Trying to buy a house

[Anonymous]

I've split your post off to start a new thread. All I changed is the title. If you want to change it to something else to the right you'll see "Options." Click on "Options" and select "Edit Message" from the drop-down menu. If you need any help with anything, let me know.

--Marinevietvet, myFICO moderator

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yes I was trying to reply to you (still learning how to use the board).

Oh now I see it.....sorry about that.  My husband and I are trying to buy a house and we need to get our scores up a little.  The problem is we followed Dave Ramsey and

closed all of our credit cards.  Well when we realized that our scores tanked because of this we each got a capital one card mine with a $500 limit and his with a $1250 limit.  We have no baddies in the past year and a half but our scores don't seem to be going up.  Any advise would be much appreciated.  We did have a couple of collections from 2009 but they are all paid. 

thanks!

[MarineVietVet]

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@Anonymous wrote:

yes I was trying to reply to you (still learning how to use the board).

Oh now I see it.....sorry about that.  My husband and I are trying to buy a house and we need to get our scores up a little.  The problem is we followed Dave Ramsey and

closed all of our credit cards.  Well when we realized that our scores tanked because of this we each got a capital one card mine with a $500 limit and his with a $1250 limit.  We have no baddies in the past year and a half but our scores don't seem to be going up.  Any advise would be much appreciated.  We did have a couple of collections from 2009 but they are all paid. 

thanks!

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In most cases simply closing a credit card account will have no effect on your score unless your utilization goes up because of it. Here is an excellent thread that discusses in detail about Closing Credit Cards.

What you can do with the 2 new card accounts and what seems to help most people for maximum tweaking is to have only one of the cards report a small (<9% of credit limit) balance each month on it's statement and then pay in full before the due date to avoid paying interest.

On the other card always have it report a zero balance each month. That doesn't mean you can't use it but just time your payments so that the desired zero balance is achieved several days before the statement posts.

The collections from 2009 have the same negative impact whether paid or unpaid and since they are so new they are really hurting your scores. Since they are paid all you can do is send GW (Good Will) letters to the creditors and ask them to remove the collections early. Otherwise they can report for up to 7.5 years from the DoFD (Date of First Delinquency) on the OC (Original Creditor) account that led to the collection.

From a BK years ago to:
EX - 3/11 pulled by lender- 835, EQ - 2/11-816, TU - 2/11-782

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".

[llecs]

To add, DR is a good guy and listen frequently, but this is the one area where I disgree with him. There's a notion that credit equals debt and that's not true. You can have a high FICO score and be absolutely debt free, which should be the goal anyway. Unfortunately the days of manual reviews while having no credit are mostly, if not entirely, gone. In fact, for most programs like FHA or VA, there are minimum FICO score requirements and having "no score", as Dave says, won't get you approved. I think many, if not most, of his callers are so far into debt or have bad habits, they quite frankly shouldn't have any credit. But if disciplined, IMO, there's no reason why you can't have a couple of credit accounts to generate a score to get you over that next big hump, like a home purchase. Ditto to MVV above.

[mauve]

Since revolving credit utilization is 30% of your score, if you close all of your revolving accounts, you can have a TREMENDOUS negative impact to your score - am I wrong about that?  I know, closing all of your revolving accounts isn't necessarily what you meant.  With 0 open revolving accounts, someone would have no points in that category.

Just a thought: you can always call your previous accounts and see if you can re-open them.  It would be a boon if they agree.

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Marinevietvet wrote:

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frustrated- wrote:

yes I was trying to reply to you (still learning how to use the board).

Oh now I see it.....sorry about that.  My husband and I are trying to buy a house and we need to get our scores up a little.  The problem is we followed Dave Ramsey and

closed all of our credit cards.  Well when we realized that our scores tanked because of this we each got a capital one card mine with a $500 limit and his with a $1250 limit.  We have no baddies in the past year and a half but our scores don't seem to be going up.  Any advise would be much appreciated.  We did have a couple of collections from 2009 but they are all paid. 

thanks!

---

In most cases simply closing a credit card account will have no effect on your score unless your utilization goes up because of it. Here is an excellent thread that discusses in detail about Closing Credit Cards.

What you can do with the 2 new card accounts and what seems to help most people for maximum tweaking is to have only one of the cards report a small (<9% of credit limit) balance each month on it's statement and then pay in full before the due date to avoid paying interest.

On the other card always have it report a zero balance each month. That doesn't mean you can't use it but just time your payments so that the desired zero balance is achieved several days before the statement posts.

The collections from 2009 have the same negative impact whether paid or unpaid and since they are so new they are really hurting your scores. Since they are paid all you can do is send GW (Good Will) letters to the creditors and ask them to remove the collections early. Otherwise they can report for up to 7.5 years from the DoFD (Date of First Delinquency) on the OC (Original Creditor) account that led to the collection.

From a BK years ago to:
EX - 3/11 pulled by lender- 835, EQ - 2/11-816, TU - 2/11-782

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".

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[MarineVietVet]

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@mauve wrote:

Since revolving credit utilization is 30% of your score, if you close all of your revolving accounts, you can have a TREMENDOUS negative impact to your score - am I wrong about that?  I know, closing all of your revolving accounts isn't necessarily what you meant.  With 0 open revolving accounts, someone would have no points in that category.

Just a thought: you can always call your previous accounts and see if you can re-open them.  It would be a boon if they agree.

---

@MarineVietVet wrote:

In most cases simply closing a credit card account will have no effect on your score unless your utilization goes up because of it. Here is an excellent thread that discusses in detail about Closing Credit Cards.

What you can do with the 2 new card accounts and what seems to help most people for maximum tweaking is to have only one of the cards report a small (<9% of credit limit) balance each month on it's statement and then pay in full before the due date to avoid paying interest.

On the other card always have it report a zero balance each month. That doesn't mean you can't use it but just time your payments so that the desired zero balance is achieved several days before the statement posts.

The collections from 2009 have the same negative impact whether paid or unpaid and since they are so new they are really hurting your scores. Since they are paid all you can do is send GW (Good Will) letters to the creditors and ask them to remove the collections early. Otherwise they can report for up to 7.5 years from the DoFD (Date of First Delinquency) on the OC (Original Creditor) account that led to the collection.

From a BK years ago to:
EX - 3/11 pulled by lender- 835, EQ - 2/11-816, TU - 2/11-782

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".

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Yes I can see what you are talking about. Not having any revolving accounts would likely have a downward effect on a score but exactly how much would be hard to predict IMO. The OP said the scores tanked after all accounts were closed but I don't know what that means. Was it 50 points? 75? 100?

Opening those 2 new CC's hopefully should have gained back at least a few of the points lost when all the old accounts were closed.

From a BK years ago to:
EX - 3/11 pulled by lender- 835, EQ - 2/11-816, TU - 2/11-782

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".

 

[Anonymous]

When we closed the accouts they still had balances so our utilization was 100% so we took about a 100 point hit we also have a HELOC that has been closed and is only about 6K from it's limit so I suspect that it may be hurting our score also. I like DR and he has helped me get the person in the mirror under control but I wish we knew about utilization rates and such. Anyway our scores are currently at 622 and we need them to ne 660 to be approved for PMI. We are supposed to close on our house in aug bit need the scores there by 28 June. I so hope we make it! Our only debt is our mortgage, our HELOC, two cars one of which will be paid off next year and the other will be one year old in July the two capital one accounts and a citifinancal loan that will be paid off next year. What are everyone's thoughts on our scores going up. And what is the best way to get them there?

Thanks in advance!

[MarineVietVet]

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@Anonymous wrote:
When we closed the accouts they still had balances so our utilization was 100% so we took about a 100 point hit we also have a HELOC that has been closed and is only about 6K from it's limit so I suspect that it may be hurting our score also. I like DR and he has helped me get the person in the mirror under control but I wish we knew about utilization rates and such. Anyway our scores are currently at 622 and we need them to ne 660 to be approved for PMI. We are supposed to close on our house in aug bit need the scores there by 28 June. I so hope we make it! Our only debt is our mortgage, our HELOC, two cars one of which will be paid off next year and the other will be one year old in July the two capital one accounts and a citifinancal loan that will be paid off next year. What are everyone's thoughts on our scores going up. And what is the best way to get them there?

Thanks in advance!

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What you can do with the 2 new card accounts and what seems to help most people for maximum tweaking is to have only one of the cards report a small (<9% of credit limit) balance each month on it's statement and then pay in full before the due date to avoid paying interest.

On the other card always have it report a zero balance each month. That doesn't mean you can't use it but just time your payments so that the desired zero balance is achieved several days before the statement posts.

The collections from 2009 have the same negative impact whether paid or unpaid and since they are so new they are really hurting your scores. Since they are paid all you can do is send GW (Good Will) letters to the creditors and ask them to remove the collections early. Otherwise they can report for up to 7.5 years from the DoFD (Date of First Delinquency) on the OC (Original Creditor) account that led to the collection.

Do those closed accounts still have balances? If so then getting them paid down/paid off as fast as possible will do much to raise your score. As mauve said utilization is 30% of your total score and is second in importance only to payment history (35%).

HELOC's are usually considered revolving until the CL (Credit Limit) reaches a certain level (I've seen anywhere from $35,000, $40,000 or thereabouts. You should be able to look on your reports to see how it is reporting. If it is being scored as a revolving account then it is hurting you also if it's utilization is high.

You say your scores are 622. One thing I will ask is where did you get your scores? No one has been able to buy their own Experian FICO score since February of 2009. Creditors can pull Experian and also there is a CU (PSECU) in Pennsylvania that supplies that information to it's members only. You can only buy true FICO scores at a few places. One place is here at myFICO. I suggest you do an internet search for "myfico discount codes" to save a little money.

At one time you could also purchase your Transunion score at transunioncs.com but that site seems to have stopped doing that. Equifax will still sell you a FICO score but you have to look very hard to find it. You can get to it here: www.equifax.com/myfico-products.

ETA: I can't get the paragraphs to space correctly. Sorry about that.

[Anonymous]

We pulled our score from here at myfico and only have the transunion and equifax (I think that is the right one). When I look at the HELOC on one report it is listed as revolving and the other lists it as category unidentified. So I bet it is calculated in my utilization. We can't pay it off now because we are saving our down payment. If I GW the two collections and they won't take them off will it bring them back into current and cause our score to drop? I was scared to do too much with them because I didn't want them to be listed as current. If we are only listed as AU on each others capital one accounts will it still work to have one report a small balance and the other report zero? If so which one should we have report the limit on the higher limit or the lower limit. We could also alternate them each month. We just need to see some major changes between now and first of July. Thanks for responding to me you have been so helpful.

[MarineVietVet]

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frustrated- wrote:
We pulled our score from here at myfico and only have the transunion and equifax (I think that is the right one). Good. At least you know they are accurate.

When I look at the HELOC on one report it is listed as revolving and the other lists it as category unidentified. So I bet it is calculated in my utilization. We can't pay it off now because we are saving our down payment.

If I GW the two collections and they won't take them off will it bring them back into current and cause our score to drop? Collections are scored from date of assigment not date of last activity so even if they deny the GW's your score won't suffer. And if at first you are denied a GW just leep trying. It's worth a few stamps if you can get these removed. You might do a search here onsite for your particular CA and see how others have approached this and what seems to work and not work.

I was scared to do too much with them because I didn't want them to be listed as current.

If we are only listed as AU on each others capital one accounts will it still work to have one report a small balance and the other report zero? If so which one should we have report the limit on the higher limit or the lower limit. We could also alternate them each month. It doesn't matter which card reports a balance. It's not the amount of total CL that is scored but the percentage of the CL that is used each month. Whatever balance is reported (for most cards) on the monthly statement is the figure used to calculate utilization. Yes you could alternate them if you'd like.

But put every extra dollar you can find to getting those balances down as fast as possible. Lowering your utilization is the quickest way to raise your score at this time IMO (In My Oinion).

We just need to see some major changes between now and first of July. Thanks for responding to me you have been so helpful.

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[Anonymous]

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@MarineVietVet wrote:

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@Anonymous wrote:
We pulled our score from here at myfico and only have the transunion and equifax (I think that is the right one). Good. At least you know they are accurate.

When I look at the HELOC on one report it is listed as revolving and the other lists it as category unidentified. So I bet it is calculated in my utilization. We can't pay it off now because we are saving our down payment.

If I GW the two collections and they won't take them off will it bring them back into current and cause our score to drop? Collections are scored from date of assigment not date of last activity so even if they deny the GW's your score won't suffer. And if at first you are denied a GW just leep trying. It's worth a few stamps if you can get these removed. You might do a search here onsite for your particular CA and see how others have approached this and what seems to work and not work.

I was scared to do too much with them because I didn't want them to be listed as current.

If we are only listed as AU on each others capital one accounts will it still work to have one report a small balance and the other report zero? If so which one should we have report the limit on the higher limit or the lower limit. We could also alternate them each month. It doesn't matter which card reports a balance. It's not the amount of total CL that is scored but the percentage of the CL that is used each month. Whatever balance is reported (for most cards) on the monthly statement is the figure used to calculate utilization. Yes you could alternate them if you'd like.

But put every extra dollar you can find to getting those balances down as fast as possible. Lowering your utilization is the quickest way to raise your score at this time IMO (In My Oinion).

We just need to see some major changes between now and first of July. Thanks for responding to me you have been so helpful.

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I have one other quick question on the credit cards.  I only have one in my name with a $500 limit and am listed as an authorized user on my husbands which has a $1250 limit.  Does that change how we manage the balances?  I can have a small balance report on mine and then my husband have a small balance report on his also?

Thanks!