Help Needed. Closing in 2 Months. Need >740 For Best APR

[Anonymous]

Hello everyone! Me and my wife applied for the mortgage this week and we were prequalified, but could not get the best %. I always had excellent credit, but my wife's history is not as good. The bank pulled her three scores and she averaged just below the magic 740 number (this particular lender uses the average of the three of a borrower with the lowest scores). The lender has a "credit enhancement department", which upon looking at my wife's situation, recommended the following:

"Below is the recommendation to raise your wife’s score.

Co - Borrower - 30 DAYS
Equifax ( 742 )

By adding a new credit card with $300 available credit, adding $10 and letting the card report naturally in 30 days."

Her current situation (as per credit wise report):

• 4 CCs (1 of which is active and is paid in full before reporting, the rest are not being used)
• Student loans in deferment


Credit utilization 1%
Oldest credit line: 6 yrs
Available credit: 13,649
Recent inquiries: 3
New accounts: 4


Do you think it's safe to go with this recommendation and open a new $300 limit card for her? Or is there a safer way to boost the score in just 30 days?

The difference in rate is not going to be dramatic (3.25% vs 3.125%), but with lower PMI it will bring down the monthly payment by at l least by $100.

Thank you all!

[SouthJamaica]

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@Anonymous wrote:
Hello everyone! Me and my wife applied for the mortgage this week and we were prequalified, but could not get the best %. I always had excellent credit, but my wife's history is not as good. The bank pulled her three scores and she averaged just below the magic 740 number (this particular lender uses the average of the three of a borrower with the lowest scores). The lender has a "credit enhancement department", which upon looking at my wife's situation, recommended the following:

"Below is the recommendation to raise your wife’s score.

Co - Borrower - 30 DAYS
Equifax ( 742 )

By adding a new credit card with $300 available credit, adding $10 and letting the card report naturally in 30 days."

Her current situation (as per credit wise report):

• 4 CCs (1 of which is active and is paid in full before reporting, the rest are not being used)
• Student loans in deferment


Credit utilization 1%
Oldest credit line: 6 yrs
Available credit: 13,649
Recent inquiries: 3
New accounts: 4


Do you think it's safe to go with this recommendation and open a new $300 limit card for her? Or is there a safer way to boost the score in just 30 days?

The difference in rate is not going to be dramatic (3.25% vs 3.125%), but with lower PMI it will bring down the monthly payment by at l least by $100.

Thank you all!

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It doesn't make the slightest bit of sense to me. It will lower her score a little, not raise it.

I don't know any short answers to raising one's score in 30 days. The only thing I can say is that she should be sure that 3 of the existing cards report at zero, and the fourth reports at less than 10% of the total limit on the card.

[Anonymous]

That's what the conventional wisdom tells me as well. But maybe they have something "tricky" in mind. I raised my concern with the loan officer, and he reassured me that if I do everything word for word, the score will go up.

[Revelate]

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@Anonymous wrote:
That's what the conventional wisdom tells me as well. But maybe they have something "tricky" in mind. I raised my concern with the loan officer, and he reassured me that if I do everything word for word, the score will go up.

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If I had a dollar for every time a LO said that .

Based on what you posted it's highly suspect information.  You don't want all your cards reporting zero which might to be the case from what you post regarding your wife's file: simply let a balance report on one of them and go on with life, don't open a new account to do that which is utterly unnecessary.

[Anonymous]

Thank you for your help! I just don't understand why would they recommend such an odd thing ($300 limit). Should I let it report a certain percentage, or any will do as long as I pay by the due date?

[Anonymous]

It is generally ill-advised to apply for any credit at all within the few months leading up to a mortgage.  Your wife already has 4 credit cards which is enough to provide her with an optimal score with that amount of revolvers.  As others have stated, have 3 report a $0 balance and the 4th report a single-digit utilization balance to maximize score.

What is her AAoA?  In the unlikely event that it's sitting at X.9 years right now, another cycle passing could bring it up to the next whole number which depending on that number could yield a few more points.  Also inquiries will age another month which could give another point or two.

Do you have any open installment loans?  I'm not sure how quickly the share secure technique yields results and it goes against what I said above of not applying for credit just before going for a mortgage, but those that have used this technique can chime in.  If you already have an open installment loan then forget about it, but if not using this technique could potentially yield you more points when it reports than would be lost from the inquiry/new account.  Of course, if the installment loan doesn't report until after you get the mortgage then it was a complete waste anyway.  If you search a few share secure loan threads I'm sure people that didn't have an installment loan prior could tell you what they gained when adding an installement loan that reported single-digit utilization.

[Thomas_Thumb]

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@Anonymous wrote:
Hello everyone! Me and my wife applied for the mortgage this week and we were prequalified, but could not get the best %. I always had excellent credit, but my wife's history is not as good. The bank pulled her three scores and she averaged just below the magic 740 number (this particular lender uses the average of the three of a borrower with the lowest scores). The lender has a "credit enhancement department", which upon looking at my wife's situation, recommended the following:

"Below is the recommendation to raise your wife’s score.

Co - Borrower - 30 DAYS
Equifax ( 742 )

By adding a new credit card with $300 available credit, adding $10 and letting the card report naturally in 30 days."

Her current situation (as per credit wise report):

• 4 CCs (1 of which is active and is paid in full before reporting, the rest are not being used)
• Student loans in deferment


Credit utilization 1%
Oldest credit line: 6 yrs
Available credit: 13,649
Recent inquiries: 3
New accounts: 4

Do you think it's safe to go with this recommendation and open a new $300 limit card for her? Or is there a safer way to boost the score in just 30 days?

The difference in rate is not going to be dramatic (3.25% vs 3.125%), but with lower PMI it will bring down the monthly payment by at l least by $100.

Thank you all!

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Getting another card may be a bad idea and may lower score. The only reason to consider doing this would be if you are primary on all the above cards listed with her having AU status and she has no cards where she is primary. In that case a new card where she is primary may have value in building her credit.

You have a couple issues above as follows:

1) Cards you want to keep should be used periodically. Otherwise they run the risk of being closed due to inactivity. I also believe that it is possible for cards that are open but been inactive for over 6 months to not be included in aggregate utilization. So inactive cards should be used atleast once every 3 to 6 months. [side note: an inactive card that is "re-activated" has been reported by some posters to cause a temporary score drop.

2) It is very important to allow at least one card to report a positive balance every month. Paying the card in full each month before statement closes may be costing 20 points if utilization reports as zero. Allow some balance to report - at least $5. More if you like but, maintain aggregate utilization below 9% and more preferrably 6%. A 1% utilization has no additional benefit over a Ag UT in the 4% to 6% range.

Given the Fed may raise rates any week now, it may be best to lock in a loan rate sooner rather than later.

[Anonymous]

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t is generally ill-advised to apply for any credit at all within the few months leading up to a mortgage.  Your wife already has 4 credit cards which is enough to provide her with an optimal score with that amount of revolvers.  As others have stated, have 3 report a $0 balance and the 4th report a single-digit utilization balance to maximize score.

What is her AAoA?  In the unlikely event that it's sitting at X.9 years right now, another cycle passing could bring it up to the next whole number which depending on that number could yield a few more points.  Also inquiries will age another month which could give another point or two.

Do you have any open installment loans?  I'm not sure how quickly the share secure technique yields results and it goes against what I said above of not applying for credit just before going for a mortgage, but those that have used this technique can chime in.  If you already have an open installment loan then forget about it, but if not using this technique could potentially yield you more points when it reports than would be lost from the inquiry/new account.  Of course, if the installment loan doesn't report until after you get the mortgage then it was a complete waste anyway.  If you search a few share secure loan threads I'm sure people that didn't have an installment loan prior could tell you what they gained when adding an installement loan that reported single-digit utilization.

________________________________________________________

No idea what the AAoA is to be honest. Will look into the installment loan option, since she does not have one. Thank you!

[Anonymous]

Thomas_Thumb, 

I'm the primary on one of the cards, the other 3 are under her name, and only one of them is being used constantly, the other two have been idle for >6 mos. Still not a good idea to get another one? In regards to the mortgage rates, the LO told me that we could lock the 3.25% today and re-run her score before closing, and if the score goes up they will lower the % by .125. Sounds too good to be true, but I like to trust people

[Thomas_Thumb]

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@Anonymous wrote:

@Thomas_Thumb, 

I'm the primary on one of the cards, the other 3 are under her name, and only one of them is being used constantly, the other two have been idle for >6 mos. Still not a good idea to get another one? In regards to the mortgage rates, the LO told me that we could lock the 3.25% today and re-run her score before closing, and if the score goes up they will lower the % by .125. Sounds too good to be true, but I like to trust people

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The new card won't help score. It's a hard call given the short timeframe. I'd opt for using one of the inactive cards with the largest CLs to "reactivate". Then pay off the charge before statement posts. That should activate the card to ensure its CL counts in aggregate UT while not having it report a balance.

Key point for optimum mortgage scores is "allow one card only to report a non zero statement balance each month". Are you doing this now? It is ok to pre-pay the majority of charges on the card being used constantly - just allow some balance to report and then PIF statement balance before due date. No need to carry a balance month to month. This technique does require making two payments per month - one a few days before statement cuts and another after statement cuts but before due date.