9% of CL. 

Third, do not open any new accounts.

Finally, once your scores have increased, you could do FHA 3.5% down and ask for seller closing cost assistance up to 6% of the sales price. 

Then, you can use the remainder of that 10-15% to pay your CCs off. 

Are there any other negatives on your CRs?

[Anonymous]

No, Those are the only baddies I currently have. I will pay off the credit cards and see what happens. Thank you.

[Mortgage-Specialist]

Many consumers can in fact qualify and be approved for a mortgage even if they have late payments within 12 months. I'm sure there are many lenders who have that strict guideline but that is yet another lender overlay.

With late payments so recent you'd definitely need a score increase - which you should be getting very soon since you paid down credit card debt.

[Anonymous]

Thank you. That is what I am hoping for a nice increase. Also, I am wondering if it would help to be added as an authorized user on one of my moms older cards to age my credit report a little more than what I currently have?

[AllZero]

What do you currently have?

AoOA Age of Oldest Account?
AAoA Average Age of Accounts?
AoYA Age of Youngest Account?

[AllZero]

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@Anonymous wrote:
I am trying to qualify for a home loan but currently my mortgage score is only around a 520. I was rebuilding my credit and ran into some problems around May of this year while I was off of work for a couple of months. My utilization on my credit cards are currently high but will be paid off by the end of this month. Also, I will have between 10-15% to put down on the purchase of the home. Can anybody offer any help on if I pay down all of my credit cards will that help with getting me a score increase I know I need to be around 620 for the preapproval. I also have around 4 30 day lates from June and July because those accounts were supposed to be on an extension until I returned to work but were not. These accounts are currently back on track.

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What is your current reported individual and aggregate utilization %?

[Anonymous]

It was at 107%. I have paid the items down just waiting for them to report.

This is how the cards were reporting:

NF Platinum Card 15,000 limit reporting at 15,335 paid down to $0

NF rewards Visa $2000 limit reporting $2016
Paid down to $0

CU MasterCard limit $5000 reporting as $6500
Paid down to $0

CU MasterCard $2000 limit reporting $100

Neiman Marcus card was reporting $3000/ $3000 limit

Paid to $500

[AllZero]

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@Anonymous wrote:
It was at 107%. I have paid the items down just waiting for them to report.

This is how the cards were reporting:

NF Platinum Card 15,000 limit reporting at 15,335 paid down to $0

NF rewards Visa $2000 limit reporting $2016
Paid down to $0

CU MasterCard limit $5000 reporting as $6500
Paid down to $0

CU MasterCard $2000 limit reporting $100

Neiman Marcus card was reporting $3000/ $3000 limit

Paid to $500

---

Those are your only cards correct?

So you will be at 2/5 accounts and $600/$27,000 = 3% (2.2 rounded up).

Pay off the CU MasterCard to $0. Mortgage FICO scores like All Zero Except One.

Optimal would be to get your Neiman Marcus card to report 8.9% or under for maximum FICO points. It's currently at 17% (16.7 rounded up)

The scoring is for FICO 8 but is should be similar to FICO 2, 4, 5:

Remember these thresholds: 8.9%, 28.9%, 48.9%, 68.9%, 88.9%

Aggregate utility-You should gain 10-15 points crossing a scoring threshold. You're probably looking at 50-75 or more available points if you can do AZEO.

Individual utility-You had four cards maxed out. So you're being penalized for that. I'm not quite sure on the points in that situation once you get your individual cards to optimization.

So with combined aggregate and individual utilization optimized I think you can get close to your goal of 620.

Report back on your scores when you pull them.

Try the Good Will Saturation Technique in the meantime to see if you can remove those delinquencies.

[AllZero]

The scoring is for FICO 8 but is should be similar to FICO 2, 4, 5:

Remember these thresholds: 8.9%, 28.9%, 48.9%, 68.9%, 88.9%

Aggregate utility-You should gain 10-15 points crossing a scoring threshold. You're probably looking at 50-75 or more available points if you can do AZEO.

Individual utility-You had four cards maxed out. So you're being penalized for that. I'm not quite sure on the points in that situation once you get your individual cards to optimization.

So with combined aggregate and individual utilization optimized I think you can get close to your goal of 620.

Report back on your scores when you pull them.

Try the Good Will Saturation Technique in the meantime to see if you can remove those delinquencies.