1) Paying off the car loan to zero, if that is your only installment loan, will really hurt your score. Best to leave that one on the payment plan. See the Understanding FICO Scoring forum for common headlines “I paid off my car loan and score dropped 30 / 40 / 50 points !!!”
2) Paying a card down to a lower utilization is always good for your Scott, just be certain at least one revolver reports at least some small balance.
2) Paying a card down to a lower utilization is always good for your Scott, just be certain at least one revolver reports at least some small balance.
*It is highly recommended that one avoid applying for new credit within 6 mos of seeking a mortgage.*
The CITI $500CL probably wasn't enough to put a dent in your util and offset the new account penalty, so yes, you saw the full scoring impact from the drop in your AAoA. When the other two report, the lowered util resulting from those combined CLs may offset the additional drops in AAoA a bit so you may not see as much of a decrease in score.
If your auto loan is your only installment, you don't want to pay it off in full too soon. Lack of an open installment loan will drop your score because it affects your 'credit mix'. Your best bet is to continue paying down your credit cards to improve your scores. Prior to applying for your mortgage, make sure you have only one card reporting a small balance of less than 8.9% of its limit, and all other cards reporting at zero (research AZEO if you are not already familiar) to get the highest possible boost in your mortgage scores.
The CITI $500CL probably wasn't enough to put a dent in your util and offset the new account penalty, so yes, you saw the full scoring impact from the drop in your AAoA. When the other two report, the lowered util resulting from those combined CLs may offset the additional drops in AAoA a bit so you may not see as much of a decrease in score.
If your auto loan is your only installment, you don't want to pay it off in full too soon. Lack of an open installment loan will drop your score because it affects your 'credit mix'. Your best bet is to continue paying down your credit cards to improve your scores. Prior to applying for your mortgage, make sure you have only one card reporting a small balance of less than 8.9% of its limit, and all other cards reporting at zero (research AZEO if you are not already familiar) to get the highest possible boost in your mortgage scores.
@Anonymous wrote:Follow up from something i just read "dont apply for new credit within 6 months of mortgage..."
Do high FICO scores, Zero Baddies, low UTIL, and 1-2 inquiries defy that logic in general? or does the rule of thumb overrule any extenuiating circumstances?
why i ask, i am looking to buy a house next summer as well. i have one recent inquiry, but looking to add a second (CC), only if the impact is minimal.
As i said, no baddies, low to no util, currently one inquiry, scores in sig (mortgage scores: 784/809/811). I have student loans and one auto loan.
Rick
It's certainly a profile-specific thing -- but it's generally the rule of thumb to ensure you are able to obtain the best possible mortgage offer (lowest rates) for your credit profile. Any ding to your scores, even a minor 5 point ding, can take you from the lowest interest rate tier to the second lowest or worse. The mortgage FICO models also weigh 'credit seeking behavior' quite heavily, so the score reduction could be more than expected. Of course, if your scores are already in the 800+ realm, and you have a lengthy AAoA on a clean report, this reduction may not affect your mortgage interest rate offer at all. But - the addition of new accounts will prevent your scores from increasing a bit more (likely due to aging factors) over the next few months prior to your applying for a mortgage. If I were you, I'd err on the side of caution just wait till after the mortgage was secured before adding new credit into the mix because i'd much rather end up with the best possible mortgage offer than a new credit card.