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Question about most beneficial utilization on 3 cards with shaky credit. supposed to close 10/2018

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Anonymous
Not applicable

Question about most beneficial utilization on 3 cards with shaky credit. supposed to close 10/2018

Hello everyone, 

First I'd like to thank all the regular and the occasional contributors on these forums.  This is a great site.  I think the forums alone are worth the monthly fee, but the monitoring and simulations have saved me thousands and countless hours of my time as well as put me in a position to get my family in a home.  

 

A little back story, my wife and i are both combat vets, met in afghanistan, i got wounded came home early, we crossed paths again and have been together ever since.  we both got out of the army in late 2012 and we had a real hard time (i had a real hard time) adjusting to say the least.  Everything went into default and at one point was down to sub 400 scores.  I am currently sitting at a middle mortgage score of 611.  I am under contract for a house, have custody of my two kids from a previous marriage, my wife and i have a beautiful 5 year old boy and things are looking up.  So for anyone out there that thinks theyre too far gone and will never recover just get a secured card and pay on it like youre supposed to starting now.  It took two years for me to be in a position to be able to pay off old debts and ive spent close to 30K doing so.  But that alone didnt raise my score enough to get a lender to talk to me.  I also had 2 secured cards that I've never missed a payment on for almost 2 years on one and almost 1 on the other.  You have to have some positive credit history, not just satisfied old debts.  thats my experience anyway.  

 

Now to my question.  I am 9 points away from an AUS approval which will afford me a better rate, and really as of right now more importantly eliminate all of this stress and fear and losing sleep waiting on the other shoe to drop from my LO that he can't make the deal happen for one reason or another.  I know theres lots of similar quesitons on here but all situations are different and wanted to see if someone had similar or the same situation and can tell me what did and didnt work for them.  

 

Current situation

Mid. Mortgage score 611

card #1- Citi secured card $200 limit 0% utilization 

card #2 - Cap. one secured card $200 limit <1% utilization

card #3- Unsecured ultra high apr indigo card $300 limit <1% utilization 

 

Ive read so many different opinions and expiriments on here but mostly with people with like 750s and above just playing with it to see what happened for others to know what to do and not to do.  But havent found any when their credit is as fragile is mine.  I spaced a reporting date 2 months ago and had the $300 card report a 75% Util. and it wrecked my score.  So what do yall think I should do to get these last 9 points?  I know it's possible with timing and proper UT%.  

 

Thanks so much for your replies.  Ill let yall know what i decide to do as well as keep you updated with what the results were for those in similar situations,. 

 

R

6 REPLIES 6
ChessChik47
Frequent Contributor

Re: Question about most beneficial utilization on 3 cards with shaky credit. supposed to close 10/2

Hi OP!  First, thank you for your service.  It's nice to hear things are looking up for you now.  Sounds like you've come a long way.  Regarding your credit score, since you have 3 cards, you should probably employ the AZEO method which means "all zero except one" - all of your cards should report a zero balance (statement balance) each month, except one card should report a small balance ($5 - $10).  So, you can use the cards are much as you need, you'll just need to pay in full (PIF) two of the cards before your statement cuts and let the other one report less than 8.9% of the credit limit each month.  You will see an improvement in your score.  Search within the forum for more info on AZEO.  It's a quick easy way to gain a few FICO points.

 

Good luck to you on your house purchase!!

Message 2 of 7
Anonymous
Not applicable

Re: Question about most beneficial utilization on 3 cards with shaky credit. supposed to close 10/2


@ChessChik47 wrote:

Hi OP!  First, thank you for your service.  It's nice to hear things are looking up for you now.  Sounds like you've come a long way.  Regarding your credit score, since you have 3 cards, you should probably employ the AZEO method which means "all zero except one" - all of your cards should report a zero balance (statement balance) each month, except one card should report a small balance ($5 - $10).  So, you can use the cards are much as you need, you'll just need to pay in full (PIF) two of the cards before your statement cuts and let the other one report less than 8.9% of the credit limit each month.  You will see an improvement in your score.  Search within the forum for more info on AZEO.  It's a quick easy way to gain a few FICO points.

 

Good luck to you on your house purchase!!


Thanks for reminding our OP to have a balance in the range of $5-10.  His balances right now are ultratiny (less than $2 on one card).  CC issuers will sometimes report on ultratiny balance as $0.  They dod not do this for balances of $5 or higher.

 

AZEO is certainly what he should try.  It may not give him the boost he needs, but it might.

Message 3 of 7
Anonymous
Not applicable

Re: Question about most beneficial utilization on 3 cards with shaky credit. supposed to close 10/2

hey thanks for replying and for your words of encouragement.  we've worked hard to dig ourselves out of this hole and kinda feel like we're waiting on the other shoe to drop as they say, but hopefully it continues to go well.  I found my lender lurking in these forums after reading his replies to dozens of va loan questions and have to admit that ive been nothing short of blown away at the way hes made it happen thus far.  so i suppose i should have a little more faith in him that this.  Ultimately it is my responsibility and I want to give him the best possible file to work with.

 

Let me ask you another quesiton.  i took out a new auto loan in june.  they had to run my credit 46 times to get the approval finally from a bank, and ironically enough the finance guy made a mistake on the application.  We got a call from the dealership and from cap one auto finance almost a month after we brought the car home and they needed me to provide something that didn;t exist.  In other words had the finance guy not goofed we never would have (never should have) been apporved for the auto loan.  But between that and paying off all this debt over the past 90 days my scores have come up almost 100 points.  Every month that the CCs update and the auto loan updates it bumps it up a few more points.   i dont think they will all report before we close do you have any suggestions on getting the auto loan to report early or how to report these new balances earlier than the normal dates they report?

 

Message 4 of 7
ChessChik47
Frequent Contributor

Re: Question about most beneficial utilization on 3 cards with shaky credit. supposed to close 10/2


@Anonymous wrote:

hey thanks for replying and for your words of encouragement.  we've worked hard to dig ourselves out of this hole and kinda feel like we're waiting on the other shoe to drop as they say, but hopefully it continues to go well.  I found my lender lurking in these forums after reading his replies to dozens of va loan questions and have to admit that ive been nothing short of blown away at the way hes made it happen thus far.  so i suppose i should have a little more faith in him that this.  Ultimately it is my responsibility and I want to give him the best possible file to work with.

 

Let me ask you another quesiton.  i took out a new auto loan in june.  they had to run my credit 46 times to get the approval finally from a bank, and ironically enough the finance guy made a mistake on the application.  We got a call from the dealership and from cap one auto finance almost a month after we brought the car home and they needed me to provide something that didn;t exist.  In other words had the finance guy not goofed we never would have (never should have) been apporved for the auto loan.  But between that and paying off all this debt over the past 90 days my scores have come up almost 100 points.  Every month that the CCs update and the auto loan updates it bumps it up a few more points.   i dont think they will all report before we close do you have any suggestions on getting the auto loan to report early or how to report these new balances earlier than the normal dates they report?

 


The only thing I can suggest is calling the respective companies and request it.  I don't think they will appease you, but it can't hurt to try.  Good luck!

Message 5 of 7
dynamicvb
Valued Contributor

Re: Question about most beneficial utilization on 3 cards with shaky credit. supposed to close 10/2

What are the exact baddies that are holding down your score? I'm assuming some lates, charge-offs, etc with accounts or collections. If you list those out someone may be able to help you with some strategies to get them removed or at least not hurt you as bad.

 

I don't think the car inquiries hurt that bad if they were all done in the same few days. I know mortgage inquiries work like that and I think auto's do too, but not totally positive.

Started Rebuild 4/2018: EX 616| TU 604| EQ 621

Current 5/28/20:


First Goal Score: 750+ Reached 3/2019

Next Goal all over 800
Message 6 of 7
Sloedough
Regular Contributor

Re: Question about most beneficial utilization on 3 cards with shaky credit. supposed to close 10/2

I am so glad you got financing through Capital One. It's situations like this that drive people to those subprime auto dealiers, that get you stuck in a loan for decades, and reposess 35%+ of their sales.

 

As for your mortgage. Think of your mortgage as a tri-pod. Your credit score is only one leg. If the other 2 are strong, sometimes underwriters can look past a lower score, however your APR will be affected. But if one leg is completly gone, the whole thing fails.

 

The second leg is your income. A strong, stable job with income that can support a mortgage payment + current obligations is what they look for.

 

And the third leg is your expences. Underwriters look at your debt-to-income ratio and other things like food, medical, etc ...

 

So if your income can support your expences, with some left over. For example, most lenders don't like to go over 80% debt-to-income (numbers are not exact). The nice thing about a VA loan is they allow you to finance up to 100% of the home value, but if you can swing a down payment, this is a way to get your debt-to-income down. Of course the most obvious soultion is to pay down any debt. Paying off debt strengthens your expences leg. Your credit score at this point is only going to affect your APR.

 

3 years ago I was in a very similar boat, but I was getting an FHA loan. I had great income, average debt-to-income, and crappy credit. I had to write a ton of letters to the underwriter stating that I am paying or have paid some collections. I still go the loan, but the APR could have been better. 2 years later, my score is 750+ and I have paid almost everything off. I only had some student loans and a car loan and of course my mortgage. I refinanced, got a stellar rate and comverted my FHA loan to a convential.

 



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