Gardening/Thin File?

[Anonymous]

Hello! In October of 2019, my scores ranged from 530-555. Today,  FICO 8 is 659/676/680. I paid off old collections and now there are 0 on my report. I was successful in getting an erroneous account deleted from all 3 bureaus and all the bad history that went with it.  I'll be down to 2 inquiries in a matter of weeks. I have 1 new secured card, which is my only open revolving line, 1 closed credit card, and 3 installment loans. 

My next step is get to 10-20% utilization. I will soon be able to pay off the closed card, which accounts for all of my 60% utilization. The question is, am I better to get it to 10% or so and keep making small payments for the positive history, or pay in full? If I pay it off  I'll be down to 4 active accounts,  only 1 revolving, and 0% utilization.

I want to be in the market for a house year-end, so I'm afraid to get another card to replace the closed one if I pay it off,  but I'm also concerned about being a thin file.  Perhaps pay it down but not paid off until after I've gotten a mortgage? What happens if I'm at 0% utilization, which I could feasibly do?

Any guidance helps. Just not sure what's the best move.  Thank you!

[AllZero]

Pay In Full, Pay To Zero the closed card. Get it paid and done with.

Since you only have one open card, you can report a small balance on your open card between 1-9% utilization.

You need to pull your EX2, TU4, EQ5, scores to see where you stand.

Free mortgage scores

EX2 + 3 Bureau scores and reports for $1 at Experian or CreditCheckTotal (part of Experian). Cancel in 7 days or less to avoid the reoccurring charge.

TU4 WyHy quarterly score. Not sure on membership requirement. Maybe hard pull TU?

EQ5 Get a savings account with DCU. Soft pull EQ to be a member. Free monthly score.

You can also obtain your 3 bureau mortgage scores at FICO Advanced . Cancel plan after you obtain your scores and reports to avoid re-occurring monthly charge.

[Anonymous]

Thank you! I have the mortgage scores. Still low,  but significantly improved. 634/645/634. I was about 120 points lower 9 months ago. 

I hear that minimums have gone up post- COVID, so I'm trying to get to 700.

[AllZero]

You are welcome. You've made great improvements with a 120 point score increase! Yes, from reading the forums, some lenders require 640 MMS. YEMV Your Experience May Very. Hopefully, you will get more score improvement paying off that closed account. Obviously, the higher your score the better.

[Anonymous]

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@Anonymous wrote:

My next step is get to 10-20% utilization. I will soon be able to pay off the closed card, which accounts for all of my 60% utilization. The question is, am I better to get it to 10% or so and keep making small payments for the positive history, or pay in full?

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Pay it off.  The closed card with a balance is seen as maxed out and is hurting you quite a bit.  Taking that down to $0 and bringing your 60% aggregate utilization down to an ideal place together would be worth strong double-digit points on your Fico scores, which if you're going for a mortgage in the near future is a great thing.

[Anonymous]

@Anonymous Congratulations on your progress!

(Actually @Anonymous , come to find out, a closed account with a balance does NOT count as a maxed card, neither does a charge off, apparently. Studying it.)

Pretty smart question, actually. In your unique situation, you might be best served by keeping a balance on that card, 29% or less individual utilization and aggregate revolving utilization at 9% or less. I am assuming no derogatories on the account?

Do you suffer an all zero penalty when your open card reports a zero balance? Because I’m not 100% certain here, but I think your closed card counts for number of accounts and if you pay it off, then you’re gonna have 100% of cards with a balance instead of 50% causing a score decrease.

So, you probably want to keep a balance on that card albeit small. I do need to know if you get an all zero penalty when your open card reports zero.

TBH, you’re gonna have to pay the closed card down to a small amount and you’re gonna have to pay your open card down to zero. When they both report, you’re gonna have to check your mortgage scores, then you’re going to need to put a small balance on your open card let it report and check your mortgage scores again and see which is higher.

IMO, If you pay that card off you’re going to suffer a penalty for 100% of cards reporting a balance.

If you need to know how to get your mortgage scores, we can direct you on that as well. Mr. Conceirge @AllZero , can you direct the member in how to obtain their mortgage scores without spending a fortune please?

[AllZero]

Pleasure to help. See message 2.

[Anonymous]

@AllZero You can tell I haven’t had much sleep can’t you? LOL! 😉

[AllZero]

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@Anonymous wrote:
@AllZeroYou can tell I haven’t had much sleep can’t you? LOL! 😉

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@Anonymous  You're doing a fine job on aiding members in need.

[Anonymous]

I try, it’s just great that we’ve got wonderful members and we’ve got teamwork at play! Together, we are able to help a lot of people!