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Need to raise credit score fast - mortgage lender will do a rapid rescore.

Score dropped due to just having to remove 3 very old dispute comments on long closed accounts.  This came up at the late in the mortgage process. Only debt is 1 year old car lease w 27 mo term showing 62% of total balance remaining and Am Ex charge (not credit) card that I pay off every month - reported statement balances over last 4 months - 2500, 3500, 2500, 1500.  Score took a dive when it went from 2500 to 3500 (not sure if that's why, as there were a 2 new mortgage inquiries as well), but score did not change much when it went from 2500 to 1500.  I have a lot of available credit.  I was advised to charge $10 on a card I haven't used in a while.  Thoughts on that?  Will it also help to pay down the car lease (shown as installment loan) to under 50%? Should I pay off AmEx completely? Middle score was at 768, then after removal of dispute comments and 2 new mortgage inquiries it dropped to 719 so every little bit will help.  
  • July 30 2014 - Parsippany-Troy Hills Township
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Answers (11)

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  • April 24
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Hello,
Revolving accounts are actually a positive things when it comes to the credit bureaus rating your credit score. The key is to keep your approved credit limit below 50% of total; ex.) if credit limit is $5,000 you want to keep your balance at $2500 or below, even 20-30% of total will help. You should make two or three times the minimum payment monthly. This shows creditors your ability to manage your debt responsibility.   
  • December 16 2014
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Revolving accounts (credit cards) are the only type of accounts that the balance in relation to credit limit effects your scores.  Installment loans (car loans, student loans, signature loans) don't carry the "utilization" component as do credit cards.  You can't charge up your auto loan like you can charge up your credit cards.

The advice to charge $10 on a card you've not used might help, but only if it was reporting as "inactive" on your report.  If you don't use a credit card for an extended amount of time (6+ months) they may deem it inactive and potentially close the account.

If you're trying to maximize your scores in a short amount of time, pay off all credit cards and rapid rescore the balances.   
  • November 19 2014
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Hi,

719 is not a bad credit score. If possible, pay as much as you can on all accounts. It may take some time but your credit score will improve. If you don't feel comfortable using the credit card, then don't use it. 
  • August 04 2014
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Accounts that are in dispute can create issues once your loan enters underwriting. Odds are your loan was initially run through an automated underwriting system (DU = FannieMae, LP = FreddieMac). Anyway, if the system picked up on the disputed accounts then the credit report must reflect these are out of dispute otherwise your loan may be subject to a manual underwrite which comes with additional underwriting guidelines.

Since the accounts in dispute were not being factored into the bureaus scoring algorithm, your score was adjusted once the disputes were removed. The $10 charge is most likely to show credit utilization which the credit analyzer probably stated it would create a score increase. With AMEX the rule of thumb is to use 5% of the balance reflected on the credit report to establish a monthly payment for qualifying purposes. So if your AMEX balance is $1,500 then only $75 are being weighed against you from a Debt-to-Income perspective. Not bad at all.

Why you need a re-score when you have a 719 is beyond my knowledge, doesn't make sense unless you applied for a very large jumbo loan; even then minimum scores are typically in the mid-high 600's. Please be advised that re-scores are no guarantee, but they do work if performed correctly. Also, I would not recommend paying down your auto lease unless it was required for the score boost which I've never seen.

If you run into any snags and would like to discuss your scenario please don't hesitate contacting me at your earliest convenience. My contact information may be found within my profile. Good luck with everything!


Kind regards,


Paul F. Marzolla
Vice President
Licensed Mortgage Consultant, NMLS#922891
__________________________________________________

Licensed by The New Jersey Department of Banking
Member of the National Association of Mortgage Professionals
  • August 04 2014
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I don't see how you are going to re-score your way back to your 760+ FICO by manipulating your AMEX or lease. I have seen scores drop when removing disputes, its unfortunate this wasn't requested on the front end of the application.  If you are, "late in the process," you may want to consider just closing your loan and being done with it. 
  • August 01 2014
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You mentioned being late in the mortgage process.  How much time do you have if you are actually under contract to purchase a home.   What kind of loan are you looking to do.  Honestly there is no much of a difference in pricing between a 720 score and a 768 score so you really only need 1 point.  I would think another string of on time payments would get you that point.  You do not have to reinvent the wheel on this.  If you would like to contact me through my profile, I would be happy to assist
  • August 01 2014
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With credit scores in the 700's, there are only 2 things that can impact your score...hard inquiries and credit card utilization.  

My educated guess are the inquiries, you're allowed 4 in 12 months before it begins dropping your score.  There are some other conditions to that, but as a general rule of thumb...that's the info from FICO.

But also you didn't mention the credit limit on the AMEX.  Utilization is calculated from balance to limit ratios.  When you drive that number up, it lowers your scores.
  • August 01 2014
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There are 2 types of american express accts, one is "net 30" that has to be paid off each month and the other is revolving. If you have a net 30 it doesn't factor in your scores, if it is revolving but your limit is $10K or more, that is why you didn't see much difference when it went from $2500 to $1500. I doubt you will get any benefit from charging $10 on an acct with a -0- balance, it is either an open acct or it's not. If it is open, you are getting score "benefit" for that available credit. Doubtful you would get more than a couple points, if any, if you paid the lease off early since you are 38% into the loan. Dispute removal was most likely the reason for the drop. As Geofrey stated, your lender can use a "what if " program where they manipulate the data to see what effect it has on the scores.   
  • July 31 2014
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This isn't a credit score problem. This is a debt to income problem. Although you have an American Express card you are not required to pay off the balance every month and it should only be counted into the debt ratio at about 4-5% of the balance per month. Your score is fine. It has to be something else.
  • July 31 2014
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Profile picture for GMerino
How soon are you looking at closing and what is the LTV that you are seeking?  You do not have much revolving debt that would make your scores jump back up in my opinion and charging a card for $10.00 not sure that would do the trick. 

Have your lender do a score stimulator to see what it would take to improve your scores.  That is where he can play with the AMEX amount that you would need to pay down to bring your scores.  It is worth a shot!
  • July 30 2014
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