Mortgage Approval/Strategy for debt payoff vs downpayment

[Galoma]

TL;DR - What would be the best "bang for my buck" with $30k to improve my mortgage FICO?

Context: We're looking to buy May/June. We spoke with a mortgage broker, and my husband is fine, but I currently have a 611 mid score. The only negative on my report is one old collection (4 years ago, ~$600, currently working to remove, but will pay if that's recommended). My newest account is 2 years old, oldest is 6 years. Everything has good payment history, no lates; the high balances seem to be the biggest driver of my score. Income is $165k, and jobs are stable. Our only other debt is one car payment, ~$550/mo, and we owe $25k.

 

I'll be receiving ~$30k in March that I want to throw at this debt in a smart way that will impact my score and hopefully push it up towards that 640. My initial thought was to just pay everything to a 30ish% utilization? Is there something more strategic that would be more helpful? Any insight or thoughts would be appreciated! 

 

Card                     Balance              Credit Limit     Utlization  

Citi AA	$1,777.35	$3,000.00	59.25%
Citi 2	$368.74	$550.00	67.04%
Cap1	$0.00	$600.00	0.00%
Cap2	$117.09	$2,250.00	5.20%
AmEx	$26.45	$1,000.00	2.65%
AmEx Hilton	$35.01	$1,000.00	3.50%
Chase Freedom	$1,107.47	$2,000.00	55.37%
Chase Slate	$80.85	$500.00	16.17%
CSP	$13,491.21	$14,000.00	96.37%
Chase Marriott	$20,359.00	$21,100.00	96.49%
Gap	$1,110.48	$2,500.00	44.42%
Target	$2,550.00	$2,600.00	98.08%
PayPal	$2,047.00	$2,597.00	78.82%
Overstock	$0.00	$3,450.00
West Elm	$0.00	$1,800.00
Loft	$0.00	$1,100.00
Total	$43,070.65	$58,947.00	73.07%

[cv91915]

IME, on top of high utilization the mortgage FICO scores hate having a lot of cards with balances reporting.  

 

While there's no question that you have to address some of the cards that are maxed (which is anything over 90%), you should also focus on getting a bunch of those balances to zero.

 

That's the general framework I would use.  

 

 

 

[Galoma]

3 hours ago, cv91915 said:

IME, on top of high utilization the mortgage FICO scores hate having a lot of cards with balances reporting.  

 

While there's no question that you have to address some of the cards that are maxed (which is anything over 90%), you should also focus on getting a bunch of those balances to zero.

 

That's the general framework I would use.  

 

 

 

Helpful, thank you! Would something like this be on the right track? Or do you have any perspective on paying those smaller cards (gap/target/paypal) but be over 30% util on one of the Chase cards? 

Name	Balance	Limit	% Util
Citi AA	$850.00	$3,000.00	28.33%
Citi 2	$0.00	$550.00	0.00%
Cap1	$0.00	$600.00	0.00%
Cap2	$0.00	$2,250.00	0.00%
AmEx	$0.00	$1,000.00	0.00%
AmEx Hilton	$0.00	$1,000.00	0.00%
Chase Freedom	$0.00	$2,000.00	0.00%
Chase Slate	$0.00	$500.00	0.00%
CSP	$4,000.00	$14,000.00	28.57%
Chase Marriott	$6,000.00	$21,100.00	28.44%
Gap	$700.00	$2,500.00	28.00%
Target	$750.00	$2,600.00	28.85%
PayPal	$750.00	$2,597.00	28.88%
Overstock	$0.00	$3,450.00
West Elm	$0.00	$1,800.00
Loft	$0.00	$1,100.00
Total	$13,050.00	$60,047.00	21.73%

[cv91915]

I didn't double check your math  but $3k more and you could get the CSP and Marriott cards under 30% AND kill off the rest of the balances.

Aside from utilization and cards with balances, addressing the collection is the other big thing you should do.  Is the debt with a company that will PFD?

 

[Galoma]

Thanks for double checking my math, good call! I would be able to pay the additional $3k by late April/May - but will need to start the mortgage approval process before that (lease timing!). 

I'm having a hard time finding information about the collection agency - it's The Bureau's, and it's (shockingly ) a tough one to search on CB.