Hello, Forgive the length of this posting, but I am not sure as to how FICO works exactly...I am seeking guidance as to the quickest way to further enhance my FICO score (please no guess work, I really need to have a response from someone who really has insider knowledge as to the best way to proceed to maximize my FICO score) 
I am about to pay-off all (or nearly all) CL/CC debt.... I have a 712 credit score (never been late on anything, but I do have a high revolving debt ratios). I want to move my score to the 800+ realm (to refinance my house at the most advantageous rates). I have 3 questions:
1. I have several Credit Lines and Credit cards - 10 to be exact with a high total debt ratio in 70%+ range...(I have three options):
a) I could pay all of them completely off (but that would run me low on cash reserves, which may "possibly" present a slight dilemma as you will see further below as to what my goal is)
b) I can pay most of them down to a zero balance and leave couple of them with a 30% to 41% balance debt ratio to limit.
C) I can pay couple of them to 0 and leave the rest of the CL/CCs to with a balance of around 7% to 9% of the limits.
What is the best route among the three options (or if you can think of a better way to do this please let me know).
2. How fast does FICO jump up if all of a sudden my debt goes to zero or near zero balances all else being equal (i.e. never being late on any payments, long credit history, etc.)? So, once FICO sweeps the new figures in April and the results are only 1st and 2nd mortgages will it automatically jump up or does it take time to go up to my desired score of around 800?
3. Going back to (option 1 a. Re. my hesitation to pay everything completely off), I have a first and second mortgage on my house (currently paying 4 3/8 on first [5/1 ARM expiring October 2009] and 7.95% on second fixed). Under current limits the addition of both would be considered a jumbo loan...However, I am hearing that the Jumbo loan limits may be increased to $750K which would convert my house loan to a standard loan and although I do not believe that the area I live in has been affected by lower real estate appraisal, I still would like to keep a bit of my cash in case I need to further pay down some of my first / second mortgage to refinance and lock a 15 or 30 years and get rid of my ARM that is going to become variable in October of 2009. MY Main objective - I would like to combine 1st and 2nd and lock them down at the lowest possible interest rate (while the interest rates are down) ...
Hi gadget_man and welcome to the forum!
By far and away, the quickest way to get a score rise is to get your debt ratio(called utilization) to below 20%....ideally for the most points: 1%-9%.
You are being seriously hurt with a utilization ratio of 70%. That's a red flag to potential lenders that would see you as bordering on financial stress.
The best case scenario is to have half of your trade lines reporting with a $0 balance, and the remaining half reporting utilizations of 1%-9%.
Getting your individual AND total utils down will effect you positively as far as FICO goes.
By far and away, the quickest way to get a score rise is to get your debt ratio(called utilization) to below 20%....ideally for the most points: 1%-9%.
You are being seriously hurt with a utilization ratio of 70%. That's a red flag to potential lenders that would see you as bordering on financial stress.
The best case scenario is to have half of your trade lines reporting with a $0 balance, and the remaining half reporting utilizations of 1%-9%.
Getting your individual AND total utils down will effect you positively as far as FICO goes.
In my opinion, having an 800 score will be of marginal to zero benefit over a 765 score.
If your UTIL is 70% now, and you pay it down to 1-9% immediately, you will see a boost significant enough to secure you the 'best rates'.
Allow 30 days after your statement dates for it to appear with the CRAs. It will report sooner than this (except the nasty AMEX and EX combination).
Message Edited by VistaV on 03-19-2008 08:24 AM
thanks for the reply, I guess you are right I am not particularly looking for 800+, I am just looking at the best FICO number that will give me the Absolute best rate! if it is 750 or 760 (or whatever it is) I will shoot for it prior to starting the process in couple of months!
You are on a great track. Once those 0 and <9% balances report, you will see an immediate and significant score increase. You simply must pay the down and then wait for the statement dates, the reporting delay (if any), and the processing delay (if any). Don't forget that if you have been revolving balances, you may be accruing interest even after you think you have "paid them off". Take thi in to account for the cards you are PIFing.
Option C. You have received good advice. Again, make sure you watch for straggling finance charges--maybe call the institutions and find out what the finance charges would be b4 paying off. Also, keep just under half of accounts with balances (1-9%).
Starting Score: 469
Current Score: 819
Goal Score: 850
Highest Scores: EQ 850 EX 849 TU 850
Take the myFICO Fitness Challenge
Starting Score: 469Current Score: 819
Goal Score: 850
Highest Scores: EQ 850 EX 849 TU 850
Take the myFICO Fitness Challenge
