Need a 4 point increase, I have $2K to pay down cards. How should I distribute it?

Question

I found a lender I liked and 4 of my friends reccomended him to me. So I applied for a Pre approval for a VA loan yesterday. I knew I had a 616 mid score going into it as I pulled from here but he seemed confident that his scores would be different. He pulled the credit and got the same scores I had gotten from here. He ran all my stuff though AU and said everything looked good from a DTI side for the ammount I want. The only problem is the AU wanted my mid score to be a 620. I was planning on this since I already knew my score and I spoke with him about pulling 2K of my 6K reserve to pay down cards. I had actually managed to not send him my account statement for the account this money was in on accident so he had no idea I had it.  My scores are EQ616, EX616, TU658, I need to get that mid score up to a 620. Hopefully with room to spare My CC balances areNFCU   15K   limit   / 14611 balance   97%chase   1500 limit   /    1119 balance   75%BOA      2500 limit   /    2352 balance   94%Cap1    3600 limit   /    3340 balance   92%Mil star 2740 limit   /    1327 balance   48%WF          700 limit   /           0 balance   52% currently reporting bal of $367, hasnt reported since paying it off.NFCU    10K limit   /           0 balance    This one is a Checking line of credit for overdraft so I cant transfer to it to drop the utilizaion on my other cards.  Total      36040 limit  /  22749 Balance 63% utilization   I was thinking of doing this$750 on boa bringing it down to 64%$750 on Cap bringin it down to 71% $500 on chase bringin it down to 41% Or shoudl I do $1000 on Cap1 bringing it down to 65% and only $250 on Chase bringing it down to 60% Would it be more benneficial to distribute it accoss multiple accounts or just paying it all on one? I dont need help with the DTI so Im not worried about dropping the payment. Just need to get my score bummped up. The CS simulator on here says paying down 2K should get me a 20pt bump acrross all three scores but hat is the fico 8 score not my mortgage scores.  Thanks for any help or input everyone! 

Answer 1

The_ocho wrote:
I am active duty military and received orders last week to move. Looking at rental properties in the area I would pay around $3-400 more a month for rent vs a mortgage payment on homes adequate for my family. Mortgage payments for homes in the price range I am looking at would be about $1-200 cheaper a month than my current rent payment I have been paying for the last few years.  Deposits, and pet fees on the rental would come up to what I could potentially be paying in closing costs assuming we are unsuccessful in having the seller fully or partially cover them.  I already have all the standard appliances if I should need them for the purchased home. I have been living in a home the size of what I am looking to purchase so utilities and stuff like that I am accustomed to paying. The tax benefits will help too.  I completely agree that I/we are not in a perfect situation to purchase at the moment but from my point of view it seems like a good time to do it. Our DTI is adequate and our residual income way higher than what is required by the VA. My wife does not have any debt other than her car payment and will be keeping her job up there. I just have the cards listed plus a car payment.  Interest rates are NFCU CC is 10% Cap1 is 4% Chase 20% BOA 15% Miltiary star 9% I am not factoring it into my decisions of rent vs buy but I will be reciving a $8-9K bonus in the next few months that would go directly to CC debt. Just bad timing with the suprise move.   My logic may be way off here and if you have any insight I am not seeing or factoring in please let me know.  Sounds like a rational decision; just as Gmood suggests there are unexpected expenses with home ownership and a majority of homes need some work as soon as you move in in many areas.  Houses can take a month or two to close on as well assuming you find one both you and your wife can agree on quickly.  Beyond that I can't fault your thought process at all personally. Pay down the nearly max cards and see where you wind up FICO score wise, I don't think 4 points is much of a problem with that much revolving utilization but address the accounts which are hurting you the most.  Not entirely sure if the line is at 80 or 90% for that FICO penalty as I never saw a good number below 93%. $400 to BOFA$500 to Cap One You don't have enough to be "sure" on the NFCU card nor enough to take one of the other tradelines to zero, me personally I'd probably just dump it to the highest APR card which sounds like your Chase account, but if you pay it towards the NFCU account if you find another ~$200ish you might get a boost there for getting under 90%, hard to say as I never saw good data in the 80-90% range on it unfortunately but a lot of people have quoted 80% over time so may be some truth to it back from the old forum days.  Lacking better data just went with that line in the Cap 1 and BOFA payment optimization. Just for personal reference on a mortage score I was tracking a couple years ago I took a card and maxxed it out, from 1 to 13% aggregate, but 1 to 99.87% individual tradeline revolving and went from 660 to 646 and while I didn't get a control point of 13% without a maxxed out card nor a better point with a max card and virtually no aggregate (maybe coming next month from a "lucky" expense hah), everyone else that has tested things over time that I've seen agrees that there's a non-trivial penalty for a card carrying a balance near it's limit.  Also repeated the experiment identically at 27% aggregate and single maxxed tradeline, same score movement -14 points on Beacon 5.0 which is part of the mortgage trifecta. Also does your wife have any high limit clean tradeline cards that you could be added to as an AU?