How much will Mortgage FICO go up based on improving credit utilization?

[heylodeb]

Hi, everyone, 

I have been lucky enough to be offered to purchase a friend's home that is directly in my budget and a dream location for me....but due to some past credit issues, I have some concerns about how my score will move. I am applying for a physicians loan with a requirement for a FICO 700 (0% down, 0 PMI). Lender has said I should be approved based on DTI, etc as long as score gets above 700. 

1: October 2019 - Delinquent on school loan payments. I am a veterinarian and have 15 school loans that all show as having been late - tanked my score from upper 700s to the lower 600s

2: Credit Debt: Each card was at about 50-90% of credit utilization until the last couple months when I picked up a second job. I will be decreasing my credit utilization to below 30% for every card in this 30 day period. ($17,000+ in credit card debt has been decreased to around 8,000 in 60 days). I am waiting for this to all be reported to see what my scores will do....

3:Car loans: 50% paid off

4: Loan: $3,000 installment loan that I took out 1 month ago (duh...didn't know I would be getting to purchase his house)

Current FICO 8: 686, 700, 707

Current FICO 2, 4, 5: 681, 681, 660

$8,000 in savings currently, will have closer to 10-12k by closing in September which is our ideal plan. 

Friend is willing to wait a couple months to close but isn't willing to wait an excessive amount of time. (understandably!) 

Is there any hope that my FICO 2, 4, 5 will be above 700, in the next 30 days, when all of these credit payments go through to less than 30% utilization?

[pizzadude]

---

@heylodeb wrote:

Hi, everyone, 

I have been lucky enough to be offered to purchase a friend's home that is directly in my budget and a dream location for me....but due to some past credit issues, I have some concerns about how my score will move. I am applying for a physicians loan with a requirement for a FICO 700 (0% down, 0 PMI). Lender has said I should be approved based on DTI, etc as long as score gets above 700. 

1: October 2019 - Delinquent on school loan payments. I am a veterinarian and have 15 school loans that all show as having been late - tanked my score from upper 700s to the lower 600s

2: Credit Debt: Each card was at about 50-90% of credit utilization until the last couple months when I picked up a second job. I will be decreasing my credit utilization to below 30% for every card in this 30 day period. ($17,000+ in credit card debt has been decreased to around 8,000 in 60 days). I am waiting for this to all be reported to see what my scores will do....

3:Car loans: 50% paid off

4: Loan: $3,000 installment loan that I took out 1 month ago (duh...didn't know I would be getting to purchase his house)

Current FICO 8: 686, 700, 707

Current FICO 2, 4, 5: 681, 681, 660

$8,000 in savings currently, will have closer to 10-12k by closing in September which is our ideal plan. 

Friend is willing to wait a couple months to close but isn't willing to wait an excessive amount of time. (understandably!) 

Is there any hope that my FICO 2, 4, 5 will be above 700, in the next 30 days, when all of these credit payments go through to less than 30% utilization?

---

You should be able to boost your mortgage scores through improving your revolving utilization.   The all zero except one ( AZEO ) approach would be your best shot, this means all of your revolving accounts reporting $0 balance except for one account which is reporting a balance around 9%.  

I don't know if this will be enough to get your scores over 700 but it should definitely move them in the right direction.  If all your accounts were previously reporting over 50% then you were taking a big FICO score hit. 

[TheKid2]

Another vote for AZEO being your best bet. The old mortgage scoring models love low utilization on revolving debt. Carrying high balances is crushing your scores (even your FICO 8s). Get your CCs paid off, lots of $0 balances and a small balance on 1 bank card (do not leave the balance on a charge or store card). That is going to be best option other than time to have the bads fall off.

[heylodeb]

Thanks, I think I can get "AZEO" by my next statement period. 

I appreciate the feed back very much! Cant believe this resource was available and I've been trying to do everything on my own with much guesswork!

[pizzadude]

---

@heylodeb wrote:

Current FICO 2, 4, 5: 681, 681, 660

---

You really only need to get two of your scores over 700, as your mortgage app will take the middle score into consideration.

I think you'll easily get to 700 from 681 by utilizing AZEO, so in my opinion you'll be where you want to be.

Keep us posted on how it works out !

[disdreamin]

I know you can't make a direct comparison but, while my utilization is typically low, I happened to hit AZEO this pull and my mortgage scores jumped between 18 and 22 points. The only other thing I can see that might have provided a boost was my newest account aged to 6 months, but I am sure AZEO accounted for at least part of that increase. Between AZEO and lowering utilization, hopefully you've got this covered.

[Natyes]

Hey! Just here to say I'm in a SUPER similar situation. Need a 700 minimum for a jumbo loan we're trying to secure ASAP. My current FICO 2, 4 and 5 are 671, 681 and 678 but my most recent report was showing 57% total revolving utilization. Just paid it down to 5% and using AZEO with my primary Bank of America credit card. Fingers crossed for both of us next cycle! Will let you know how it goes 

[heylodeb]

So I had some GREAT news today!

FICO 8: 720, 725, 727

FICO 2, 4, 5: 708, 707, 668

This was just getting below 30% utilization!

E-mail has been sent to the lender to start the official approval process!!!

[pizzadude]

---

@heylodeb wrote:

So I had some GREAT news today!

FICO 8: 720, 725, 727

FICO 2, 4, 5: 708, 707, 668

This was just getting below 30% utilization!

E-mail has been sent to the lender to start the official approval process!!!

---

Congrats !!   You'll gain addtional points once you've hit AZEO as well so it looks like you're set now