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Mortgage Approval/Strategy for debt payoff vs downpayment


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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%

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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.  

 

 

 

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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%
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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?

 

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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.  

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