@Anonymous wrote:I think I have the score I need for a mortgage I will be applying for in the next 3-4 months after playing this rediculous credit score game (I was a pay it all off every month guy before learning the "rules"). I think I could squeeze out a few more points by opening up 1 more credit card and 1 gas card. However, I'm worried about doing this so close to date I will apply for the mortgage. Is there a general rule on a "dead period" (no inquires, no new accounts) before applying for a mortgage?
Unless you're a thin file one shouldn't open new accounts generally in the run up to a mortgage app. If you're less than 3 cards *maybe* get a third but that depends on other factors like how long your other cards have been open for. Generally better to round out a file after mortgage instead of before when we're talking short time horizons as long as you're meeting the minimum tradelines from an underwriting perspective.
Also gas card? Color me skeptical, some folks have pontificated that regarding Auto Insurance scores but that's a terrible score to attempt to optimize for; fact is I have one retail card (Walmart) and I have the "consumer finance account" ding on some of my scores... which is saying something as my reports aren't pretty: a gas card is at best the equivalent of that.
@Anonymous wrote:Revelate, I have a question about your post. We talked with our credit union about a mortgage. He suggested that due to my thin file, I get at least one (but suggested 2) more major card - not store cards. I only have a cap 1 but store cards are VS and OS. The AAoA when I add these cards will kill me. Why would they suggest this when it will create a score drop? I did get a total rewards visa pop up last night and took it. NFCU approved my DH's membership and that will be my 3rd card. I will garden for quite a while because I don't need any other cards. I don't "need" the extra they are suggesting but if it helps my portfolio, I will do it.
How long does it take for scores to bounce back from a hit like that? I have one old closed account that is 10 yrs old. The others are since November.
Loan agents / officers unfortunately aren't that much more versed about the inner workings of the FICO algorithm than the average consumer in many cases. The exception to that are the ones who read information here or a few other places online which serve a similar purpose. I'd recommend that everyone (including me, and I've been on here a while) double-check anything a LO tells you to do which is going to hit your credit report... a mortgage is too important to do something on one person's non-vetted opinion.
National bank cards > store cards: I don't think anyone would argue that but we're talking points in the margin if at all... fact is a revolving tradeline is a revolving tradeline when it comes to the bulk of the score calculation, and payment history doesn't care what the line is, a late is a late is a late.
The old standard used to be 4 tradelines for mortgage qualification as I understand it, I've seen over on the mortgage forum that seems to be more like 3 now but may depend on individual lender too.
Scores are somewhat fungible in the mortgage world as we're talking clearing a hurdle and higher is better... the problem you're likely going to have is your tradelines aren't seasoned. There are a couple mortgage bankers that frequent this forum and they've all suggested that if your tradelines are less than a year old they may have to resort to non-traditional tradelines like rent / utility payments. It gets awkward.
Do you know what your AAOA is now? With the old account you're likely in the 3 year range? Another couple of accounts would knock that down some, but the one you probably don't want to fall short of is the 2 year boundary as anything <2 years = 1 year as far as AAOA goes.
The other major question is how far out is your mortgage application?
You'll usually see people suggest here that six months or so should be score neutral, but that doesn't track for people with files like yours necessarily with one old account and new ones being serious changes in AAOA... for me if I pick up a new card I lose 2 months AAOA (yawn), for you, it's measured in years currently. As I understand it you have 3 open now, and 1 closed tradeline? That should be sufficient in terms of file thickness, if you had to add another tradeline I'd do a baby secured installment loan instead of a credit card personally, might as well pick up some additional points in the margin on mix of credit if you have to add one and especially if there's no use for another card.