Increasing Fico Scores at least 5 points for Refi!

Anonymous · ‎08-05-2019

Hello,

I would like to refinance my FHA mortgage to get rid of PMI and to take advantage of the current low rates. I pulled my mortgage scores today and they are 688, 695, and 703. Here is what my utilization looks like:

Amex - $6013, 49%

Discover $1560, 27%

Cap1#1 $1,211, 24% ( This has been completely paid and should update on the 10th)

Cap1 #2 $ 934, 13%

Home depot $77, 1% (this has been completely paid and should update the 8th)

Macys $ 2, 0%, (paid but updates the 25th- mistakenly paid minimum instead of whole balance and was left with 2 dollars)

12 other credit cards reporting at 0.

I would like some advice on what to do to bring the score to at least 700.

So far, I paid off 3 cards of the 6 showing balances. I requested a credit limit increase at Discover ( got 1k, new CL: 6700) and at AMEX ( got close to 12k, new CL: 24k). I would like to not get rid of discover or amex because they both have 0%apr until next year. I can pay off the next other cap 1 card completely and I could decrease the balance of the AMEX. Both Discover and Amex are now at less than 30% utilization, would paying those down to lets say 15% even matter?

Overall I have a 13% utilization, or I am using around $9,700/$72,970 (this number does not have the extra 13k CLI i got on discover and Amex)

Things keeping down my score: 1) a serious delinquency of student loan that went into default while I was still in school. It was an overpayment and they sent some letters to my parent's home that I did not see until it was too late and I paid right away but it went to collection anyways. This was 2014.- They would not remove it even though I should not been responsible to pay anything back until I left school 2) 4 inquiries in the last 12 months, from August- December last year. I regret them now. 3) short credit history. The oldest account is 6 yrs 9 mo, the youngest account is 9 mo.

I do have student loans which I am half way down paying, the mortgage which it is still very high, and a car loan, which I owe 9.5k out of 27k loan. I can provide with any other info you might need.

How can I quickly increase my score in the next 15 days?

Thank you for your help!

AllZero · ‎08-05-2019

Remember these thesholds: 8.9%, 28.9%, 48.9% 68.9%, 88.9%
Get your aggregate UTI below 8.9%

If you can get individual account such as the AmEx and Discover below 28.9% would be good too.

Mortgage FICO likes more accounts reporting zero. Can you pay off Capone #2?

Anonymous · ‎08-05-2019

Thank you for your reply @allzero
I can pay down the Cap1#2, the Discover account should be at a 22% utilization in like 1 or 2 days. Needs to update on FICO which usually happends the 4th or 5th of the month. The Amex should have a utilization of 24%. I could still pay a bit more since it updates around the 15th of the month.

If i bring the utilization to less than 8.9% for all my cards, and 2 cards reporting out of 18. How big of a jump could i expect?

If i do all of this, the soonest I could apply for refi is at the end of August and I'm just worried rates could go up, outweighing the benefit of having a 700 score.

AllZero · ‎08-05-2019

10-15 points when you cross an aggregate UTI threshold. Also, maybe +-5 additional points when individial utilization crosses too if you were practicing AZEO (All Zero Except One). I'm not quite sure on the 2 accounts reporting.

Your Amex or Discover won't realize any points unless you cross a threshold.

So your UTI will cross 8.9% and paying off that CapOne# 2, you should see the 5 points you need once your scores update.

MauiMan85297 · ‎08-06-2019

@Anonymous wrote:
Hello,

I would like to refinance my FHA mortgage to get rid of PMI and to take advantage of the current low rates. I pulled my mortgage scores today and they are 688, 695, and 703. Here is what my utilization looks like:
Amex - $6013, 49%
Discover $1560, 27%
Cap1#1 $1,211, 24% ( This has been completely paid and should update on the 10th)
Cap1 #2 $ 934, 13%
Home depot $77, 1% (this has been completely paid and should update the 8th)
Macys $ 2, 0%, (paid but updates the 25th- mistakenly paid minimum instead of whole balance and was left with 2 dollars)
12 other credit cards reporting at 0.

I would like some advice on what to do to bring the score to at least 700.

So far, I paid off 3 cards of the 6 showing balances. I requested a credit limit increase at Discover ( got 1k, new CL: 6700) and at AMEX ( got close to 12k, new CL: 24k). I would like to not get rid of discover or amex because they both have 0%apr until next year. I can pay off the next other cap 1 card completely and I could decrease the balance of the AMEX. Both Discover and Amex are now at less than 30% utilization, would paying those down to lets say 15% even matter?

Overall I have a 13% utilization, or I am using around $9,700/$72,970 (this number does not have the extra 13k CLI i got on discover and Amex)

Things keeping down my score: 1) a serious delinquency of student loan that went into default while I was still in school. It was an overpayment and they sent some letters to my parent's home that I did not see until it was too late and I paid right away but it went to collection anyways. This was 2014.- They would not remove it even though I should not been responsible to pay anything back until I left school 2) 4 inquiries in the last 12 months, from August- December last year. I regret them now. 3) short credit history. The oldest account is 6 yrs 9 mo, the youngest account is 9 mo.

I do have student loans which I am half way down paying, the mortgage which it is still very high, and a car loan, which I owe 9.5k out of 27k loan. I can provide with any other info you might need.

How can I quickly increase my score in the next 15 days?

Thank you for your help!

You're forgetting one big point, PMI will always be there in an FHA mortgage- you're getting confused with a conventional loan where insurance falls off at 20% equity.

LTV<90% (if you put down 10% or more): PMI goes away after 11 years

LTV>90% (if you put down less than 10%): PMI is for the life of the loan

Anonymous · ‎08-06-2019

MauiMan85209
This is why I am refinancing from FHA to conventional. To get rid of PMI.

NC_Mtg_Loaner · ‎08-06-2019

@Anonymous wrote:
Thank you for your reply @allzero
I can pay down the Cap1#2, the Discover account should be at a 22% utilization in like 1 or 2 days. Needs to update on FICO which usually happends the 4th or 5th of the month. The Amex should have a utilization of 24%. I could still pay a bit more since it updates around the 15th of the month.

If i bring the utilization to less than 8.9% for all my cards, and 2 cards reporting out of 18. How big of a jump could i expect?

If i do all of this, the soonest I could apply for refi is at the end of August and I'm just worried rates could go up, outweighing the benefit of having a 700 score.

lol

Don't worry, rates aren't going anywhere near 4.0% anytime more this decade.

__________________________________________________

Licensed NC Mortgage Loan Originator

MauiMan85297 · ‎08-06-2019

@Anonymous wrote:
MauiMan85209
This is why I am refinancing from FHA to conventional. To get rid of PMI.

Just checking because your post said you're looking to refinance your FHA mortgage (didn't state into a Conventional). 680 MMS should give you decent rates for that loan but it's 720+ where you'll see a good difference.

Anonymous · ‎08-06-2019

Sorry you are right MauiMan85209, I did not mention that.

Yesterday i told the broker I have been working with that i pulled my scores and to give me a rough estimate on how the rate would look like and she sent me the following "With credit 695, today is 4.625. With credit 700, today is 4.5. With 720 score, today is 4." Which i thought was very high. She did not specify if she was covering the closing costs or not in this email and I am about to ask her, but in the past she has quoted me around .5 less with one point vrs no cost no point. So I am assuming it would be 4.125, 4, and 3.5. Definitely seems like 720 would be the optimal rate in my case (besides 740) and once I get closer to the end of the month I will talk to other brokers to get other rates and costs. She also told me I could not cash out if I have less than 75% equity, which I'm estimating I have and I was hoping to cash out 5% for debt consolidation. I do not believe her much since I thought 80% is the most LTV ratio you could have.

Once the FICO scores update, do the Mortgage score update automatically? I do not mean the membership I mean like they different models would use the same information available on my reports. I asked this because I pulled my scores a month ago, I had about 9 cards out of the 18 with small balances, around the same 13% utilization. Also i had 1 more hard pull that just fell off. from them to yesterday, I have the exact same scores. I was hoping for small increases but that has not happened.

AllZero · ‎08-06-2019

Your Amex is a revolver and not a charge card, correct?

If you want to squeeze every last point to get close to 720 middle score try AZEO; individual and aggregate 8.9% or under.

Hard pull scoring penalty stops at 1 year. It has no effect score wise dropping off at 2 years.