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Improve Credit Scores - immediate goal is to purchase a home (in the next 18 months or so)

HowDoesThisAllWork
Frequent Contributor

Improve Credit Scores - immediate goal is to purchase a home (in the next 18 months or so)

Howdy! Howdy! Howdy!

 

This is my first post so please be gentle! LOL!

 

Long story, short (don't get toooooooo used to that from me) is that I made some horrible decisions back in 2017 and it is biting me in the backside.  More on that shortly.

 

The devil is in the detail, however.  And I am really good in the detail.  This will be a rather long post and the question will be at the bottom of this post (just a heads up on that point).

 

Not ever been much of a credit card user (currently 54 years young) and started my credit build / rebuild back in November of 2019 (thank you to my friend - you know who you are).

 

Current FICO8 Scores (as of 2021 JULY 21):

1.  EquiFax   -  703

2.  Experian  -  699

3.  TransUnion  -  690

 

Current Credit Cards:

1.  DiscoverIT   (opened December, 2019  -  Current CL of $1,500  -  perfect payment history)

2.  Lowes Advantage  (opened April, 2021  -  Current CL of $4,500  -  perfect payment history)

3.  Capital One Platinum  (opened July, 2021  -  Current CL of $3,000)

 

I currently have neither a car loan (paid that off five months early at the end of April, 2021) nor a home loan (long story there, closed that account in the middle of February, 2021  -  most grateful to the ex-wife for being willing to speak with me on the two related points and for agreeing to take action to modify the Divorce Decree).

 

I do have two closed Auto Loans on my credit report (both have perfect payment history) and one Home Loan on my credit report (again, perfect history).  This is great....but the accounts are closed (so, not helping my credit mix at the moment).  And, for those interested, when I closed the auto loan my credit score dropped some 25+ points (on each of the three CRAs).  Which was expected (lots of people think that closing a loan out with a perfect payment history is a good thing - which it is - and will result in a credit score INCREASE - which it will not necessarily do).

 

I am renting a home since March, 2021 and am gainfully employeed full-time!

 

I have closed four credit cards:

1.  OpenSky Secured  (opened in November, 2019 - closed in October, 2020 - had $1,000 CL - closed due to AF)

2.  TOTAL Visa (opened in May, 2020  -  closed in October, 2020  -  had $300 CL  -  closed due to HIGH AF and very low CL)

3.  SURGE MasterCard  (opened in May, 2020  -  closed in October, 2020  -  had $750 CL  - closed due to HIGH AF)

4.  CreditOne  (opened in July, 2020  -  closed in June, 2021  -  had $600 CL  -  closed to HIGH AF, low CL, terms and conditions)

 

I ensured that I requested at the time of closing (I called each of the credit card companies) that the comment "Closed per consumer request" was added to each.  All four had perfect payment history and I was very mindful of the credit utilization reported.  I kept everything under 10% (far under 10%).  I closed them as per my comments above.  I am grateful to each of them as each provided a purpose along my credit build / rebuild journey.

 

I have one derogatory account:  Merrick Credit Card.

 

I had an issue in March, 2017 and was not able to make payments for six months.  It was then charged-off at that point.  This shows as the only derogatory account on each of the three Reporting Credit Agencies (TransUnion, EquiFax, Experian).  I have since paid off the amount owed (paid 100% of that amount).  I will have a question of two on this......but those questions will be separate posts.  This - according to my credit reports - is due to fall off my credit reports in March, 2024.  UGH!!!!

 

So, without further ado, my questions are these:

 

1.  Would it benefit me (read: credit score) to open up a Savings Secured Loan from Nave Federal Credit Union?  That would add an installment loan to my "exclusively" revolvers-laden credit mix and would make - from what I understand - FICO and the scoring Gods much much happier.  Secondary question here (and I realize that each credit profile is vastly different) - what range of score increase could someone anticipate from this.

 

2.  General question here - anything that I can do regarding the CO (besides wait for the drop date, or perhaps the Early Exlusion date for each of the three CRAs)?

 

3.  With the immediate goal of purchasing a house, would there be any "unintended consequences" from opening the SSL at Navy Federal Credit Union (or any other financial institution.....specifically focusing on NFCU, though, based on all of the amazing comments in this forum)?

 

Thank you!

 

 

 

 

FICO8 Scores as of 2021 JULY 21:


FICO Auto 2/4/5 Scores as of 2021 JULY 21:


FICO Bankcard 2/4/5 Scores as of 2021 JULY 21:


FICO Mortgage 2/4/5 Scores as of 2021 JULY 21:


Starting Score: Exp 699
Current Score: Exp 699
Goal Score: Exp 750


Take the myFICO Fitness Challenge
Message 1 of 4
3 REPLIES 3
gdale6
Moderator

Re: Improve Credit Scores - immediate goal is to purchase a home (in the next 18 months or so)


@HowDoesThisAllWork wrote:

 

So, without further ado, my questions are these:

 

1.  Would it benefit me (read: credit score) to open up a Savings Secured Loan from Nave Federal Credit Union?  That would add an installment loan to my "exclusively" revolvers-laden credit mix and would make - from what I understand - FICO and the scoring Gods much much happier.  Secondary question here (and I realize that each credit profile is vastly different) - what range of score increase could someone anticipate from this. The benefit would be taking it out for as long as possible and then paying it down to below 8.9% of the original amount which will push the next payment date out. This would immediately raise some points on the installment loan utilization and as the hit for the inquiry/new account fade more points are gained. Max is around what you lost when you paid off your last installment loan

 

2.  General question here - anything that I can do regarding the CO (besides wait for the drop date, or perhaps the Early Exlusion date for each of the three CRAs)? Addressed this in your other thread

 

3.  With the immediate goal of purchasing a house, would there be any "unintended consequences" from opening the SSL at Navy Federal Credit Union (or any other financial institution.....specifically focusing on NFCU, though, based on all of the amazing comments in this forum)? General guidance is no new credit 6 mos to 1 yr prior to mortgage app pulls. One other thing if there is any other debt you may have not being reported and it still can be reported (max 7.5 yrs from DoFD) mortgage pulls bring them out of the woodworks so you would want to address them before you do the mortgage pulls.

 

Thank you!

 

 

 

 


 

Message 2 of 4
HowDoesThisAllWork
Frequent Contributor

Re: Improve Credit Scores - immediate goal is to purchase a home (in the next 18 months or so)

@gdale6 

 

Thank you so very much for the added detail.  Learning this whole "credit game" after ignoring it or, worse, IGONRING it (translation, doing my own thing....).

FICO8 Scores as of 2021 JULY 21:


FICO Auto 2/4/5 Scores as of 2021 JULY 21:


FICO Bankcard 2/4/5 Scores as of 2021 JULY 21:


FICO Mortgage 2/4/5 Scores as of 2021 JULY 21:


Starting Score: Exp 699
Current Score: Exp 699
Goal Score: Exp 750


Take the myFICO Fitness Challenge
Message 3 of 4
HowDoesThisAllWork
Frequent Contributor

Re: Improve Credit Scores - immediate goal is to purchase a home (in the next 18 months or so)

@gdale6 

 

So, was feeling a bit frisky yesterday!  And, careful everyone!  I use that word a bit differently from how most do.  LOL

 

I opened up an account with Navy Federal Credit Union....well, technially, I should say that I opened two accounts with NFCU: a checking account and a savings account.

 

I opened the accompanying checking account because the savings account is not able to receive or to send funds from/to "external" accounts at NFCU.  So, all "external" transfers flow through the checking account.

 

Next Friday I am going to fund it with $2,000.   Once those monies hit (naturally, will hit the NFCU checking account and then I perform the internal, instant transfer to my savings account) I will initiate the Shared Savings Loan.  I am thinking that I will do either an 18-month or a 24-month term loan.

 

And, for those of us out there interested in this, the two people with whom I spoke yesterday at NFCU informed me that there is NO credit check (yes, you read that correctly...no soft pull and no hard pull).  I will request a check for $2,000.  I am going to then deposit those funds into my NFCU checking account and will ultimately put those funds back into my Marcus savings account (which is the origial source of that $2,000).

 

I will then allow some time for this "Installment Loan" to hit the three CRAs (TransUnion, Experian, Equifax) and will allow it to then sit there for a hawt minute!  So, to be clear, I am going to make sure that this $2,000 loan shows on all three CRAs and that $2,000 is the initial balance.  My thought process is that I then make that first payment (whenever that might be due) and that this initial payment will be $1,840 (which will leave a $160 balance).  I specifically picked this number as it is 8% of the original loan amount.

 

I will then pay off that $160 balance over the remaining 17- or 23- months (@2.25%).

 

I will then have an installment loan (and not having 'any recent installment loan activity' is indeed listed as a reason for my FICO scores being what they are) and that 'issue' will be resolved.

 

Does this plan appear to be sound?  Am I overlooking anything?  I do tend to be "Captain Obvious" but I am a detail person and often - in my experience - people tend to ass/u/me things and they assume incorrectly far too often than I care to allow!

 

Thanks!

FICO8 Scores as of 2021 JULY 21:


FICO Auto 2/4/5 Scores as of 2021 JULY 21:


FICO Bankcard 2/4/5 Scores as of 2021 JULY 21:


FICO Mortgage 2/4/5 Scores as of 2021 JULY 21:


Starting Score: Exp 699
Current Score: Exp 699
Goal Score: Exp 750


Take the myFICO Fitness Challenge
Message 4 of 4
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