Best strategy for buying a house?

[Anonymous]

I will be purchasing a home in 1 year and wanted to know what the best strategy was for keeping my score in the 800's. I currently have a car payment , original loan amount $39,100 remaining balance $31,090.00. I use my American Express card and Visa cards monthly however pay them in full monthly. I have noticed when I pay them off my scores drop to 795 or 800 then back again if I run the balances up? Shoud I keep my Visa at 9% UTI and not pay all of it monthly? Thanks 

Scores now   EQ 819

                      TU 812

                      EX  824

[Anonymous]

I belive for optimal scoring you want two cards reporting a balance of 0 and one card with a balance of less than 9%. I'm not sure how this works with only 2 cards, but perhaps try having one report a balance of 0 and one below 9%?

[Gmood1]

740 or higher gets the best rate. Wasted energy worrying about a few points in the 800 range.

[RobertEG]

If you know the type of loan you will be seeking, then I recommend shopping around with a few different lendors for their advice and rates.

Even with FHA loans, for example, lendors have discretion on qualification criteria.

Do you have any prior delinquencies currently reporting?

[Anonymous]

It looks like you have five open revolving accounts on your personal report....

American Express Platinum Card (25k)

BBT Visa (20k)Wells Fargo Visa (7500)

NC State Employees Visa (3500)

$35,000 Personal Line of credit BB&T

$20,000 line of credit NC State Emp

... and these two business accounts not appearing on your personal report...

American Express Business Gold Card (65K)
Wells Fargo Business Card (15K)

Does that look right?

Of the five accounts that do appear on your personal reports, what are their balances (as they appear on the reports themselves)?  You refer to using your American Express, but it is unclear whether you mean your personal Amex, your business Amex, or both.

You will get no scoring advantage to running up big balances on any card, so certainly do not do that in the belief that it helps your scores.  It is a VERY good thing that you always pay your cards in full -- keep doing that.

As long as you keep your utilization reasonable low (< 29%) there is nothing you need to change as a strategy for preparing for the home purchase, except as follows.

The scores you are referencing are almost certainly FICO 8 scores, which will not be the model that the lenders use.  What you should do during the next 60 days is get exactly one card reporting a small positive balance, could be as little as $20 or it could be $100.  Whatever..  The card should be a true credit card (not either of your Amex charge cards).  All other revolving accounts should be paid to $0.

Then pull your mortgage scores here on myFICO.  It's the mortgage scores that you want to see, not the FICO 8 scores.

You'll do this "all zero except one" dance two more times after that.  Once in the 40 days before you apply for pre-approval.  And again in the 60 days before final underwriting begins.

[Anonymous]

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@RobertEG wrote:

If you know the type of loan you will be seeking, then I recommend shopping around with a few different lendors for their advice and rates.

Even with FHA loans, for example, lendors have discretion on qualification criteria.

Do you have any prior delinquencies currently reporting?

---

Robert my reports are clean and I am a solid 800. 7 cars financed payed in full since 08 , 2 jumbo house loans one in 97 and one in 2002. I am putting 20% down on the loan as well.

[Anonymous]

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@Anonymous wrote:

It looks like you have five open revolving accounts on your personal report....

American Express Platinum Card (25k)

BBT Visa (20k)Wells Fargo Visa (7500)

NC State Employees Visa (3500)

$35,000 Personal Line of credit BB&T

$20,000 line of credit NC State Emp

... and these two business accounts not appearing on your personal report...

American Express Business Gold Card (65K)
Wells Fargo Business Card (15K)

Does that look right?

Of the five accounts that do appear on your personal reports, what are their balances (as they appear on the reports themselves)?  You refer to using your American Express, but it is unclear whether you mean your personal Amex, your business Amex, or both.

You will get no scoring advantage to running up big balances on any card, so certainly do not do that in the belief that it helps your scores.  It is a VERY good thing that you always pay your cards in full -- keep doing that.

As long as you keep your utilization reasonable low (< 29%) there is nothing you need to change as a strategy for preparing for the home purchase, except as follows.

The scores you are referencing are almost certainly FICO 8 scores, which will not be the model that the lenders use.  What you should do during the next 60 days is get exactly one card reporting a small positive balance, could be as little as $20 or it could be $100.  Whatever..  The card should be a true credit card (not either of your Amex charge cards).  All other revolving accounts should be paid to $0.

Then pull your mortgage scores here on myFICO.  It's the mortgage scores that you want to see, not the FICO 8 scores.

You'll do this "all zero except one" dance two more times after that.  Once in the 40 days before you apply for pre-approval.  And again in the 60 days before final underwriting begins.

---

Thank you, I have a personal American Express Platinum card run 2k to 4k per month pay in full every month. My BB$T Visa I run 2k or so and I always pay it in full each month. I just looked at the mortgage scores and they are

EQ 823

TU 812

EX 833

Thank you for your advice.

[medicgrrl]

SECU only reports to EQ so don't let that be the card that reports the balance for optimal scoring.

[Thomas_Thumb]

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@Anonymous wrote:

Thank you, I have a personal American Express Platinum card run 2k to 4k per month pay in full every month. My BB$T Visa I run 2k or so and I always pay it in full each month. I just looked at the mortgage scores and they are

EQ 823

TU 812

EX 833

Thank you for your advice.

---

Clearly you will have no problems with those Fico mortgage scores. The key points to avoiding a significant drop in mortgage scores (particularly EQ) is to not report balances on more than 50% of your cards, maintain aggregate utilization under 9% (I recommend under 6% to be safe) and don't allow any card to report a balance of 29% or higher.

Side note: AMEX NPSL card spending is looked at on your EX Fico 98 mortgage. The factor looked at is balance/(high balance). Make sure B/HB is under 49% to avoid a potential major score drop on your EX Fico 98 mortgage score. When I reported 100% B/HB my EX Fico 98 score dropped 26 points [837 => 811].

The only issue I see is you appear to have listed your EQ and TU scores backwards. A TU 823 is typical as is an EQ 812. Maximum EQ Fico mortgage score is 818, so 823 for EQ is out of range.

[SouthJamaica]

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@Anonymous wrote:

I will be purchasing a home in 1 year and wanted to know what the best strategy was for keeping my score in the 800's. I currently have a car payment , original loan amount $39,100 remaining balance $31,090.00. I use my American Express card and Visa cards monthly however pay them in full monthly. I have noticed when I pay them off my scores drop to 795 or 800 then back again if I run the balances up? Shoud I keep my Visa at 9% UTI and not pay all of it monthly? Thanks 

Scores now   EQ 819

                      TU 812

                      EX  824

---

You will help to optimize your mortgage scores by paying all but one of the cards off before the statement closes. You should definitely continue to pay in full, but you should let only one card report a balance, and keep it small -- like 9% or less. Do not let all cards report at zero as that could cost you a few points temporarily.

Paying the car loan down to $3500 will pick up some points for you in your mortgage scores, but there is disagreement on this forum as to which mortgage scores care about that. My personal theory is that TU FICO 4 would reward you for that, and EX FICO 2 would not.  I have no data on EQ FICO 5.