Next Step Please

[Anonymous]

I started this journey just 2 short months ago in an effort to bring my Mortgage scores up to 680 from 575.

Starting

• Middle score was 575
• 3 Cards reporting with balances
• 71% UTI
• 2 Collections
• Most recent late payment was 1 month

Now

• MIddle score is 650
• 1 Card reporting with a balance
• Paid $9k+ to bring down to 1% UTI (Waiting to see the effects early next week after the final card reports
• 1 Collection (Got 1 removed) the other is impossible to remove
• Most recent late payment is 3 months

My Final Credit Pull is in January or February.

What else can I do besides garden? Is there anything to ensure a final bump in score to reach 680?

Thanks,

Brew

[Kree]

Do you have an installment loan? If not getting one will help.

[Anonymous]

Yes I do. an auto loan in good standing

[Adkins]

Is the remaining collection at least PIF or paid, so it shows a zero amount?

[Anonymous]

Hey there -

You and I are in similar boats, my friend! I also ended up at this forum about 5 weeks ago in an attempt to resuscitate my credit to qualify for a mortgage. What state are you in, if you don't mind my asking?

My advice is to find a family member (spouse or parent is best) who can add you as an authorized user on a very well established credit card. Make sure the account has no late payments, credit utilization is as low as possible, and the account is as old as possible. I understand that you can get a bump of up to 50 points doing this. My mother (God bless her!) added me to a 25-year-old chase account with a 22K limit and a 25-year-old Macy's (previously Jordan Marsh!) account with a $1,500 or so limit. Those accounts should update early next week and then I can verify how my scores were impacted. The myFICO 3B score simulator shows that the Macy's store card will actually cause my Transunion score to go down by 5 points, but raise my other two scores 10 points. Oddly, Transunion has the highest mortgage score for me, so we'll see how it plays out. If you don't have 3B, I recommend it. FAKO scores and even FICO 08 scores aren't giving you an actual picture of your mortgage creditworthiness. 

[Anonymous]

Adkins... Yes PIF since 2015

Eve... thank you and yes I am already on a 25 year old card as an AU... Never Late.

Thanks!

Brew

[RobertEG]

Adding an AU is not a magic bullet.

By definition, it is the account of another, and thus does not represent your own history, and thus even if it has a positive score impact, it produces a score that is no longer representative of your own risk analysis.

Potential creditors cannot back out individual accounts from scoring, and thus cannot see a credit score based only on your own risk assessment whenever you have an AU account in your report.  Some creditors, particularly when evaluating credit decisions involving large principal amounts, will require removal of any AU account so that they can see a "real" score based only on your own credit history.

AU's may provide an artificial score bump, but can lead to problems in a credit approval process should the creditor wish to see a credit score based on your own history as part of their evaluation process.

I would consult a potential mortgage lendor before adding AUs to your report/scoring.

[Adkins]

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@Anonymous wrote:

Adkins... Yes PIF since 2015

Eve... thank you and yes I am already on a 25 year old card as an AU... Never Late.

Thanks!

Brew

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Then I think you've done all you can. I wouldn't do anything else, just the pay the balance down as you've planned and let everything age until it's time to pull your credit. Good luck! 

[Anonymous]

I do not mean to suggest that adding an AU is a credit cure-all. However, it is an option to increase your score quickly when there are no other options available. Although a mortgage underwriter might request the removal of an AU account to get a better picture of the borrower's creditworthiness, the AU account can still be used to the borrower's advantage prior to, and after the mortgage is closed. For instance, if the borrower had high utilization due to toy limits, the credit bump from an AU account would allow him or her to request a CLI they may not have qualified for with a lower score. 

In my experience, there are at least two hard credit pulls during a loan process. There's the initial pull to qualify for a pre-approval, and another pull about 5 days prior to closing. A pre-approval is good for 90 days. If the house hunt takes longer than that, a borrower may be looking at 3 pulls. That's approximately a 15 point score drop. Once the mortgage loan is completed, the AAoA will drop, potentially causing another drop in score. Adding an AU account after the mortgage closes would allow the borrower to quickly regain lost ground.

I recognize the accuracy of RobertEG's statement that an AU account isn't necessarily a representation of a person's risk analysis, but I do think there are a few caveats to that. The primary reason being, the credit industry and credit reporting bureaus allow it. I assume the credit industry allows it because it expands their customer base without expanding their risk potential. I assume the bureaus allow it because the credit industry supports it. If the credit industry can use a backdoor to benefit itself, why shouldn't consumers use that same door to benefit themselves? If the credit industry did not want it to raise a person's score, it wouldn't.

The second reason, in my opinion, that an AU account indicates creditworthiness is due to the fact that a person requesting AU status is most likely doing so in order to rebuild and improve their credit profile. I know that I'd rather eat glass right now than make a late credit card payment. I'm a darn good risk right now, even if I did have a late payment 3 years ago.