Improving Mortgage Score? Adding lines of credit

[amclaughlin42]

I am wanting to improve my mortgage score. My middle score is 568. I've been rebuilding for about a year and a half, I've had some financials walls that have prevented me from excelling as much as I want on my rebuild. But now I am in a better position. My middle FICO 8 is a 623. I wanna start applying for the loan in 12-18 months. Probably more like 18 realistically. I'd like to get 80-100 point increase in this time. 

CC - Citi Bank - AU- CL - $300 - Balance $230 - Reporting $158. This is getting paid back down to $150 in the next week. So I will be around 50% utilization again. My wife is OC and had to use it when she was stuck out of town when we had an issue with out debit card. This is the only active card between the two of us. 

Discover - Closed - on payment methods - 180 day late - Original CL - $4500 - Current Balance - $2917 - I tried for a delete of lates in their online discover chat, but that didn't go over well at all. Payment $79 - autopay 

Porfolio Recovery - Closed capital one - making payments on time every month - Will be finished in December 2019 current Balance $308 - Autopay
Medical collections $250 - unpaid from 2017

I have other charged off accounts, that used to be collections but have recently disappeared off my report on all bureaus. Totallying roughly $3500. All Charged off accounts were due to job loss at the end of 2016.

Student Loans $23000 - Status Repayment - Have made no payments due to income levels. But I will be making payments in about 3 weeks. Even if its just small amounts to keep interest down. 

I've been told on other boards that I need more lines of credit to really help my score. I've read the mortgage scores look more on installments rather than revolving, like auto, student loans, and personal loans. 

I don't want or need unneccesary payments like for an auto loan. I have a car payment but through family and not a lender. 

I use creditkarma as secondary source - I know not the most reliable, but says I have good approval odds for capital one platinum and capital one quicksilver. But my CK score is 40 points higher than my FICO 8. So I don't know if I am ready to go for the app.

I feel I only have a few options

A) Paydown a portion of wifes card, to see if it improves my score, apply for personal loan, use personal loan money to pay down remaining medical collections and use remainder for a secured card. 
B) Go for App with Cap1, 
C) Paydown wifes card for score increase, apply for Cap1 but not personal loan.
D)Paydown wifes card and student loans over 6 months and see how it increases, then decided what to do from there. 

[Anonymous]

If you're not making payments on your loans due to your income, are you on REPAYE or IBR? Both have interest subsidy benefits. If you are filing jointly already then they're already looking at your joint income, so there's no strategic benefit to staying on IBR. On REPAYE the government will pay all of the interest unpaid by your payments for the first 3 years on subsidized loans, the half of the interest after. On unsubsidized loans, they will pay for half of the interest not paid for by your payments. So in essence, if you make a $2 payment, you're paying the $1 of interest that would actually accrue and the $1 of interest the government was going to pay for you. While I understand the desire to pay it down, I'd personally wait until my income increased and the subsidy didn't apply anymore.
Hope this helps.

[amclaughlin42]

My wife doesn't work, due to us not being able to afford child care. We could if she did, but her entire income would go directly to daycare, so it makes more sense for her not to work. So I am the only income right now. So it won't affect my student loans in that regard. I am on PAYE. Would you reccomend focusing on the unsubsidize loans first even if interest maybe higher on a subsidized loan? How would not paying due to income affect a mortgage? 

[Anonymous]

FICO Mortgage scores weigh heavily on debt. If you want to raise your scores you WILL have to get those closed accounts/accounts in collections taken care of to raise your scores. You do need to get more accounts, but I would hold off on getting those until you can get your debt down more. I hope you are using a written budget. Use it to analyze your spending habits and see where you can create cash flow to help speed up paying down your debt. GL!

[Anonymous]

I'm sorry, I didn't mean to come off like you needed to justify not having payments, if you thought that. I'm all for people taking advantage of whatever plan helps the most.
The interest subsidy for PAYE is similar to REPAYE:
"Under this plan, you have 20 years to repay your debt. If your new monthly payment doesn’t pay enough to cover your interest, the government will pay:

For subsidized loans: The government covers 100% of the difference between your total interest and what your payment covers, for a 3-year period.
For unsubsidized loans: The government doesn’t cover any interest."
https://www.nitrocollege.com/blog/federal-student-loan-interest-subsidy

With this difference, I would eventually focus on the unsubsidized loans and if it's been longer than 3 years, the subsidized loans. I'm not familiar with this but someone else can probably help you in more detail. There's also the possibility of temporarily switching to a plan that will give you a small monthly payment to use.

However, for now I'd say let the interest accrue and make the minimum payment required. You'd have to pay this loan down a lot to get any point gain. I think that money is better spent concentrating on your revolving debt. Lowering your credit card utilization and dealing with the collections (PFD?) should provide you with a nice score bump.

Edit: FHA vs Conventional loan and IBR:
https://ficoforums.myfico.com/t5/Mortgage-Loans/What-s-best-Student-Loan-Repayment-option-for-DTI-is...

[Anonymous]

I don't know much about mortgage. But if you are looking at applying for Cap One make sure it has been 1 year from your charge off date. Cap one usually does not allow you to get in if the CO is within an year.

[simplegirl]

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@Anonymous wrote:
I don't know much about mortgage. But if you are looking at applying for Cap One make sure it has been 1 year from your charge off date. Cap one usually does not allow you to get in if the CO is within an year.

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Is that 1 year after the charge is paid or after it went into charge off status?

[Queen_Etherea]

You can always check the pre-qualified page with Capital One. They're usually pretty solid on whether or not you'll be approved. 

[Anonymous]

one year from CO status

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@simplegirl wrote:

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@Anonymous wrote:
I don't know much about mortgage. But if you are looking at applying for Cap One make sure it has been 1 year from your charge off date. Cap one usually does not allow you to get in if the CO is within an year.

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Is that 1 year after the charge is paid or after it went into charge off status?

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