Personal Finance and Mortgage Score

[MarcPA]

So here is my situation my FICO 9s are good over 770 but my mortgage FICO mid score is 735. I think the lenders are using FICO 5. Anyways I have a loan with Prosper and Lending Club I can pay off as they are showing as Consumer Finance Accounts and a reason for a lower score. Should I pay then off. They have 3000 each left on them or will that hurt my mix of accounts.

I have 8 ccs with close to 0 utlizations and a total credit limit of 60k across all of them. Except one which is 14000 of 15000 this was a balance transfer card with 0 APR.

My student loan which will be paid off in 10 months and no derogs or baddies. Aaoa is 6 years.

Should I pay off my personal loans or bring down the balance on the CC to bring my score up.

My DTI is good so I'm not worried about that for my mortgage just want to get the best rates and one lender told me above 740 he can do a little better.

[Anonymous]

Without a doubt you should pay down your CC.

If you would like to buy a home very soon, then you don't have the luxury of experimenting gradually in your paydown.  In that event I would make sure you pay all cards to zero except the one card with the big balance -- and with that card pay it down to under 48.9% of its credit limit. 

If those paydowns/payoffs also take you to under 28.9% total utilization (all credit limits combined) then you will certainly get the extra points you want.

What is your total utilization now?

[MarcPA]

Appreciate the quick reply

23 percent it's so strange to me how this system works I paid off the entire balance on my discover as an example and got a credit limit increase from them from 4400 to 6000 and I get an alert my score dropped two points.

Most of cards are reporting either no balance or 1-2% with exception of the balance transfer card. I pay then several times throughout the month. I'll get that under 50% see what happens.

Just wanted to see what would be better for my score to pay the 2 personal loans or bring my total util to under 15 percent.

[MarcPA]

Total utilization is at 23% all but the balance transfer card either report 0 percent or no more than 2%

Appreciate the help

[SouthJamaica]

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@MarcPA wrote:
So here is my situation my FICO 9s are good over 770 but my mortgage FICO mid score is 735. I think the lenders are using FICO 5. Anyways I have a loan with Prosper and Lending Club I can pay off as they are showing as Consumer Finance Accounts and a reason for a lower score. Should I pay then off. They have 3000 each left on them or will that hurt my mix of accounts.

I have 8 ccs with close to 0 utlizations and a total credit limit of 60k across all of them. Except one which is 14000 of 15000 this was a balance transfer card with 0 APR.

My student loan which will be paid off in 10 months and no derogs or baddies. Aaoa is 6 years.

Should I pay off my personal loans or bring down the balance on the CC to bring my score up.

My DTI is good so I'm not worried about that for my mortgage just want to get the best rates and one lender told me above 740 he can do a little better.

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If you are serious about doing the mortgage application soon, you have 2 categories to concern yourself about, (a) mortgage FICO scores and (b) other, non-scoring, factors.

Scoring

1. You should pay the credit card with balance down to $1300. Have the others report zero.

2.  You should leave the student loan alone, just keep doing what you're doing there.

3.  From a scoring perspective you might pick up a little improvement on your mortgage scores by making sure that the total of your installment loan balances is less than 9% of the total of the original limits. If that's already the case you don't need to do anything from a scoring perspective. You won't pick up any points by paying off the CFA's, they're already factored into credit mix and your report will be stuck with them whether they're closed or not. But if you're not down to 9% you might pick up a few points on one or more mortgage scores by partially paying down the CFA's to get down to 9% aggregate.

Non-scoring

4.  I know you say you're good in the DTI department, but if you want to improve it, each loan you pay off helps you improve it further.

[Revelate]

Actually anything over 9% aggregate, and individual utilization appears to be profile dependent given how many different datapoints we have.

If you want a better answer, post every single revolving tradeline with current balance / credit limit, including one's that are zeroed out.  Also how much cash you have to throw at the revolving debt.  Basically 1 revolver (specifically national bankcard with a CL under 20k call it) with some minimal balance and every other revolver $0 is optimal, but if you're sitting at 14/15k you're losing points just on that tradeline alone TBH.

Ignore the installment debt, only affects 1 of 3 mortage scores anyway, revolving utilization is where it's at for quick score bumps and 23% isn't optimal.

ETA: this is an example of how a maxxed out revolver can affect EX FICO 2 which is part of the mortgage trifecta:

https://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Experian-HELOC-high-utilization-gt-0/m-p...

[Anonymous]

The breakpoints for total utilization are as follows:

88.9%,  68.9%,  48.9%,  28.9%,  8.9%

Between those breakpoints you get no benefit for lowering your total utilization -- only for crossing one of the breakpoints.

But total utilization is not the only scoring factor related to CC balances.  There are two more factors:

(1) Individual Utilization (which consider's a card's balance compared to it own individual credit limit)

(2) Number of accounts reporting a positive balance

You are experiencing a severe penalty for having a CC maxxed out.  That will go down for each of the breakpoints you cross above.  (Except for 8.99% -- it's not clear to the scoring experts here that there is any significant benefit to Individual U for lowering a card much below 28%.)

There is also a scoring penalty for having multiple accounts with a positive balance (#2 above).  Since it sounds like it would would be very easy for you to pay all cards to zero except the one card with the big balance, you should do that.

[MarcPA]

All right here goes
Chase 100 of 15k
Amazon Prime Card 25 of 6.8k
Capital 1 0 of 2.8k
Other Capital 1 0 of 1.5k ( they are so stingy with CLI
Discover 0 of 6k
Amex SPG 300 of 15k
Citi 13.9k of 15k
Amex Platinum (charge card) around 800 I pay in full.
I can probably throw around 8k or more now at it and more in end of March I get a quarterly bonus.

I have my 5 percent down and closing cost. It's a seller's market now where I'm at.

I used USDA the first time I make too much now and FHA won't cover the size of house we need.

DTI after selling my current house is in the mid 30s . Lender said they don't count anything with 10 payments or less for DTI. Which the personal loans and my student loan falls under.

Sounds like I need to dump money into the Citi card.

[Anonymous]

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@MarcPA wrote:

Sounds like I need to dump money into the Citi card.

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Close but not quite.

My initial advice remains the same.  You have three cards with tiny balances.  These would cost you almost nothing to pay off.  Therefore, you should, as per my initial recomendation....

(A) Pay all cards to zero except the one card with the big balance -- and (B) with that card pay it down to under 48.9% of its credit limit.

(A) will give you scoring points by creating a profile in which almost all your accounts have a zero balance.  That is a scoring factor completely apart from total or individual utilization.

(B) will give you scoring points by removing most of the penalty you are experiencing for having a card with a very high individual utilization.

You will without a doubt get the scoring points you need if you do that.

An alternative would be to soften (B) to lowering the card to just under 68.9%.  That would very likely get you all the points you need too.  But if 48.9% is easy to do, then just go for it, get better scores than you strictly need, and be done.

[Anonymous]

PS.  When you look at your credit reports, you should see a field called HIGH BALANCE for your charge card.  That field is a record of the highest that the balance on the charge card has ever gone in its history.

The EX score is using the HIGH BALANCE field as a proxy for credit limit and is doing its own CC utilization calculation with it.  In other words, it matters a lot what your HB field says compared to your current balance for that charge card.

Can you tell us what the HB field says?