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debt consolidation loan for first time home buyer

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DarkKnight_Credit
New Contributor

Re: debt consolidation loan for first time home buyer


@ShanetheMortgageMan wrote:

@DarkKnight_Credit wrote:

Credit Utlization: 63%
FICO SCORE 8: EQ 674, TU 667, EX 676

With those mortgage scores and what you are aiming to do I'd lean towards taking out a personal loan and paying off your credit card debt.  You can leave a small balance less than 2% of the balance on one of the credit cards (and make sure it reports that way before credit is checked) to maximize your score (that is called the AZEO method).

 

I'm sure @Thomas_Thumb will see your response sooner or later and provide further feedback on score improvement.  


Ok awesome! Yeah my credit coach back in the day told me to leave a small 7% balance back in the day. I'll take your advice and leave less than 2% balance. Thanks for this. Getting a personal loan seems like the best way since I'm planning to get a house this year. What I'll do is continuing saving up and making payments on the new loan. If I have money left over after the down payment, I'll put the rest on the loan and most likely pay it off around the end of this year.

 

Thanks for helping me.

 

I'm curious on @Thomas_Thumb thoughts as well.

My credit cards:




Starting Score 08/2021: 
Current Score: 
Message 11 of 15
Thomas_Thumb
Senior Contributor

Re: debt consolidation loan for first time home buyer

Given you have a 4 month account, a debt consolidation loan to payoff CC balances should help score. Such loans prefer seeing a 680 score for a decent rate and loan amount.

 

You will lose 5 points for another HP. As mentioned above, pay off all but one of your credit card accounts. It is best to have a higher limit revolver report the balance. The reported balance should be atleast $10 but less than 9% of the card's credit limit. The card reporting the balance should not be an AMEX charge card or a store card.

 

Side note: given the number of cards the OP has; one or two cards reporting small balances should be fine. Just have reported balances under 9% of each card's CL. Maintain aggregate CL under 5%.

 

Scores should reach 720-740 when revolving utilization is optimized but, unfortunately not 760-780.

Fico 9: .......EQ 850 TU 850 EX 850
Fico 8: .......EQ 850 TU 850 EX 850
Fico 4 .....:. EQ 809 TU 823 EX 830 EX Fico 98: 842
Fico 8 BC:. EQ 892 TU 900 EX 900
Fico 8 AU:. EQ 887 TU 897 EX 899
Fico 4 BC:. EQ 826 TU 858, EX Fico 98 BC: 870
Fico 4 AU:. EQ 831 TU 872, EX Fico 98 AU: 861
VS 3.0:...... EQ 835 TU 835 EX 835
CBIS: ........EQ LN Auto 940 EQ LN Home 870 TU Auto 902 TU Home 950
Message 12 of 15
DarkKnight_Credit
New Contributor

Re: debt consolidation loan for first time home buyer


@Thomas_Thumb wrote:

Given you have a 4 month account, a debt consolidation loan to payoff CC balances should help score. Such loans prefer seeing a 680 score for a decent rate and loan amount.

 

You will lose 5 points for another HP. As mentioned above, pay off all but one of your credit card accounts. It is best to have a higher limit revolver report the balance. The reported balance should be atleast $10 but less than 9% of the card's credit limit. The card reporting the balance should not be an AMEX charge card or a store card.

 

Side note: given the number of cards the OP has; one or two cards reporting small balances should be fine. Just have reported balances under 9% of each card's CL. Maintain aggregate CL under 5%.

 

Scores should reach 730-740 when revolving utilization is reduced but, not 780.


Wow you guys are experts Smiley Happy

 

This is good to know. I had no idea that Amex not having a balance is best practice. So it looks like my credit is close to 680 and I need 680 to get the loan. What I'll do is pay off a balance from synchrony bank Living Spaces store card and pay off my other Capital One card that has a $3000 balance. The credit limit for that one is 3500. Hopefully my scores will at least above 680. And then once it's reported, I'll get a loan and do the steps you mentioned. Does that sounds reasonable?

My credit cards:




Starting Score 08/2021: 
Current Score: 
Message 13 of 15
DarkKnight_Credit
New Contributor

Re: debt consolidation loan for first time home buyer


@Thomas_Thumb wrote:

Given you have a 4 month account, a debt consolidation loan to payoff CC balances should help score. Such loans prefer seeing a 680 score for a decent rate and loan amount.

 

You will lose 5 points for another HP. As mentioned above, pay off all but one of your credit card accounts. It is best to have a higher limit revolver report the balance. The reported balance should be atleast $10 but less than 9% of the card's credit limit. The card reporting the balance should not be an AMEX charge card or a store card.

 

Side note: given the number of cards the OP has; one or two cards reporting small balances should be fine. Just have reported balances under 9% of each card's CL. Maintain aggregate CL under 5%.

 

Scores should reach 720-740 when revolving utilization is optimized but, unfortunately not 760-780.


So to provide an update, I checked my rate at Upstart and unfortunately they declined giving me a loan. I called the reprsentative, because I wanted to know why. They told me that they're going to speak with the supervisor and email me a response. So I received the email and it said the reason why they declined it:

 

"Proportion of balances to credit limits is too high on bank revolving or other revolving accounts. Please see

credit report disclosure below for additional details."

 

So that would mean I would have to pay down on my credit cards just to get an approval from them. The score probably isn't the problem it seems.

 

I must say this actually ruined my day. And it's very depressing.

My credit cards:




Starting Score 08/2021: 
Current Score: 
Message 14 of 15
kwinks
Regular Contributor

Re: debt consolidation loan for first time home buyer

Don't give up! I was in an even WORSE situation so I know the feeling but you just have to keep trying Smiley Happy

 

You might want to consider paying off one of the credit cards if you can, wait for it to report to your credit report, then apply for a personal loan for the rest of the debt. You would likely get approved at that point especially if you are earning enough

Message 15 of 15
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