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Approved for mortgage, need 12 points to get better rate

cerika
Established Member

Approved for mortgage, need 12 points to get better rate

Need community help please...

 

So I am always somewhat credit challenged, not for late pays but credit card utilization. I am refinancing my mortgage and have been approved for a jumbo of $950K with a middle Fico (on mortgage version) of 688. My Experian is 701 and my Equifax is 687. My Fico 8's are Equifax 722, Transunion 725, and Experian 726. A month ago they were each about 60 points lower bc of CC utilization. I paid off 60K last month before applying.

 

I have a 2.75% first with Chase of $493K and a HELOC interest only with a CU for 6.75% - but it is tied to the LIBOR. New rate is 5.5% fixed overall and I am paying off a personal line of credit for 20K with the refinance. I'm a jumbo loan still in AZ, where I live, so rates are higher (frankly I'm surprised they approved me with less than 700 middle score). I put down more than 40% when I bought the house. Appraisal just came in at 2.2M, so I have plenty of equity and no plans to pull more out.

 

My DTI is very low 14% for new mortgage and 17.5% with all debts after new mortgage - long term W-2 employment.

 

No collections, no liens. I have two 30 day lates from November of 2020 when I moved to AZ from CA, changed bank accounts, and screwed up 2 of my autopayments. One with Wells Fargo for $35.00 that I first disputed, then begged for forgiveness (even went to the CEO, got a call from them, then a letter saying tough beans, no change). The other for a car payment that I went into the branch to change the autopay (only way to do it was by paper and they helped me fill it out). Unfortunately it sent a payment from them to WF, who I bank with, and not the other way around. They also refuse to forgive the late pay so I am stuck with both for another 5+ years. And yes, I do know I should have verified they both went through, so ultimately it is my fault. I've paid off 14 mortgages in the last 7 years (most by selling and a couple from mortgage being sold - never a late payment - ever).

 

I have 45 open credit cards, most with no balance now. I am canceling all of my retail cards as soon as I close and will probably close 2 of my AMEX cards, Hilton (3100 credit line - 0 balance) and Delta Gold (1000 credit line - 0 balance). I am keeping my Delta reserve because of the lounge and baggage benefits and keeping my Amex platinum because of the benefits. I have a Barclay reserve with a 4700 credit limit and 700 owing, that I use for the American Airlines points. I travel weekly for work and it helps maintain status with AA. I have a Citi AA card with a 6500 credit line, 0 balance, and a Citi Simplicity with a 1500 credit line, 0 balance now but showed a $499 balance when it reported in April. I have a Chase Saphire with a 20,100 cl and a 13,000 balance.

 

The WF line of credit is $20K with a 19.5K balance (which is being paid off with refi). I have 2 WF cc that I want to cancel one with a cl of 3100 and the other with 300 cl - no balance on either. I also have 3 auto loans that are about 50% paid off with a total balance of $65,000 (on all 3). I am going to pay off the 2 totaling $46K of that next month when I get a bonus, but don't want to do it now because I want to keep my reserves at more than 12 months until after close.

 

My question is why my mortgage scores are still well below my FICO 8 even though I've never had a late payment on any mortgage. I know the two 30 day lates hurt me. My overall revolving utilization is now 30% (mostly because of the Chase utilization at 65% and WF LOC with 98%), but the rest of my cards are well under 20%. Will paying off the tiny balances at Nordstrom, Discover, Neiman, Barclay, etc. do more than paying the Chase Card down to 20% be better or vice versa? I would have paid  more on Chase originally, but I know from experience that if I paid it off all at once with my scores where they were a month ago, they would have lowered my credit limit to 10K or less. I'm less worried now that my regular scores are back in the 700+ range.

 

Also, am I doing the right thing closing credit cards after I close? How many should I keep - and which ones? Finally, I'm not sure that even if I gain the 12 points I need before close in two weeks on refi that my rate will get better as I'm already conditionally approved (they are just awaiting 30 day payoff quote from Chase - the only remaining condition), but I'd still like them. I want to do better with my credit and not play this game of paying things off when I need a mortgage and get them up again. I have to be less lazy about credit cards and use them less.

 

Looking for advice please. Thank you!

current scores TU 740, Exp 744, Eq 719
Starting scores June 2015 TU 591, Exp 540, Eq 520
Message 1 of 8
7 REPLIES 7
Cowboys4Life
Regular Contributor

Re: Approved for mortgage, need 12 points to get better rate


@cerika wrote:

Need community help please... So I am always somewhat credit challenged, not for late pays but credit card utilization. I am refinancing my mortgage and have been approved for a jumbo of $950K with a middle Fico (on mortgage version) of 688. My Experian is 701 and my Equifax is 687. My Fico 8's are Equifax 722, Transunion 725, and Experian 726. A month ago they were each about 60 points lower bc of CC utilization. I paid off 60K last month before applying. I have a 2.75% first with Chase of $493K and a HELOC interest only with a CU for 6.75% - but it is tied to the LIBOR. New rate is 5.5% fixed overall and I am paying off a personal line of credit for 20K with the refinance. I'm a jumbo loan still in AZ, where I live, so rates are higher (frankly I'm surprised they approved me with less than 700 middle score). I put down more than 40% when I bought the house. Appraisal just came in at 2.2M, so I have plenty of equity and no plans to pull more out. My DTI is very low 14% for new mortgage and 17.5% with all debts after new mortgage - long term W-2 employment. No collections, no liens. I have two 30 day lates from November of 2020 when I moved to AZ from CA, changed bank accounts, and screwed up 2 of my autopayments. One with Wells Fargo for $35.00 that I first disputed, then begged for forgiveness (even went to the CEO, got a call from them, then a letter saying tough beans, no change). The other for a car payment that I went into the branch to change the autopay (only way to do it was by paper and they helped me fill it out). Unfortunately it sent a payment from them to WF, who I bank with, and not the other way around. They also refuse to forgive the late pay so I am stuck with both for another 5+ years. And yes, I do know I should have verified they both went through, so ultimately it is my fault. I've paid off 14 mortgages in the last 7 years (most by selling and a couple from mortgage being sold - never a late payment - ever). I have 45 open credit cards, most with no balance now. I am canceling all of my retail cards as soon as I close and will probably close 2 of my AMEX cards, Hilton (3100 credit line - 0 balance) and Delta Gold (1000 credit line - 0 balance). I am keeping my Delta reserve because of the lounge and baggage benefits and keeping my Amex platinum because of the benefits. I have a Barclay reserve with a 4700 credit limit and 700 owing, that I use for the American Airlines points. I travel weekly for work and it helps maintain status with AA. I have a Citi AA card with a 6500 credit line, 0 balance, and a Citi Simplicity with a 1500 credit line, 0 balance now but showed a $499 balance when it reported in April. I have a Chase Saphire with a 20,100 cl and a 13,000 balance. The WF line of credit is $20K with a 19.5K balance (which is being paid off with refi). I have 2 WF cc that I want to cancel one with a cl of 3100 and the other with 300 cl - no balance on either. I also have 3 auto loans that are about 50% paid off with a total balance of $65,000 (on all 3). I am going to pay off the 2 totaling $46K of that next month when I get a bonus, but don't want to do it now because I want to keep my reserves at more than 12 months until after close. My question is why my mortgage scores are still well below my FICO 8 even though I've never had a late payment on any mortgage. I know the two 30 day lates hurt me. My overall revolving utilization is now 30% (mostly because of the Chase utilization at 65% and WF LOC with 98%), but the rest of my cards are well under 20%. Will paying off the tiny balances at Nordstrom, Discover, Neiman, Barclay, etc. do more than paying the Chase Card down to 20% be better or vice versa? I would have paid  more on Chase originally, but I know from experience that if I paid it off all at once with my scores where they were a month ago, they would have lowered my credit limit to 10K or less. I'm less worried now that my regular scores are back in the 700+ range. Also, am I doing the right thing closing credit cards after I close? How many should I keep - and which ones? Finally, I'm not sure that even if I gain the 12 points I need before close in two weeks on refi that my rate will get better as I'm already conditionally approved (they are just awaiting 30 day payoff quote from Chase - the only remaining condition), but I'd still like them. I want to do better with my credit and not play this game of paying things off when I need a mortgage and get them up again. I have to be less lazy about credit cards and use them less. Looking for advice please. Thank you!


I would love to help you but I am going to be honest.  That large block of text is too difficult to read and break down.  Can you edit the post and put some paragraphs in to break it up so that the relevant parts are easier to go through?

Message 2 of 8
ShanetheMortgageMan
Super Contributor

Re: Approved for mortgage, need 12 points to get better rate

Even though your end goal is to qualify for a lower rate on a mortgage, your question pertains to credit scoring and how to improve your scores, which the Understanding FICO® Scoring section is specifically for - getting support to reach your score goals.  Not saying you won't get help here, but the experts in this sort of stuff frequent that other section much more often.  Hopefully a mod will move it over there for you.

Helping people with mortgages (FHA, VA, USDA, Fannie, Freddie, Non-Prime, Construction, Renovation/Rehab, Commercial) since 2002
Located in Southern California and lending in all 50 states
Message 3 of 8
GatorGuy
Established Contributor

Re: Approved for mortgage, need 12 points to get better rate

Your line of credit counts towards your revolving utilization. Looks just like a maxed out credit card to the algorithm. It is a huge anchor to your score. Followed by your other credit card with a greater than 60% util. The number of credit cards with balances also affects your credit score so getting as many to zero is ideal. For scoring purposes, all credit cards having no balance except for one with a small balance is best.

 

If you paid off your Chase credit card, they will report your zero balance immediately so you would get an immediate score boost. The others would depend on your reporting dates on when they would show.

Message 4 of 8
SouthJamaica
Mega Contributor

Re: Approved for mortgage, need 12 points to get better rate


@cerika wrote:

Need community help please...

 

So I am always somewhat credit challenged, not for late pays but credit card utilization. I am refinancing my mortgage and have been approved for a jumbo of $950K with a middle Fico (on mortgage version) of 688. My Experian is 701 and my Equifax is 687. My Fico 8's are Equifax 722, Transunion 725, and Experian 726. A month ago they were each about 60 points lower bc of CC utilization. I paid off 60K last month before applying.

 

I have a 2.75% first with Chase of $493K and a HELOC interest only with a CU for 6.75% - but it is tied to the LIBOR. New rate is 5.5% fixed overall and I am paying off a personal line of credit for 20K with the refinance. I'm a jumbo loan still in AZ, where I live, so rates are higher (frankly I'm surprised they approved me with less than 700 middle score). I put down more than 40% when I bought the house. Appraisal just came in at 2.2M, so I have plenty of equity and no plans to pull more out.

 

My DTI is very low 14% for new mortgage and 17.5% with all debts after new mortgage - long term W-2 employment.

 

No collections, no liens. I have two 30 day lates from November of 2020 when I moved to AZ from CA, changed bank accounts, and screwed up 2 of my autopayments. One with Wells Fargo for $35.00 that I first disputed, then begged for forgiveness (even went to the CEO, got a call from them, then a letter saying tough beans, no change). The other for a car payment that I went into the branch to change the autopay (only way to do it was by paper and they helped me fill it out). Unfortunately it sent a payment from them to WF, who I bank with, and not the other way around. They also refuse to forgive the late pay so I am stuck with both for another 5+ years. And yes, I do know I should have verified they both went through, so ultimately it is my fault. I've paid off 14 mortgages in the last 7 years (most by selling and a couple from mortgage being sold - never a late payment - ever).

 

I have 45 open credit cards, most with no balance now. I am canceling all of my retail cards as soon as I close and will probably close 2 of my AMEX cards, Hilton (3100 credit line - 0 balance) and Delta Gold (1000 credit line - 0 balance). I am keeping my Delta reserve because of the lounge and baggage benefits and keeping my Amex platinum because of the benefits. I have a Barclay reserve with a 4700 credit limit and 700 owing, that I use for the American Airlines points. I travel weekly for work and it helps maintain status with AA. I have a Citi AA card with a 6500 credit line, 0 balance, and a Citi Simplicity with a 1500 credit line, 0 balance now but showed a $499 balance when it reported in April. I have a Chase Saphire with a 20,100 cl and a 13,000 balance.

 

The WF line of credit is $20K with a 19.5K balance (which is being paid off with refi). I have 2 WF cc that I want to cancel one with a cl of 3100 and the other with 300 cl - no balance on either. I also have 3 auto loans that are about 50% paid off with a total balance of $65,000 (on all 3). I am going to pay off the 2 totaling $46K of that next month when I get a bonus, but don't want to do it now because I want to keep my reserves at more than 12 months until after close.

 

My question is why my mortgage scores are still well below my FICO 8 even though I've never had a late payment on any mortgage. I know the two 30 day lates hurt me. My overall revolving utilization is now 30% (mostly because of the Chase utilization at 65% and WF LOC with 98%), but the rest of my cards are well under 20%. Will paying off the tiny balances at Nordstrom, Discover, Neiman, Barclay, etc. do more than paying the Chase Card down to 20% be better or vice versa? I would have paid  more on Chase originally, but I know from experience that if I paid it off all at once with my scores where they were a month ago, they would have lowered my credit limit to 10K or less. I'm less worried now that my regular scores are back in the 700+ range.

 

Also, am I doing the right thing closing credit cards after I close? How many should I keep - and which ones? Finally, I'm not sure that even if I gain the 12 points I need before close in two weeks on refi that my rate will get better as I'm already conditionally approved (they are just awaiting 30 day payoff quote from Chase - the only remaining condition), but I'd still like them. I want to do better with my credit and not play this game of paying things off when I need a mortgage and get them up again. I have to be less lazy about credit cards and use them less.

 

Looking for advice please. Thank you!


1.  You have a virtually maxed out PLOC and a heavily utilized credit card.  If you want to bring up your mortgage scores you need to get those down 48% or less.

 

2.  There's no reason to close your zero balance cards.  They're not hurting you.  They help you.

 

3.  Paying off small balances and getting them down to zero balance can help get you a couple of points as well.

 

4. Reducing your maxed out revolving accounts is the most important thing you can do. Even if you can't get them down to 48% it may help anyway to get them down from where they are.

 

5.  Your time frame may be too short, but I guess you've got to do what you can.


Total revolving limits 689000 (587000 reporting) FICO 8: EQ 715 TU 712 EX 695

Message 5 of 8
cerika
Established Member

Re: Approved for mortgage, need 12 points to get better rate

Thank you - I posted there after reading this!

current scores TU 740, Exp 744, Eq 719
Starting scores June 2015 TU 591, Exp 540, Eq 520
Message 6 of 8
cerika
Established Member

Re: Approved for mortgage, need 12 points to get better rate

I didn't know that if I paid off Chase they would immediately report. Thank you!

current scores TU 740, Exp 744, Eq 719
Starting scores June 2015 TU 591, Exp 540, Eq 520
Message 7 of 8
Mdowning30
Regular Contributor

Re: Approved for mortgage, need 12 points to get better rate

Pay down the balances down to >9%

Capital One Platinum Secured (5/2021): $300 | Chase Freedom Unlimited (1/2022): $500 Discover It Chrome (5/2022): $2000 | Charles Schwab Investor Card AmEx (5/2022): $6000
Total Credit Limit : $8800
As of 4/2022: Experian FICO 8 : 657 | Experian Vantage : 681 | Equifax FICO 8 : 622 | MyEquifax : 630 | TransUnion FICO 8 : 660 | TransUnion Vantage : 658
Starting Score: 512
Current Score: 657
Goal Score: 670+

Take the myFICO Fitness Challenge
Message 8 of 8
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