Strategies for Improving my FICO

SeaFlyBoy · ‎05-07-2013

Had a Bad day last week on my way to refiniancing the home. Major car repair bill has nearly maxed out my 1 CC. (Yes I have a few store CCs).

So after consulting with my Banker, we determined the following course of action, that I would like feedback on.

Sceanario:

First I applied for $20K HELOC

At the same time (with the same app) I increased my CC limit from $12K to $16k

The car repairs will increase my CC to $15K for about 30 days.

Once the HELOC is completed (30 day process) I will take $15K and pay off the CC to a 1% utilization rate and fix it there.

Question1: Will moving my debt from a revolving CC to an equity backed loan (significant reduction in monthly interest & payments) improve my score.

Question 2: I increased my credit ceiling from $12K to $36K .... my debt remained at $15K will FICO look at both the CC and HELOC as a $36K Credit and $15K debt for a 43% utylization ... OR ... will the CC be treated as a 10% revolving Credit Utylization and the HELOC treated as a 75% Utylization with different scoring applied to each as they are different types of debt.

(The above numbers are only for discussion purposes)

So is any of actions to raise my FICO misguided thinking?

A. Raised my available credit limit which lowered my utylization rate.

B. Moved debt from revolving CC to HELOC

Note: I have only tapped a portion of the credit I could me approved for as my personal preferences is debt free except for the home. But debt free is a hostle position to ones credit score and so we play the banks games not because we want to but because we are compelled to.

Your Thoughts? Experiences?

Quips · ‎05-07-2013

@SeaFlyBoy wrote:
Had a Bad day last week on my way to refiniancing the home. Major car repair bill has nearly maxed out my 1 CC. (Yes I have a few store CCs).
So after consulting with my Banker, we determined the following course of action, that I would like feedback on.

Sceanario:
First I applied for $20K HELOC
At the same time (with the same app) I increased my CC limit from $12K to $16k
The car repairs will increase my CC to $15K for about 30 days.
Once the HELOC is completed (30 day process) I will take $15K and pay off the CC to a 1% utilization rate and fix it there.

Question1: Will moving my debt from a revolving CC to an equity backed loan (significant reduction in monthly interest & payments) improve my score.

Question 2: I increased my credit ceiling from $12K to $36K .... my debt remained at $15K will FICO look at both the CC and HELOC as a $36K Credit and $15K debt for a 43% utylization ... OR ... will the CC be treated as a 10% revolving Credit Utylization and the HELOC treated as a 75% Utylization with different scoring applied to each as they are different types of debt.

(The above numbers are only for discussion purposes)

So is any of actions to raise my FICO misguided thinking?
A. Raised my available credit limit which lowered my utylization rate.
B. Moved debt from revolving CC to HELOC

Note: I have only tapped a portion of the credit I could me approved for as my personal preferences is debt free except for the home. But debt free is a hostle position to ones credit score and so we play the banks games not because we want to but because we are compelled to.

Your Thoughts? Experiences?

Increasing you CL on the CC will help your FICO score (decreases the UTIL)

Taking out a HELOC - impact depends on it if is classified as revolving debt vs installment (I have had them treated both ways as it depends on how the lender reports to the CRA). If it is revolving, your total CL is $36K (not counting the store cards) and the $15k gives you a 43% UTIL and your FICO will increase based on the increased ceiling . If it is counted as an installment and you move the debt to the HELOC - you should also have a FICO increase with the decrease UTIL on the CC, but the impact may be lessened by the new account opening.

FICO: EQ 769, TU 762 , EX ???

SeaFlyBoy · ‎05-08-2013

So it seems to me that we should trade in our CC's for HELOC ...

OK ... so I cant just cutup my CC ... but I can keep the balance below 5% and transfer each month the balance to he HELOC and then make my monthly payments to the HELOC instead of the CC.

I treat both accounts as one account ... my credit score sees two accounts ... so the score is maximized

I also get the benefit of a secured loan so the interest rates are minimized ...

Seems to good to be true ... what the catch Im missing?

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