@jg1983 wrote:
I am trying to get my credit score high enough and debt to income ratio low enough to qualify for a mortgage. I am very close to qualifying for a FHA loan (credit score is high enough, debt ratio is a few percentage points too high). I would prefer a conventional mortgage which my credit union told me they would approve me for if my middle score reaches 620. But we are willing to take a FHA loan (and later refinance) if we have to. I applied with my credit union then with Carrington Mortgage. The interesting thing is they both gave me a totally different set of scores and my FICO 8 scores are different from those two sets of scores. It's like trying to hit a moving target or something. Anyways Carrington Mortgage went over some possible ways I can get my debt ratio down and establish a credit score for my wife so we can add her income. I wanted to see if I can get some tips from you guys. Here is my credit information and my wife's:
credit scores from Carrington:
Experian/FICO: 618
TU/Empirica: 592
EQ/BEACON: 609
my credit union (when I asked what type of scores they were they just said FICO):
Ex: 615
Eq: 582
TU: 592
FICO 8 scores (via creditchecktotal.com):
Ex: 631
Eq: 606
TU: 623
Debts:
Credit card balances (CCT shows 70% utilization. I don't have my credit limits off hand but can get them if needed. The balance is approximate.):
DCU: $1000 Opened over 2 years $25/month
Navy Federal: $1600 Opened over 2 years $31/month
Chase: $500 Opened over 2 years $30/month
Mattress Firm: $300 Opened over 2 years $50/month
Amazon Store card: $800 Opened over 2 years $35/month
Capital One: $400 Opened over 2 years $25/month
CO platinum: $0 Opened about 1 year
Walmart: $0 Opened over 2 years
Personal loans:
Navy Federal: $5000 loan about $3000 balance Opened over 2 years $125/month
NF CLOC: $4000 balance $5000 limit Opened over 2 years $100/month
local credit union: $5000 loan opened 3 months ago with wife as co signer. $180/month
$15k car loan $10k remaining opened for over 3 years.
$8k back federal income taxes on payment plan $150 a month (not on credit but relevant for mortgage application)
No collections. One late payment on the car loan almost 3 years ago. No other negatives whatsoever. $41k income last year.
wife's credit:
No credit score. No negatives. Personal loan that we opened together reporting for 3 months. No other accounts. $24k income last year.
Now that I provided that information here is what we have to work with. We have $3100 saved up to go to the Philippines later this year to visit my wife's family. My wife has decided getting a house is a higher priority to her so that money is now available to pay down our debt (in addition to another $500 we have). We are hoping to use this money to improve my credit scores and debt ratio as much as possible. We would also like to generate a credit score for my wife so we can use her income towards the loan application. First of all what is the best way to use this money to most effectively increase my credit scores? Secondly what is the best way to create a credit score for my wife? Should I add her to some or all of my credit cards and if so which ones? It will take us a few months to save a down payment so we do have a little time for any changes to affect our credit scores. What is the best strategy here?
You haven't provided enough information for exact instructions but you should follow these general rules to get your mortgage scores up:
1. No applications for new credit.
2. Get as many revolvers as possible to report zero balances.
3. Get your overall utilization way down.
4. Try to get to overall utilization of 8.9% or less, and individual revolving account utilization at 28% or less.
5. You could add your wife as an authorized user to one of the cards, ideally an old card with low or no balance.
You should seriously reconsider jumping into buying a home at this time; it's a huge financial commitment and burden. Just because someone will give you a mortgage doesn't mean you can actually afford the home.
@jg1983 wrote:
Thanks for the advice. What I am looking for here specifically is what is the best way to apply the $3600 I have to my credit cards to best optimize my credit score.
How can we possibly answer that without knowing what your credit limits are?
Do I pay as many as I can down to zero balance until I'm out of money?
I can't answer that without knowing what your limits are.
Do I pay an equal amount on each one?
No, that would be meaningless.
Or some other way? As far as my wife goes should I only add her to one credit card? Which card(s) do I add her to?
I already answered that: "5. You could add your wife as an authorized user to one of the cards, ideally an old card with low or no balance."
As far as jumping into a house goes that is sound advice. However my wife and I after careful consideration of all the variables have decided for various reasons we would like to purchase a home or be in the process of finding a home within the next 4-6 months. We are looking to be in the $60k to $70k with $100k being the absolute max. Where we live real estate is inexpensive and we can get a decent 3 bedroom house in the $60k to $70k range. We ran the numbers and even at $100k the mortgage payment is lower than our current rent. We are sick of throwing away money on rent when we could be putting it towards a house instead. We are currently in a month to month lease. My wife wants to move. That would mean signing a year lease and waiting at least that long to buy a house. My wife is willing to stick it out where we live now if we are working towards a goal. If we get a large chunk of the credit cards paid down and lower our monthly rent/mortgage payment we will actually be in a better financial position than we are now then we can throw more at the remaining debt (and never go into debt like that again). I should add we can both increase our income substantially by working overtime. The only problem is finding a babysitter but we may have a solution to that now.
@jg1983 wrote:
credit scores from Carrington:
Experian/FICO: 618
TU/Empirica: 592
EQ/BEACON: 609
my credit union (when I asked what type of scores they were they just said FICO):
Ex: 615
Eq: 582
TU: 592
FICO 8 scores (via creditchecktotal.com):
Ex: 631
Eq: 606
TU: 623
If you get subscribe to the 3B report from MyFico, they will give you a full suite of scores and some will probably match what you are getting from the lenders. It's $29 per mo, just cancel before 30 days if you don't want to pay more than that. I got a total of 28 scores between the 3 CBs, here is a partial example of what you'll get:
@jg1983 wrote:
These balances are a close approximation.
Pay amounts in red
DCU: $1000/$1000 550
Navy Federal: $1500/$1600 750
Chase: $500/$500 360
Mattress Firm: $300/$2500 300 if this is a revolving account; if it's an installment account then just pay monthly and apply the 300 to DCU
Amazon Store card: $800/$800 450
Capital One: $400/$500 300
CO platinum: $0/$300
Walmart: $0/$300
