No Credit Bump after Paid down Cards?!?!

[Anonymous]

This kind of scares me because we plan on paying down our credit cards when we get our tax refund. We are at abnout 97% UTI. We are only able to pay down to 50%UTI We want to purchase a home. Now Im scared that we wont get the point bump we need. 

[CreditWarrior21]

I'm told... And have yet to determine if this is true- that under 30% is where you want to be.

Which- hopefully I will be in the next 30 days. My score calculator says people with the highest scores are under 10%.

which would be nice because I'd have less monthly bills!

[Revelate]

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@Istherehope wrote:

Thanks for the answers.

Yes, they are reporting- I'm seeing them as they come in. It's just not moving. I agree, I must not have hit that threshold to bump yet..

Revelate: Thank you for the offer to look more closely: As of today-

Capital One Quicksilver: $2322.20         CL: $6000

Capital One Mastercard: $2990.25         CL:$5750

Chase Marriott Rewards: $1819.00         CL: $5000

Chase Slate                     $54.00             CLL $500

Credit One:                       $738.00          CL: $1350

Credit One:                       $130                CL: $700

So in Total:       Balance: $8053.45          CL: 19,300

Thoughts?

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How much more money do you have to pay down?

Revolving utilization is in 3 parts:

1) Aggregate utilization (<9%, FICO rounding mishaps is optimal)

2) Individual: depends on where your, generally most consider under 30% to be optimal here though my dirty file can go up much higher before taking a penalty on mortgage models

3) Number of revolvers with balances: fewer (but not zero revolvers with a balance, which is a straight negative) is better, one is optimal for all; with only 6 cards ideally you probably want to be one, but 3/6 is better, and 2/6 is better than that.

If I were you I'd pay off the 3 smaller balances, and then see what money I had left over for further tweaks; amount of cash to play with factors heavily into FICO optimization.

To the other poster, same sort of strategy can be done, strategic use of funds is often better than outright just throwing money at the issue when we're talking FICO optimization... note this isn't quite the same as doing what's smartest from a financial perspective, but with a mortgage lasting only a few months, the higher interest rate on one vredit card vs. another isn't that big of a deal in comparison to house price.

[CreditScoreChallenged]

Are the scores you are referring to your Fico scores or mortgage scores?

[StartingOver10]

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@CreditScoreChallenged wrote:

Are the scores you are referring to your Fico scores or mortgage scores?

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To clarify:  ^^^ mortgage scores are also FICO scores but they are a different scoring version from FICO 8.  Take a look at the stickies above (in the mortgage section) for details of which scores are used for mortgage scores.  Most lenders pull all three reports and use the lowest mid-score of the applicants for the mortgage.  Very occasionally I will see someone post that their lender only uses one mortgage score model. 

[CreditWarrior21]

They are my FICO scores. My mortgage scores are as follows:

Experian Fico Score 2: 614

TransUnion Fico Score 4: 543

Equifax Fico Score 5: 590

Not sure why there's a wide difference between the 3. Or which they use.

[StartingOver10]

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@Istherehope wrote:

They are my FICO scores. My mortgage scores are as follows:

Experian Fico Score 2: 614

TransUnion Fico Score 4: 543

Equifax Fico Score 5: 590

Not sure why there's a wide difference between the 3. Or which they use.

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The differences are because there is a slightly different scoring algorithm used by each of the big 3 CRA's.  The mid score is used (in your case the 590 score).  If you have another borrower on the loan with you and that borrower has lower scores, then that borrowers mid-score will be used for qualifying. 

[jenrhi]

Just make sure not to close them after you pay them off--that will mess with your debt to income ratio for sure!

[CreditWarrior21]

Hi all,

Wanted to quick update as I know there were one or two on the thread watching.

After about 60 days of paying down- from 88% utilization to about 45% utilization overall- my credit score jumped 31 points yesterday!

I am not going to pull hard credit, as I am going to be able to pay below the 30% mark at the end of this month, but I'm hoping that after that I have a big enough bump to start looking for a home! Currently sitting at exactly 620 due to the 31 point bump.

Thanks for all the support and advice. Getting that UTI down certainly seems to be key.