Need a boost of only 20 points

[Anonymous]

We are in the process of getting a USDA  home loan. My husband's middle score is 620 and he needs to boost that score quickly by 20 points. He has a $6,000 CC which is maxed out. A closed CC which is still with original creditor, but has a balance left of $600. A car loan with a balance of $2000. And a few student loans. All are in good standing. We have $1000 to put towards these debts. What would make the most positive impact on his credit score? 

[Anonymous]

Any CC posting a balance over 89% is considered maxed out and can CRUSH your FICO score.

That closed CC is also reporting maxed balance since the available CL is $0.

Pay the $600 off completely.

Pay the maxed out card down as far as you can go -- 89% or less for sure (remember interest will report and raise balance on statement cut).  Paying to less than 39% utilization is even better.

$1000 to pay off the $600 and $400 on the $6000 card may help but depends what the balance is on the $6000 card.  You need the statement to post with less than $5300 including any new interest.  $1000 may not make it.

[SouthJamaica]

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@Anonymous wrote:

We are in the process of getting a USDA  home loan. My husband's middle score is 620 and he needs to boost that score quickly by 20 points. He has a $6,000 CC which is maxed out. A closed CC which is still with original creditor, but has a balance left of $600. A car loan with a balance of $2000. And a few student loans. All are in good standing. We have $1000 to put towards these debts. What would make the most positive impact on his credit score? 

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Nothing that will get him 20 points, but applying it to the maxed out card is probably the best bet for picking up some points.

[Anonymous]

The best boost that might get 20 points is for him to have three open CCs.  I know a few CCs will report quickly to the CRAs but underwriters will probably be spooked by new accounts.  Getting a minimum of 3 open credit cards on your CRAs before shopping for a mortgage can boost your scores 20-40 points depending on where you're at.

[SouthJamaica]

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@Anonymous wrote:

The best boost that might get 20 points is for him to have three open CCs.  I know a few CCs will report quickly to the CRAs but underwriters will probably be spooked by new accounts.  Getting a minimum of 3 open credit cards on your CRAs before shopping for a mortgage can boost your scores 20-40 points depending on where you're at.

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That would not be a good idea at this stage. If she were applying a year from now maybe, but definitely not now.

[Anonymous]

Yep I would absolutely NOT do that right now.  But for others thinking of getting a mortgage, it's a massively important step early on.

For 20 points, the only answer is paying down utilization, but $1000 is going to be too close for comfort.  That closed account is going to report "maxed out" even if it has only a $1 balance.

The $6000 account may need as much as $660 to pay down to 89% plus it might accrue $120 or more in interest, so that could be close to $800 there.  $1400 might do it, $1000 probably won't be enough.

[Anonymous]

SouthJamaica you beat me to it. With a maxed out card and a closed card reporting a bal. I think any underwriter would be very concerned with any new account at this point.

[medicgrrl]

Is the closed account showing a credit limit? If it's just closed then it may still show the CL. Which account is showing a higher utilization?

[Anonymous]

My report says the credit limit or original amount is $1080. The account was closed in Feb.