How to raise score / prepare for mortgage pre-qual?

[Anonymous]

DW received a big lift when collections were paid to $0 last Summer. Scores went from 520s to 640s now. She now has two revolvers, a secured Cap1 M/C $551 (opened Sep '18), and unsecured Cap1 QS1 $3k (opened Jan '19).

How else to get her scores raised?

We are aiming for pre-qual on a new home build this Spring, with closing about a year away. One of the, “Don'ts” posted elswhere on these forums is, “Don't seek new credit leading up to attaining mortgage approval.” Given this, we're wondering about our options. Does pre-qual for a home carry the same guidelines as for closing with regard to not seeking new credit? Thought is, some new credit could boost her thin file.

Options:

A.) Don't seek new credit until we clear the pre-qual. Would continue trying to get her collection items removed, and just garden what she has. This seems to be the common sense option, but want to run B, C and D across the folks here --

B.) Get an NFCU secure loan and pay it down for the installment loan benefit. Not sure if this helps folks who already have a mortgage? We have mortgages on two properties.

C.) She travels a lot and could use a good Visa. The Flagship is a great match. When we apply for it, want to ensure she has a good SL, so should we let her scores creep a bit higher before applying?

D.) What else?

[FireMedic1]

FICO mortgage scores are different than FICO 8. From a FICO 8 perspective. She has 2 cards and a installment loan. Or should I say you both have the mortgage. So thats covered. I feel your topic would be answered in more detail in the Mortgage Section on the forum. Speaking on FICO 8 scoring. Time will heal the past and let time do its thing. Good Luck!

[Anonymous]

FireMedic1, think you are right -- probably should have posted in the Mortgage sub-forum. Not sure how to ask a moderator to please move this thread?

[FireMedic1]

Click the 3 dots top right. Says report.............. Just ask. Sure they will. You'll get more exposure there. Best of luck!

[Mortgage-Specialist]

What is stopping you from being prequalified now? I understand that you'd like highest possible scores for best potential offer but you can still get prequalified now and while your scores increase along the way before the loan goes through the lender will use your higher score. Just ask the lender in advance they will accept the higher score. Some of them wont so they can charge the higher rate (even though they would suggest its their guideline) 

[Anonymous]

We're buying into a master planned community where the builders sort of reign supreme. The lot we want hasn't been, "released," so there can be no construction contract until that occurs. We cut the builder a reservation deposit, and are told we're numero uno on the waiting list. So we get to wait until the release date (supposedly Spring) and then we'll be wheeled in front of the builder's selected finance broker for the pre-qual.

Since we've had a bit of a bumpy road since our last mortgage, we want to do everything possible to raise our scores now.

[Anonymous]

I see no problem with applying for the credit card she wants, as long as it is clear that a full 13 months will occur with no credit applications (cards, loans, etc.) in the run-up to the final mortgage underwriting.

We can advise you best if we know the age of her youngest account as of today.  If her AoYA is > 12 months now, then she should wait until the pre-Q has gone through, then get the card she wants, then wait 13 months before the mortgage underwriting.  If, in contrast, her AoYA is currently 0-4 months, then the new account penalty will likely not be substantial and she could get the card now even before the pre-Q.

Are the two of you enrolled in the myFICO Ultimate credit monitoring service?  (Specifically choosing the flavor that gets you new reports/scores every 30 days?)  You should certainly do that in the run-up to the pre-Q -- after which you could cancel.

Because she already has open loans on her report, the Share Secured Loan Technique will give her no help -- not even for FICO 8.

BTW, how many open accounts does she have right now?  How many closed?

[Anonymous]

Certainly both of you should implement AZEO right away with a small positive balance reporting on a true credit card (not a charge card) and make sure it is a card in that's person's name (not an AU card).

This will help you whether you are talking about preparing for a CC application or a mortgage pre-Q or final mortgage underwriting.  During the long 13 month period of gardening, AZEO is not important -- just in the 45 days prior to an important credit pull.

[Anonymous]

CreditGuyInDixie, thank you for this feedback. DW AAoA is 7 years, with 4 open accounts and 4 closed. She also has 4 medical collections, paid to $0, that we're trying to get removed altogether. She just received an alert from Equifax that her credit score crossed a threshold, into, (and I'm paraphrasing) "access to better credit options."  I think this means she passed 650?

We've decided to sit tight until the pre-qual.  Oddly, Cap1 just increased the CL on her secured M/C by $300, to $851. She made no request, and they didn't send her a notice afaik. She just logged in, and observed the increased amount. Good things come to those who wait?