How to bump up your credit score

NEW -> Contingent Buyer Assistance Program
ps99472

ps99472

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So emailed my mortgage lender and asked what I have to do to purchase non-contingent for my next house with a target of mid $1 million.  She said, my ratios are close and if I go with my bread and butter 5/1 ARM, I will get a fairly high interest rate.  She also said if I pay off all my credit card balances, I might be able to squeeze thru with a 7/1 ARM.  I guess if you pay off your credit card balance before your statment closes, the bank will report a $0 or near $0 balance to the credit companies.  Not good for the long run as new lenders will see basically $0 balances on your credit reports and hesitate to issue credit.  But it can boost scores temporarily as you'll improve your debt to credit ratio and that has a high impact on FICOs. 


 
there is credit utilization ratio that affects your credit score, not sure about debt to income, which is more about obtaining new credit. so paying off your balance (zero debt) + 7/1 ARM helps lower your DTI ratio in order for the new credit. if you plan to rent out your current home, the rental income alone will make this a non-issue.

 
rental income needs to be a year for it be factored in no?  I don't plan on renting it out.  Gonna sell it after I buy.
 
ps9 said:
rental income needs to be a year for it be factored in no?  I don't plan on renting it out.  Gonna sell it after I buy.
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You are taking bp pretty seriously.  Race you to Torrey!
 
ps9 said:
One of my weaknesses, very impulsive, ask me next week if I still want BP :)
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Moving to Buena Park? Baker Ranch? edit: ahhh Beacon Park

sorry I am not very knowledgeable about credit...  I have never heard anything about paying off your bills too fast hurting your FICO.  My credit is pretty good but then I am not that leveraged.... like IHO would say the 99%s can't be spending too much now

Just looked on Suze Orman's site as she had mentioned something about credit companies categorizing people into two camps - one who pay their credit cards off entirely each month and then the others.  She had an official name for them that escapes me, but she seemed to value paying them off each month. 

"You don't improve your credit worthiness by carrying balances forward from month to month (as opposed to paying each bill in full), but lenders may be more likely to offer credit to people who carry balances because they have a history of paying interest on their accounts."
http://www.suzeorman.com/resource-center/managing-debt/
 
ps9 said:
rental income needs to be a year for it be factored in no?  I don't plan on renting it out.  Gonna sell it after I buy.
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If your going to do a quick sell, maybe you should pay a nominal fee to list your property on MLS and lower the commission rate for the buyer's agent to 2%. Right there you save 4%.
 
Coleman said:
ps9 said:
One of my weaknesses, very impulsive, ask me next week if I still want BP :)
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Moving to Buena Park? Baker Ranch? edit: ahhh Beacon Park

sorry I am not very knowledgeable about credit...  I have never heard anything about paying off your bills too fast hurting your FICO.  My credit is pretty good but then I am not that leveraged.... like IHO would say the 99%s can't be spending too much now

Just looked on Suze Orman's site as she had mentioned something about credit companies categorizing people into two camps - one who pay their credit cards off entirely each month and then the others.  She had an official name for them that escapes me, but she seemed to value paying them off each month. 

"You don't improve your credit worthiness by carrying balances forward from month to month (as opposed to paying each bill in full), but lenders may be more likely to offer credit to people who carry balances because they have a history of paying interest on their accounts."
http://www.suzeorman.com/resource-center/managing-debt/
Click to expand...

The Great Dave Ramsey says use cash instead of credit cards. When you use cash, you feel the money leaving you and tend not to spend more.
 
The trick is to apply for and use business credit cards (you also get another set of sign up bonuses!).  These balances do not show up on your credit report.  Definitely pay off your personal CCs before the statement closes to get that 0 balance.  You only need to do this a few months before you get your loan. 

Leaving large balances after your statement closes can also affect your ability to get new credit since it increases your overall credit utilization usage.  CC companies don't like to see this and will sometimes slash your CL if they see you get too close to your CL on one of your cards. 
 
Shouldn't the credit rating schema/formular be transparent to consumers? After all it is consumers' credit reputation that is being judged. IMO we should be allowed to verify if everything is being done fairly.

If the current system can be gamed by guess work, it wouldn't be fair. If it is fair, then let us all see how it works.
 
woodburyowner said:
The trick is to apply for and use business credit cards (you also get another set of sign up bonuses!).  These balances do not show up on your credit report.  Definitely pay off your personal CCs before the statement closes to get that 0 balance.  You only need to do this a few months before you get your loan. 

Leaving large balances after your statement closes can also affect your ability to get new credit since it increases your overall credit utilization usage.  CC companies don't like to see this and will sometimes slash your CL if they see you get too close to your CL on one of your cards. 
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+1  I have a Chase Ink card that I use occasionally but mostly use my Chase Freedom and Citi Double Cash cards due to the cashback rewards.  As long as your credit card utilization is 5% or less I don't think it really improves your credit scores.  However, lenders will take the minimum monthly payment amount on your credit report use it to determine your DTI.  Also, for a 5/1 ARM the lender will use a 30-year rate to underwrite your loan but if you get a 7/1 ARM or longer term ARM the lender will use that specific rate to underwrite your loan. 
 
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