Yes, another credit score question... But help if you'd like?

[JanetJackson]

Hi Friends!

I've scoured the internet and the search feature and taken into account all that I have found, but would still like to propose my situation here in case anyone has any insight/ideas.

Credit Score for future Mortgage.

Some jumbled facts:
I've been very actively working on my credit score for about three or four years, prior to that I lived very frugally by necessity, but never really deeply considered personal finance, my credit score, etc.

I was divorced in 2009 and also had medical debt and student loan debts.  Any negative items on my credit report (a joint CC that prior spouse went on a spending spree on before I had a chance to cancel it upon seperation and a visit to urgent care) have been paid, but still show up as "negative charge-offs".
I have three credit cards, two of which I just got extended credit lines for (the other request was declined for reason of "lack of use of current credit"), I am an AU on my mothers 20+ year credit line, paid my student loans down from 30k+ to 5k, my available credit is 53k, 1% of credit used, oldest credit line 16 years ... I've done a bunch of things....  I have had a hard focus on my credit score for a few years and I've brought my credit from the high 500's post divorce & medical bills (YIKES) to 750 (as of today) and climbing (YAY).

I plan to purchase a home in the 50-70k range in 2019 or 2020 and would like, of course, to have the best credit score (and therefor the best interest rate) possible on the mortgage. 
I will have 20% to put down and I will also be Air BnB'ing the additional bedroom (the area I am looking in has very favorable AirBnB regulations and regular enough tourism), if that matters in this consideration.

I can't spend more on my cards to utilize the credit lines they've given me, as I put nearly everything on them and then immediately pay them off... My total spending is between $1100-$1250/month.  My income is variable, but is projecting around 35k this year.

Some slightly more organized quick-read facts:
-Brought score from high 500's to current 750.
-AU on mothers 20+ year old credit line.
-Have three credit cards, can't increase credit lines more due to somewhat low-ish spending (13-15k/year).
      >about 22k in credit lines, about 5k left on student loans, no other debts.
-Two negative Charge Offs on report, both paid more than 7 years ago- not sure why they're still on there.
-Plan to purchase home in 2019/early 2020 in 50-70k range, do some house hacking, and pay off ASAP.

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My plan is to write a Goodwill Request Letter (or whatever the internet calls it) to have the negative charge offs removed from my credit report (not sure why they are still on there, as they have been paid for more than 7 years)...
This seemed to be the suggestions I found via google and forum searches....
Aside from that, is there really anything I can do to improve my score more or should I just accept my 750 (likely to go up a few points by the time I'm ready to purchase) and shut up?

Thanks in advance for any ideas and for your kindness!

[bacchi]

You have at least a year before you buy. Get another credit card. This will increase your overall available credit, which will reduce the % of credit used. What does Mint say your % of credit used is at? You need that less than 5%.

And you may as well get a rewards card like...a Citi AA card for 60,000 miles (if you can meet the minimum spend). Then you can have a roundtrip flight for free. Win-win. When the annual fee comes around, downgrade it to a Citi Double Cash card and the account remains the same.

Generally, though, don't worry about it. A 750 score should already get you the highest mortgage rate.


Eta: Yes, writing that letter is important.

[JanetJackson]

You have at least a year before you buy. Get another credit card. This will increase your overall available credit, which will reduce the % of credit used. What does Mint say your % of credit used is at? You need that less than 5%.

And you may as well get a rewards card like...a Citi AA card for 60,000 miles (if you can meet the minimum spend). Then you can have a roundtrip flight for free. Win-win. When the annual fee comes around, downgrade it to a Citi Double Cash card and the account remains the same.

Generally, though, don't worry about it. A 750 score should already get you the highest mortgage rate.


Eta: Yes, writing that letter is important.

Thanks! 
Do you think they'd give me a card when my utilization is so low? 
I'm not a traveller, but I can certainly look around for a cash back card (although I'd heard you can sell your miles somehow).
I don't use Mint, but I can try if it will help me determine my % used.  I wonder if there's an online calc. I could use instead though? *Edited here because my Creditwise account and the credit check that comes with my Chase card both show my credit use at 1%*

Thanks for the ideas!  I'm sick in bed for an hour or two, so my brain is churning! :)

[letired]

Just to clarify, but when you say "immediately pay it off", do you mean "statement period closed with a balance then I pay in full on or before the due date" or "pay as soon as I get home or before the statement period closes"?

[JanetJackson]

Just to clarify, but when you say "immediately pay it off", do you mean "statement period closed with a balance then I pay in full on or before the due date" or "pay as soon as I get home or before the statement period closes"?

I go home and check my account 3-4x each day until the charge posts, and as soon as it does, I pay it off. 

[Bracken_Joy]

Just to clarify, but when you say "immediately pay it off", do you mean "statement period closed with a balance then I pay in full on or before the due date" or "pay as soon as I get home or before the statement period closes"?

I go home and check my account 3-4x each day until the charge posts, and as soon as it does, I pay it off.

I think you're supposed to let it go to statement and then pay off, right? My understanding is what you're doing right now is suboptimal, but I could be wrong and it makes no difference. Why not just put them on autopay though?

That being said, 750 generally puts you in the top tier for credit score for mortgages. BUT, you don't know what score they'll use- we had checked our scores before our mortgage (both in the 780-810 range), but the score the bank pulled was "only" 760. Still was enough to get the best rate, but I was surprised by the disparity.

[JanetJackson]

Just to clarify, but when you say "immediately pay it off", do you mean "statement period closed with a balance then I pay in full on or before the due date" or "pay as soon as I get home or before the statement period closes"?

I go home and check my account 3-4x each day until the charge posts, and as soon as it does, I pay it off.

I think you're supposed to let it go to statement and then pay off, right? My understanding is what you're doing right now is suboptimal, but I could be wrong and it makes no difference. Why not just put them on autopay though?

That being said, 750 generally puts you in the top tier for credit score for mortgages. BUT, you don't know what score they'll use- we had checked our scores before our mortgage (both in the 780-810 range), but the score the bank pulled was "only" 760. Still was enough to get the best rate, but I was surprised by the disparity.

Thanks,
Everywhere I have checked it's reading 750, but like you said, you never seem to know where they'll pull it from... so I'd like a little bit of buffer.
My cards are all actually on auto pay, but I'm anxious AS HELL and it feels like my skin is crawling if I don't pay them ASAP.  Maybe I'll let a few go to Autopay and then check my score after a few months?

[Catbert]

I don't know anything about goodwill request letters, but it certainly can't hurt.  Beyond that I think you just need time.  Time for the bad stuff to age and drop off.  Time for your current good credit habits to go longer.

I agree that paying off before statement dates isn't helping and might be hurting.  They only time you might consider paying before statement is if 1/FICO is about to be pulled for real and 2/you've made a large purchase that makes your utilization too high.

When your get your FICO score you are generally given a couple of reasons for why the score isn't perfect (i.e., length of credit history too short, too many charge-offs, not recent credit, etc.)  Sometimes the reasons are pretty nonsensical.  What are your reasons?  Do they make sense and can you do anything about them?

Whatever you do, don't go to a credit repair service.  Just  a rip off that make do more harm than good.

[JanetJackson]

Thanks!
 The first most impactful thing on my credit score list is that my oldest account is an old enough (it’s 16 years old, how old do they want it to be?)...
 The second most impactful is that I don’t have any open real estate accounts ...
so...
I’m thinking there’s not that much I can do that will change more than a few points... besides wait. :)

I don't know anything about goodwill request letters, but it certainly can't hurt.  Beyond that I think you just need time.  Time for the bad stuff to age and drop off.  Time for your current good credit habits to go longer.

I agree that paying off before statement dates isn't helping and might be hurting.  They only time you might consider paying before statement is if 1/FICO is about to be pulled for real and 2/you've made a large purchase that makes your utilization too high.

When your get your FICO score you are generally given a couple of reasons for why the score isn't perfect (i.e., length of credit history too short, too many charge-offs, not recent credit, etc.)  Sometimes the reasons are pretty nonsensical.  What are your reasons?  Do they make sense and can you do anything about them?

Whatever you do, don't go to a credit repair service.  Just  a rip off that make do more harm than good.

[beekayworld]

Are you sure your mother's card is being reported on your credit reports? Go to CreditKarma or get your free credit reports from each of the three agencies.

I learned that American Express cards don't report AUs length of time on the account like other cards do (only the credit line is added); and if your mother didn't add your SS#, and DOB, or possibly address, it doesn't always get added to your own credit report.

When you said your oldest card was 16 years, but your mother's card is 20+ years is a discrepancy. YOUR oldest card (i.e. on YOUR credit report) should also be the 20+ year old card.

[JanetJackson]

Good question- Thanks! 
I will ask her the next time I speak to her.
I actually have a vague and dreary memory that it may be an American Express card. :|

Are you sure your mother's card is being reported on your credit reports? Go to CreditKarma or get your free credit reports from each of the three agencies.

I learned that American Express cards don't report AUs length of time on the account like other cards do (only the credit line is added); and if your mother didn't add your SS#, and DOB, or possibly address, it doesn't always get added to your own credit report.

When you said your oldest card was 16 years, but your mother's card is 20+ years is a discrepancy. YOUR oldest card (i.e. on YOUR credit report) should also be the 20+ year old card.

[Bracken_Joy]

This could also be worth considering: https://www.nerdwallet.com/blog/finance/credit-report-rent-payments-incorporated/ Although it sounds like it may not be used in the scores pulled for mortgage considerations. *shrugs*. Options though.

[Sibley]

#1, Credit Karma isn't the required free credit report site. That is annualcreditreport.com - though they still try to get you to pay for stuff you don't need.

#2, paying your credit card the instant a charge appears is no more or less helpful than paying the balance in full when the statement arrives. If you want to, go for it. But you don't need to. Just pay your bills on time.

#3, the major thing holding your score down is probably those 2 bad items.

#4, if you're an AU on your mother's card, it should show up on your credit report.

[secondcor521]

1.  Dispute the two negative items with the credit bureaus that show them.  I think it is seven years from the last activity on the account, not necessarily seven years from the charge off.

2.  My understanding is different from Sibley's second item above.  The main thing your credit score reflects is your ability to pay debt back.  If you pay off your cards ahead of time, then they will report a zero balance to the credit bureaus (most credit cards report your balance as of the statement closing date).  From the credit bureau's point of view, how can they say you're good at paying debt back if you seem to never incur it?

3.  Yes, a credit card company will give you a credit card if your utilization is low.  But you should pick an issuer with which you do not currently have a relationship.  So for example if you have a Citi and a Barclays credit card, then apply for a USBank or Chase card.  The new issuer will look at it as a chance to win your business.

You can ask your prospective mortgage lender what their credit score breakpoints are - above 720 is usually a very good rate, but you might get a better rate for being above 760 or something.  They can also tell you their scoring methodology - I think a lot of them get your mortgage FICO score based on the big three bureaus and then take the middle score.

I would add one more thing:  Putting 20% down as a down payment on your house should prevent PMI, and avoiding PMI probably makes far more of a difference to your finances than your actual interest rate.  In other words, saving half a point on interest may save you $50 a month, but avoiding PMI might save you $100 a month.

By the way, 750 is pretty darn good, especially if those chargeoffs are actually affecting your score.

[letired]

2.  My understanding is different from Sibley's second item above.  The main thing your credit score reflects is your ability to pay debt back.  If you pay off your cards ahead of time, then they will report a zero balance to the credit bureaus (most credit cards report your balance as of the statement closing date).  From the credit bureau's point of view, how can they say you're good at paying debt back if you seem to never incur it?

^^ this is also my understanding, but there is so much misinformation about how credit scores work, I don't want to act like I'm 100% positive that's how it works.

If you want to try but its too uncomfortable, here are a couple options:
1. pre-pay all but $50 or $20 or whatever amount doesn't drive you crazy
2. let it post with a balance and pay it off the day after the statement posts
3. don't worry about it!

[BrightFIRE]

Chiming in here that Sibley is incorrect. You need to let the statement close with a balance so that it reports to the credit bureaus, *then* pay it off in full. Paying it off before the statement cuts is the same as not using the card at all for reporting purposes.

There are 2 credit percentage numbers that matter: 1, the percent utilization of the card you have a balance on and 2, the percent utilization across all cards. I used to be active on the MyFICO forums when I was doing credit repair; from memory, the ideal amount of activity/credit use you want to show is 1-9% of your total available credit, and ideally on only 1 card.  So if you have 22k across all lines, don't let more than a $1980 balance report on a single card.

So, you have 3 cards. Let 1 of those cards report a balance and pay it in full. The next month, let a different card report a balance. Then the 3rd card. This way, all 3 cards will be showing active use, but you will also be displaying the "ideal" utilization of 1-9% of your total available credit.

Also, FYI, those messages on what to do to improve your score are actually pretty meaningless. The algorithm always gives you 3 things you need to improve. My credit score is over 800 and I'm still told 3 things I should do - don't bother chasing that nonsense. Also, also - the banks use a different, industry version of the FICO score, so they will likely see a different number than you do - don't freak out if that happens.

Finally, sometimes the 7 years ends up being 7.5 for some companies, and some stop reporting just shy of 7 years. I don't think you need a GW, I think you should dispute with the credit bureau as being past the 7 years.

[JanetJackson]

Thanks for your help y'all!

Sorry for my delayed response, I've caught whatever bug is floating around and have been way way under the weather this last week/ten days.

I will check with my mum tonight to see HOW she added me as an AU and if it's showing up as available credit.

I also did send out Goodwill letters and received a case manager for my BOA letter.  We spoke last Tuesday and she said she'd call me back within a few days with a decision.  She left a generic voicemail for me on Friday and I called her back today but got her VM.  Fingers crossed, I'll try to call her again in an hour or so.

The other collections place is a very small local business, who I haven't heard back from yet.  When I google though, it seems like many people have had luck with them helping them restore credit.  This was a $125 collection (the medical bill I didn't know about), so I am hoping they'll be helpful.


I've decided since all of my cards are on autopay, to practice letting one go to payment due this month and see if I can calm the F down and not panic about it.  Again, fingers crossed.


I will also start looking around for a new card with a different bank.
Citi Bank mailed me something about a card with a $0 yearly fee, no cash back, but 0% for 18 months.  I could, in theory, use this card for my student loans, or even pay a chunk of my student loans off on this card (the difference that I currently overpay over the minimum due) and then pay it off in... say 6 months?  This could be a good idea?
But then again, I'll be stuck with a card that I'll never want to use since it has no rewards.... not sure it's worth it.


I'll need to hunt around the forums... maybe there's a good card for me out there. 
Perhaps I'll start a new thread...
I don't care about travel rewards, I don't have the time or the desire to travel.  Maybe in 10+ years, but not right now.  I don't care about any bonuses besides cash.

Anyway.... I'm rambling now!  Thanks again for the tips and ideas y'all!