How to increase mortgage score

[DGOATS1]

I have 1 year to get improved
Mortgage scores 647/610/646
Can’t figure why TUis lower. All data same

I have cc charge offs 2800
I have 4 student loans of which I can pay 3 off this year
I will have no cc debt in 4 months

Will paying off the CO and loans help the mortgage score increase?

[Anonymous]

Paying off the loans will not help your mortgage scores at all.

Paying down the loans (but not off) might help one of the three scores but the other two scores will get no help.

Paying off your CC debt is a very good idea.  Once you have done that you can have one card reporting a small balance.

As far as paying off the C/O's, that could be a great idea if you get the holder of the debt to agree to delete the C/O from your report once you do that.  Such an agreement is called a PFD or Pay For Delete.  If you head over to the Rebuilding Forum they can advise you about how to explore that.

[DGOATS1]

C/O is killing the utilization so wouldn’t paying it off increase the score?

[DollyLama]

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@DGOATS1 wrote:
I have 1 year to get improved
Mortgage scores 647/610/646
Can’t figure why TUis lower. All data same

I have cc charge offs 2800
I have 4 student loans of which I can pay 3 off this year
I will have no cc debt in 4 months

Will paying off the CO and loans help the mortgage score increase?

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If you can get a pay for delete on the charge offs, you will get the biggest boost in scoring. Some creditors will work with you and others won't.  Exactly how many cards are charged off? 

Definitely pay off 2 student loans, as for the other two- getting your utilization aggregate and individual. No idea on your balances, but this scenario is best. If you have a small student loan that would be left of the 4 with a balance of less than 8.9% of the original loan amount, keep it open, pay off the 3rd. You don't want to have 3 paid, and 1 left with a high balance to the original balance, as it makes the utilization higher. Example, Student Loan 1 & 2 zero balance, student loan 3 $800/10k, student loan #4- $5400/6k. Best to keep 3 &4 as stated to lower the overall, unless you can pay #4 off completly. 

When you state no cc debt in 4 months, do you mean 4 open accounts with zero balances, are all they all closed? If they are open, always have 1 card with a small balance at statement cut report, and the rest zero balance. Charge a tank of gas, or netflix. Rotate this with the cards. Fico dings scores with zero across the board on credit cards. FICO scores hard on high utilization and no utilization. 

No new credit applications, as it will ding for new hard pull inquiry, will cut down on age of credit. It takes a year for the inquiry alone to become unscoreable. 

[Anonymous]

Some say pay the charge off, some say no. I think it depends on the lender. As far as paying off your student loans, that will have zero effect on your mortgage scores. I paid mine off last year and nothing changed with my mortgage scores as well as the other scores.

[Anonymous]

Sorry for any lack of clarity on my part regarding the CO's. 

There's no doubt that paying off the CO's will help even if you don't get a PFD agreement negotiated.  But as long as you still owe them the money you have far more leverage to get them agree to do a PFD, and getting these CO's deleted completely will help your score a ton.

This is why you need to be cautious about just plunking down money and paying them off without a prior PFD agreement.  If you do that, you will have these COs on your reports for the full 7 years.  The people over at the Rebuilding forum can explain strategies for how to get the creditors to agree to a PFD.  It may take several months of negotiation -- but you have 12+ months to prepare, so there's no reason not to spend the first 7 months working on getting a PFD.

Regarding the loans, you can revisit what I said about them.  Paying off loans will not help your mortgage scores.  Paying down loans (but still keeping them open) might help one of the three scores, but since the lender will be looking at your middle score, the help could have no effect on what that middle score turns out to be.  You should not pay off these loans right now, since that's not an action you can reverse later. 

Your focus now should be paying off all CC debt (except COs -- begin a campaign for a PFD with that).

[SouthJamaica]

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@DGOATS1 wrote:
I have 1 year to get improved
Mortgage scores 647/610/646
Can’t figure why TUis lower. All data same

I have cc charge offs 2800
I have 4 student loans of which I can pay 3 off this year
I will have no cc debt in 4 months

Will paying off the CO and loans help the mortgage score increase?

---

1. Paying off the CO's will certainly help in the long run; it may or may not help by the time of the mortgage application. What I would do is pay them off, and then start sending verification letters to the bureaus, in the hope of one or more of the paid charge off entries being removed from your report sooner than normal.

2. Paying the loans down to much smaller numbers, but not to zero, would probably give some slight boost to one or more of your mortgage scores. But -- and this is a big but -- paying them down to zero WILL help your DTI ratio, which in the world of mortgage lending is probably MORE important than your FICO score.

3.  When you pay off the credit cards, let one of them report a small balance on the statement before you pay it off.

4.   Very important: do not apply for any new credit anywhere else until after you have closed on the mortgage.