2 point gain in a month -- possible?

[Anonymous]

Hello!

I am trying to get my credit score up by 2 points asap. We are pre-approved for a mortgage. However, if I get my score up by 2 points (from 718 to 720) we can get a better financing package (basically a 95% mtg without PMI, or a better rate on an 80/20 if we go that route). I do *not* want to pay PMI, and I'd rather go with the 95% as the other route would be a stretch to get the 20% down pulled together.

Here's the timing:

Our current house closes 3/31. I will have some equity to pay down as soon as I get that check. (Probably about 5-7K to go to CC debt if we put aside the 5% for the DP)

Proceeds from the sale will also pay off a 4300 balance on a new (small) loan that was opened (ding) in October 2011. (This was for a furnace/AC for this house and is the only inquiry in 2011 or 2012 until our lender pulled our credit on 1/16/12 for this loan (where I had 718).

We have one credit card with a balance -- it is large (as I transfered one other to it some time ago to take advantage of an interest promotion.) In any event: It is 36K bal, 40K limit. My lender thinks that is probably our biggest issue in terms of getting my score up. DH's scores are all near 800 or over. (The other item I have that hurts me is student debt. It is all paid on time and never been late BUT it is over six figures.....we've been in this home for 7  yrs and have paid off two vehicles (no car debt), so really other than my student debt, that one big credit card is our lingering issue....which we are now targeting, but I need to know *how much* I need to lop off of it in order to bump up 2 points....we are not using it (increasing) and making well over the monthly, but I am going to put our (minimal) tax refund on it (probably 1000-1500 in a few weeks) and have toyed with doing something like pulling a large chunk out of my 401K to make a *big* impact quickly...like 5 or 10 or even 15K. (I can borrow at 4.25% interest to myself -- not ideal, but I also don't want to pay 176/mo in PMI for several years either...)

So, I'd appreciate your advice.

I could also use a primer on what the difference is between my FICO score and my EQ/EX/TU scores. I know my lender pulls all three for both DH and I and they use the middle score for each of us, and the lower of those two middle scores is the one they use for the financing level/rate. That score is 718. When I signed up for myFICO tonight, it pulled as 718.....so.......................educate me!

[Anonymous]

See my prior post about needing 2 points for a better interest rate/financing option (718-aiming for 720)

As I was working through my credit report I noted that a 30 day late payfrom 10/2009 was still reporting from a CC company. I had called in 10/09 to resolve it (they agreed), and then when I pulled my report in 2010 it wasn't fixed so I called back and had all the info and they said they'd update it....and I apparently haven't reviewed my credit since then (for shame, I know) -- in any event, I called tonight and they *say* they have fixed it (after having to escalate to a supervisor b/c the first guy said I could write the credit bureaus and dispute...eh, no.

Anyway, do you think this will make *any* difference in my quest for 2 points? I have done the simulator on here and it is one of the three items on my negative column. (Late pay -- it is the only one). The other negatives are balance of CC debt (which I am working on as well). But just curious if anyone has any experience with this sort of issue.

[RobertEG]

It's more than possible, I would opine that it is probable.

Your apparent issue at this point is with your high % util on the revolving CC.  Reduction of revolving % util is the one factor in which you have control, and has no historical memory from month to month.  Your new % util takes the place of your prior util in scoring as soon as it is reported.  Just be aware that the new % uti wont show until the creditor reports.

It is not instantaeous upon payment.  CRA posting usually occurs within a few days after monthly reporting by your creditor.

How much?  I would speculate that a 10% reduction would get you there.  Certainly nothing drastic.

AS for deletion of the reported late, being that minor and that old, I would view it as gravy, and make sure not to rely on it.  It will most likely provide more than two points when deleted, but may put you in another scoring bracket, and thus alter your scoring a bit, so I would concentrate on reducing % util on the CC.

I would not put a lot of $$ into paying down the installment loan.  It is a relatively minor factor in scoring, certainly no where near the impact of your % util of revolving.

Might be nice to keep that for new house expenses.

Best of luck!

[llecs]

Ditto to revolving credit. Look at your lender's report. It'll list next to each score the top items that hurt your score the most. It'll show a FICO reason code followed by a description. If revolving balances or utilization is a factor, then it's a safe bet you'd see increases as balances go down. For best results, pay off the smallest balances first. FICO likes to see $0 balances, just not all $0 balances. These would include CCs, LOCs, and HELOCs. And I also wouldn't worry about loan balances as they play only a tiny role in FICO.

I wouldn't worry about the late. Even if they don't fix it, don't call back. Some creditors will take the step to add a dispute comment to your CR which can hamper your mortgage process. Yet others have been known to delete the tradeline entirely, especially if closed. Definitely not worth the risk for a late that has little or very likely zero impact at this point. Post back if they fix it and your FICO changes. FICO junkies like to know.

As you pointed out, lenders pull all 3 for spouse and self, and will take the lower of the two middle scores as a basis for the rate, PMI, etc. MyFICO offers two FICO scores, one each for TransUnion and Equifax. As of 3 years ago, Experian blocked consumer access to your EX FICO score, though your lender can still pull it.

In comparing the FICO versions from myFICO to your lender's, almost all lenders use the same EQ FICO version used on myFICO.com and is called "Beacon 5.0". TU FICO from myFICO, on the otherhand, is not used by a majority of mortgage lenders.

The version of TU FICO from myFICO is often called "Fair Issac Risk Score, Classic 98" (nicknamed on here TU98). Even though millions of that score were pulled last year, most lenders use a newer version called "Fair Isaac Risk Score, Classic 04" (nicknamed on here TU04). In comparing TU04 to TU98, some have reported that the differences were spot on and others reported it was 30+ off,  in either direction. Something to think about if you happen to pull your TU FICO on here and compare. And who knows, maybe your lender is using this older version.

If it matters any, myFICO used to offer an EX FICO before Experian did what they did. That version, and the version used by a vast majority of lenders is "Fair Isaac Risk Model Version 2 (or v2)".

[Anonymous]

Thank you for the replies....I am going to be cautiously optimistic that I can get this fixed. Now, to ask your help in deciding "how much" to pay down on the revolving debt (within limits --  LOL!)

Here is a cut and paste from the Equifax report I pulled this week:

Revolving

4 $36,213 $13,487 $49,700 73 % $641 1

Interpretation -- we owe $36,213 (all to one card with a limit of 40K)

Total available credit is $49,700 (all other accounts are zero balances)

It says thus that I am at 73% utilization when looking at ALL revolving debt.

Is that the utilization % that matters or is it % of the specific card's limit? (Which I am higher on, obviously)

I *can* pay about 10K -- do you think this will give me the push I need in a month? (This CC reports on the 24th of this month and I will be able to make the payment well before then) Also, do you think a lesser $ would do it? (I'm not sure how much I want to risk that though because this will make about a 150/mo difference in our total mtg pyt (it means the difference between PMI/no PMI basically).

Theoretically, I could have one final shot at it in April if one month doesn't do it, as we close on May 1st and if I wanted to wait and not lock in, we could have the lender re-run credit that last week before we close (although I think she's going to want to do it 2+ weeks prior for final credit approval, so....)

SO, I want to go "All In" in March....thoughts?

Also, I am a little unsure about the different FICO scores/programs used by lenders...when I pulled the score on here it was 718,which is the figure she gave me as our 'problem score' so I assumed it was the same one. Is that a bad assumption? I can get more info from her I am sure.

[Anonymous]

Okay, I'm back -- anyone have any advice on how much to pay down based on the info in my prior post?

Second, my lender is using Equifax/Facta Beacon 5.0: This 718 is my equifax score --

She sent me the credit score disclosure report. Here are the codes/reasons, in order:

00010 Proportion of balances to credit limits is too high on bank revolving or other revolving accounts

00030 Time since most recent account opening is too short

000020 Level of delinquency on accounts

00013 Time since delinquency is too recent or unknown

#1 I understand (set forth above -- I am going to pay down a big chunk but REALLY need some good input on how much it will take)

#2 We opened an installment loan in 10/11, that is it in the last two years (aside from the refi we did in Nov 2010)

#3 I have *one* alleged late pay in 10/09 which they are (allegedly) removing, so this can't be playing a *huge* part

So, I'd really appreciate any advice on how much I should pay down (up to 10K possible, but 5K would be better....but will do what I have to do to avoid PMI!!!!!!)

[Revelate]

I'd second Robert's suggestion, 10% or 5K is probably fine.

What you could (and perhaps should) do is this: pay the 5K, ninja pull your scores to see, and if they're still not where you want, toss more cash at it and ask for a rapid rescore and/or your CC lender to update the balance again.  Think the update costs something like 15 dollars, that's pretty trivial in comparison as a sanity check to leverage as much of a downpayment as possible.

[Anonymous]

"Ninja Pull" my scores -- will the "Score Watch" I signed up for accomplish this? (I have it set to alert me to a change of 2 points up, for example...)

Can you please explain to me *exactly* how I request a rapid rescore? I am *MORE THAN WILLING* to pay the 25/35 whatever cost to get this CC company to update the scores, but so far I haven't gotten any solid info on how exactly I accomplish this. I mentioned it to my mortgage lender and she did not seem to know what I was talking about..... ???

Do I call the credit card lender after the payment posts and ask for them to report to the CRAs (or at least to the one I know is 718)?

Please help! I would *LOVE* to be able to show the bump before March 26th (My statement date on this card) as it would give my mtg lender more peace of mind on the stuff that needs to be done pre-closing. Appraisals are backed up here 3-4 weeks, etc..and she says she can't order it until we finalize the credit/financing.

Sooooooooooooo......give me the idiot proof instruction on how to get a rapid rescore done.

[Anonymous]

I had a similar issue with AMEX where they report on my statement date so my balances always were going against my credit utilization.

Here is what you do:

1) Talk to the credit card company and find out when they report to the bureaus.  You may need to talk to a special department to get the info or make the request in point 2.

2) If their next reporting date isn't in time and you are talking to the right department, explain you are getting a mortgage and need to have them report sooner.  In the case of AMEX, they agreed to do a one time reporting to the bureaus.  Basically I had to wait for the payment to post and then they would report.  It would take 2-3 days for the bureaus to pick it up.  It may be that your reporting day won't require a special request.  But remember I would be safe and give it a week in advance to have bureaus pick it up.

As for credit utilization, definitely dropping below 30% is where you will see a bump.  Dropping it below 10% will get you the biggest bump.  Remember this percentage is of your total available revolving credit and not just that credit card.

[Anonymous]

Paying 5K would get you down to 63%, MIGHT be enough. But you said you'd be pulling these funds from the 401K. So I'd be careful at throwing the full 10K at once.

The full 10K gets you to about 52%.

I'd do this in steps, as mentioned before. You don't want to throw just a whole amount at it and then be out some money and get a larger gain than needed, specially when it's coming from retirement money.