Can't understand why no increase

[Anonymous]

Has anyone seen their mortgage scores hit a brick wall while trying to prepare for mortgage?  I can't get my scores to come up at all and have paid off 6 cards and dropped the remaining 5 cards by almost $10K!  Middle score maintains at 654.   Utilization of the 5 cards with balances is at 28.7% but bringing the 0% balance cards drops the overall utilization to 9.6%.  

I have two new vehicles and those utilization's comparing balance vs. high credit are pretty high but are those working against me in the utilization category?  I thought that was only revolving debt?

Still have the stupid paid medical collection showing on all three CR's and working with Syndicated (Central Finance Control) is a nightmare.  Can this single medical cost me 100 points and not let the mortgage score rise???  Also have an AMEX card with a balance.  Does carrying a balance for AMEX hurt FICO's?

Any knowledge and help on this would be greatly appreciated!!

[Anonymous]

It's all about utilization here, number of cards with balances and of course that one major baddie.

If that's the only negative item on your credit report, it's costing you anywhere from 60-100 points give or take.  Getting it removed would be the single most impactful thing you could do to improve your report/scores.

Utilization is next.  If you're currently in the 20's percentage wise on aggregate utilization, you want to get that down below 9%.  Doing so will score you a good amount of points, probably 20-40.

Last, number of cards with balances.  The mortgage models are much more sensitive to this.  Ideally you only want 1 card to have a reported balance, with all others reporting $0.  Doing that when you have a bunch of cards with balances right now will probably help you another 15-30 points on the mortgage models, where on a model like FICO 08 it may only help 5-10 points. 

So, as you can see, from my estimations above if you were to deal with those 3 issues, you'd stand to gain something in the range of 95-170 points (probably about in the middle).  If you have any other questions definitely fire away.

[Anonymous]

Thanks for the input.  

2 questions on this.  Aggregate utilization is calcualted with all open cards with balance against limits?   If this is true, then would a single card with a higher balance give better scores than multiple cards with low balances?  I know the small boost will occur when aggregate % falls below 9 but I am looking for the most boost in the mortgage scores and it sounds like they run so differently than the others.  

I am caught in the loop of having cash on hand (9-12 month reserves) vs. paying off the cards (~7k would clear all but one).  I have ~50K for down payment on 480K home and assume the credit score being higher is the smarter financial move.  

My FICO 9's are 759, 752, 732.  These don't take into account the medical correct?  That supports your estimation of ~93 points due to the collection.  Just don't know if I can get it deleted.  I paid an organization $900 to have it deleted and they failed.  It is so unfair to have a medical that you had no control of to hurt this much.  

[Thomas_Thumb]

---

@Anonymous wrote:

Thanks for the input.  

2 questions on this.  Aggregate utilization is calcualted with all open cards with balance against limits?   If this is true, then would a single card with a higher balance give better scores than multiple cards with low balances?  I know the small boost will occur when aggregate % falls below 9 but I am looking for the most boost in the mortgage scores and it sounds like they run so differently than the others.  

I am caught in the loop of having cash on hand (9-12 month reserves) vs. paying off the cards (~7k would clear all but one).  I have ~50K for down payment on 480K home and assume the credit score being higher is the smarter financial move.  

My FICO 9's are 759, 752, 732.  These don't take into account the medical correct?  That supports your estimation of ~93 points due to the collection.  Just don't know if I can get it deleted.  I paid an organization $900 to have it deleted and they failed.  It is so unfair to have a medical that you had no control of to hurt this much.  

---

1) You will get a major boost by dropping aggregate UT to below 9% (get below 8% to add some safety margin). This is particularly true for mortgage scores where you should pick-up 15 to 20 points.

2) EQ Fico mortgage penalizes score substantially for an excess # of cards reporting a balance. Get # reporting down to 3 cards.

3) If you need to transfer debt to reduce # cards reporting, keep utilization on all cards that do report balances to under 49% and more preferrably to under 29%.

The above may add up to 40 points on EQ Fico 04 (mortgage Fico) and 20 to 30 points on TU Fico 04 (mortgage Fico) & EX Fico 98 (mortgage Fico). If you have an AMEX charge card reporting a balance, get it below 49% of the listed high balance to avoid dropping your EX Fico 98 score.

Again, get # cards reporting balances down to max of 3 total - all at under 29%. I'd advise against transferring all debt to one card if that results in the card's UT going above 49%.  As I recall, you have 10 cards - if so, 3 reporting balances should boost score noticeably compared to 5 reporting. I'd suggest 2 reporting at under 29% each if you have the funds.

The collection, depending on age, probably drops your score 50 to 75 points compared to not having the collection. Other factors probably make up the remainder.

[Anonymous]

It sounds like you have plenty of cash to pay off all cards and not affect your separate fund for down payment.

So I think it would be simpler just to pay all cards to $0 and then continue to use one for small purchases. 

You'll have swiftly addressed the problem of total utilization, individual (per-card) utilization, and number of cards reporting a positive balance. 

One card with a positive balance is a safer choice than three, especially if you have open loans (i.e. other open accounts with a positive balance).  I received a reason statement from the mortgage models saying that my score was being penalized for having too many accounts showing a balance, and I had only 2 out of 12 cards showing a balance.  My guess was that was because I had two open loans.

Your CC balances is something under your control, whereas getting the collection removed will require a compliant creditor.  So focus on both, but extract every available point from the CCs.

[Anonymous]

Thanks for the advice guys!  Will get a plan together to pay off several of these cards.