@Anonymous wrote:I was wondering if one of this forums experts could offer any insight on how much of a score inscrease I would see on the mortgage models, by paying down a credit card, the simulators don't seem to capture it. 5 points? 10? 20?
I currently have 1 card with a $1422 balance, giving me a card utilization of 48% and a total utilization of 19%.
I have a FICO 8 of 705 middle score, but my mortgage scores have a 673 middle score.
I am trying to get the best rate on a mortgage within 2 months. Other than missed payments around 4 years ago, my loan officer advised me that the only thing I can do other than continued timely payments to move my score is pay down the CC, and pay down installment loans (my student loan balance is higher than initial balance due to defererring for a while before starting payments).
Paying down the installment loans rarely has much impact in the mortgage scores.
Paying down a credit card to 28% utilization would help your FICO 8's and might help your mortgage scores.
Paying the credit card down to reporting at 0% is even more likely to help your mortgage scores, since the mortgage scores like to see more zero balances among your revolvers.
@Anonymous wrote:Thanks for the response!! So paying the credit card to having 0% would help the mortgage scores more than leaving $5-10 on it?
With my mortgage scores in the mid 670s, I was told by my lender I am close to the next "range" of scores. So I think even a 10 point or so boost would make a difference.
Yes, assuming that there will be at least one other card reporting some kind of small balance.
If you only have the one card, then you might be better off with a small balance rather than no balance... but here I am only speculating, since I have no experience with only one account, and few people on this forum do have that kind of experience.
I'm currently working on the same thing, trying to raise my mortgage scores.
I would not pay the card to zero or you may lose points due to the all zero penalty.
Based on the 48 percent card utilization and 19 percent overall, you must of other cards or a card with zero balances that makes up your total credit limit. If you have at least three cards and pay one down to maybe $10 balance you possibly gain points on your mortgage scores. Not sure how many points. It could vary depending on other factors on your profile. You may gain 10 or more points.
You may also gain some based on lower utilization
Other factors to consider would be any recent inquiries or new accounts. Mortgage scores are more sensitive to new accounts or inquiries. On one of the 3 reports other posts on this forum has stated that an inquiry can still affect your score up to 17 months instead of 12
I think with reducing your utilization and acieving AZEO with a small balance on one card you should see a decent sized gain in the next couple of months.
@Anonymous wrote:No I currently have 5 cards, zero balance on 4 of them, one with a $1422 balance.
OK so let one card report a small balance before you pay it off, while the others report zero. Then you are optimized.
Make sure that the one card you're relying on to report the small balance is a bank card, not a store card, and not a credit union card. If it's a Chase card, then make sure not to pay it down to zero at any point during the cycle.