Going from 571 to, well...as high as possible.

[Anonymous]

My wife and I are going to be applying for a mortgage in a year or so.  We pulled her credit scores and were surprised by what we found.

TU = 571

EQ = 591

Both reports have the same items:

Credit Cards:

Visa             789 bal    1800 limit    6 years old - 1 30 day late payment from a year ago (may soon be removed)

Mastercard   5507 bal   5500 limit   2.5 yrs old - perfect payment

Citi Leons     2140 bal   2303 limit   just under 2 years old - 3 lates.  2 30 days and 1 60 days from almost a year ago (also may soon be removed)

Sears           735 bal     750 limit   Just under 4 years old - perfect payment

Car Loan     8000 left on 18000 loan - perfect payment

Student Loan  22000 left on 23000 loan - perfect payment

Average age is  about 40 months

A couple of closed accounts that had perfect payment, closed by me.

All of the lates may be removed and were from last summer.

Total revolving util is  86%

We are moving in with my parents for a year and will be able to quickly bring down the util to 0 within three months.  If we do that and pay everything else on time (as we always have exept that one period last summer ; )

how much of a boost can we expect when they are all payed down?  Should we then increase our credit limits?  Thanks for any help!

Message Edited by Forde on 04-29-2009 11:56 PM

[guiness56]

Just paying down your credit cards will have a pretty big impact on your score. Your utilization should be around 9% for optimum scoring.

Are the lates the only bad items on the credit report?

[Anonymous]

I agree with guiness.

Pay utilizatin down.  Take it in steps.  First get to 50% of total CL's, then 35%, then 25%, then get it under 10%.

Also, send GW letters to the accounts with lates.  If you have had the accout for years and only had a late or two, chances are you might get some understanding.

Mortgages are sensitive to debt, especially CC debt.  Having those maxed has got to change.  If you can't afford to pay your CC's means you can't afford the mortgage or can't handle it.

1.  Create a budget.  know what income you have and exactly where it is going.

2.  Cut ALL non-essential spending till you get those paid down.

3.  Continue to cut ALL non-essential spending till you have saved an emergency fund.

4.  Continue to cut ALL non-essential spenidng till you have saved a down payment (need at least 3.5% but should really have some buffer on top of that, and down should not be from your emergency fund)./

5.  Have a garage sale, ebay and craigslist sale.  Sell all the stuff you don't need, don't use, don't want, don't remember stored in the attic, closet, under bed, garage or WORST in a paid storage unit.  Sell the luxuries you can live without.  Many people raise from hundreds to even a thousand or more dollars.  Put this toward your debt and/or emergency funds.

6.  If possible, get a second part time job.  Accelerate your pay down, emergency funds and down payment.  You will hate it, but will love the results and hopefully in 6 months or a year you can think about dropping it.

7.  Do not run up new debts, don't buy what you cannot PIF at end of month. 

Good luck on the home