Weekly Tips
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Lizardking · #1 (**permalink**) 10.15.2002, 18:22

Here is my tip for boosting your score real quick for a big loan you are expecting. This will work assuming you have a mostly clean report of other negatives.

The past 2 months I have been getting my credit report(s) ready for when I apply for my mortgage next month.

To absolutely maximize your score, the best thing you can do in the short term is to pay down credit card revolving balances.

The problem is that even if you pay off the balance in full, the credit card reports the balance that was on there at the closing of the statement. So if you charge $2,000 and pay it off as soon as you get the bill, your report still shows $2,000 in revolving debt.

The trick is to pay off the account prior to the statement closing. This will cause the satement to close with a $0 balance and the report to list $0 in revolving debt.

I did this last January prior to a car lease and it boosted my Experian score from 714 to 762 by merely getting my revolving debt down from $3,000 to $250.

I have been paying off all of my balances prior to the statement closing for two months now just to give myself a cushion in case they don't report each month.

I have Equifax up to 742 and Experian up to 730.
The ONLY debt on my reports right now is my wife's auto lease with $17,300. It is from Jan 2002.

RoundLake · #2 (**permalink**) 10.15.2002, 18:49

If I understand you correctly, you are saying that what they report is the total balance due at the close of each accounting period.

This kinda makes sense... it really doesn't matter what you pay - it is the outstanding balance that gets reported each cycle, right?

-Cliff

msb212 · #3 (**permalink**) 10.15.2002, 19:22

Alternatively, you can also dispute the balance on EQ, which will remove it from the fico calulation, at least for 30 days. Only works for EQ, and only if you have high balances, and other tradelines. But for me, my score went up 36 points by disputing two credit card tradelines that are maxed out. I would love to follow the above strategy by don't have the funds to pay down the balances.

Lizardking · #4 (**permalink**) 10.15.2002, 19:23

Quote:

Originally posted by RoundLake
If I understand you correctly, you are saying that what they report is the total balance due at the close of each accounting period.

This kinda makes sense... it really doesn't matter what you pay - it is the outstanding balance that gets reported each cycle, right?

-Cliff

Correct. Thus you can affect the amount of debt reported on your credit reports by paying off the CC prior to the statement closing. Financially this is not good because you are not taking advantage of the grace period.

But if you know you are about to apply for a mortgage and you want the best rate possible, it is worth doing for 2-3 months prior in order to get that low mortgage rate.

Lizardking · #5 (**permalink**) 10.15.2002, 19:25

Quote:

Originally posted by msb212
Alternatively, you can also dispute the balance on EQ, which will remove it from the fico calulation, at least for 30 days. Only works for EQ, and only if you have high balances, and other tradelines. But for me, my score went up 36 points by disputing two credit card tradelines that are maxed out. I would love to follow the above strategy by don't have the funds to pay down the balances.

That would work for a loan where they only pull Equifax, but for a mortgage they typically pull all 3 credit scores.

Quixote · #6 (**permalink**) 10.15.2002, 19:44

Hey LK,

I went one trickier than that. I coordinated with my mortgage broker so I knew approximately when My CR's were going to be pulled. About a week and a half ahead of it, I took out a new Credit Line ($15K) from MBNA. I waited a couple of days to give them time to report the new account. I then used the CL to pay down some of my credit card debt. The next day, I got updated statements faxed (these MUST be on letterhead and MUST have a signature on them!) to me reflecting the new, lower balance. I then faxed them to each of the credit bureaus with a (true) sob story about how I'm trying to get a mortgage and I need every last FICO point I can get and would you pleezopleez hurry up and update the balances on these accounts so we can buy our first home. Each of them updated within 72 hours. My scores all bumped up 50-75 points, because the new balance had not yet reported from MBNA. So I had the additional CL improving my ratios, then a whole bunch of debt just disappeared for about three weeks. My mortgage broker then pushed on the lender to get my credit pulled, which they did, with about three days to spare. The scores below have all fallen approx 50-60 points since the balances reappeared. It's not for the faint of heart.

Result: Approved. Stated Income, Stated Asset Loan ($271K) at 6-7/8% with no points and nothing down. I'm signing the loan documents tomorrow and escrow closes Friday. Party's at my (soon to be) house.

DaveLV · #7 (**permalink**) 10.15.2002, 20:54

Quote:

Originally posted by Lizardking

That would work for a loan where they only pull Equifax, but for a mortgage they typically pull all 3 credit scores.

Yes, but since they use the middle score, you can use this to your advantage if you have one good score and two so-so scores.

DaveLV · #8 (**permalink**) 10.15.2002, 21:17

Another thing I learned during my recent mortgage application process was that at least in my case, disputing an item on TU caused the lender to be unable to generate a TU score. Thus, I only had two scores at one point and the lender was going to use the lower one.

So if your Experian score is OK and you can boost your Equifax score by disputing balances you could completely negate your TU score if you want.

This was my personal experiance and YMMV. Later on in the process when the item was deleted from TU the lender was able to get a score.

G. Fisher · #9 (**permalink**) 10.15.2002, 22:26

Quote:

Originally posted by Quixote
Hey LK,

I went one trickier than that. I coordinated with my mortgage broker so I knew approximately when My CR's were going to be pulled. About a week and a half ahead of it, I took out a new Credit Line ($15K) from MBNA. I waited a couple of days to give them time to report the new account. I then used the CL to pay down some of my credit card debt. The next day, I got updated statements faxed (these MUST be on letterhead and MUST have a signature on them!) to me reflecting the new, lower balance. I then faxed them to each of the credit bureaus with a (true) sob story about how I'm trying to get a mortgage and I need every last FICO point I can get and would you pleezopleez hurry up and update the balances on these accounts so we can buy our first home. Each of them updated within 72 hours. My scores all bumped up 50-75 points, because the new balance had not yet reported from MBNA. So I had the additional CL improving my ratios, then a whole bunch of debt just disappeared for about three weeks. My mortgage broker then pushed on the lender to get my credit pulled, which they did, with about three days to spare. The scores below have all fallen approx 50-60 points since the balances reappeared. It's not for the faint of heart.

Result: Approved. Stated Income, Stated Asset Loan ($271K) at 6-7/8% with no points and nothing down. I'm signing the loan documents tomorrow and escrow closes Friday. Party's at my (soon to be) house.

"We don't want to have consumers trying to alter their behavior in short term ways that will --regularly has nothing to do with their long term credit risk." - Fair, Isaac

http://www.creditscoring.com/pages/f...pt.htm#page298

What a perfect example.

In more than one way.

Your loan application is supposed to be an accurate representation of your debt. It isn't completely clear: Did the broker actually know about the new debt-- but failed to disclose it? Do they actually have a license?

herauntsis · #10 (**permalink**) 10.15.2002, 22:46

Uh oh, Quixote, next thing you know, he will be on the phone to your lender.

Bunter · #11 (**permalink**) 10.16.2002, 01:30

Quixote, congratulations on the new home. You should build a little pond with a bridge in the backyard. It would give G.Fisher a place to hide under.

suzza · #12 (**permalink**) 10.16.2002, 03:24

Why do I get the feeling that Greg's favorite saying as a child was, "I'm telling Mom."

Quixote · #13 (**permalink**) 10.16.2002, 06:40

I just knew that would get Greg's goat. Heh, heh, heh. However, it ultimately was only an exercise, because we were finally able to determine that the minimum score needed was 620 (middle score) for the loan we got. All three of my scores are still well above that even after the fall.

And excuuuuse me for not giving a flying fig what Fair Isaac & Co. thinks of my behavior. They set up this screwy system. I just figured out how to make best use of it.

G. Fisher · #14 (**permalink**) 10.16.2002, 07:24

... in more than one way.

It's your house. Scoring aside, if you miss a few payments and the lender finds out that you lied on the application, they may not be as lenient as they would otherwise. The score doesn't figure debt-to-income ratios.

I'll take that bait, any day. The questions above remain unanswered, at least overtly.

--------------------

For the unitiated, the three whines from the sidelines relate to this thread:

I've never done this lawsuit thing

in which a person's name, address, email address and telephone number were posted on a public message board. It's pretty ugly, so I just contacted them to ask if they wanted to participate in the discussion described as a "PUBLIC FORUM," to perhaps, among other things, defend their honor.

2000 years after the idea emerged, the participants seem to misunderstand its concept.

Quixote · #15 (**permalink**) 10.16.2002, 07:32

I lied about nothing on my loan app. Because it was a Stated Income, very little documentation was needed. They pulled my credit, called my work to verify employment, and that was pretty much it. If I had been asked to list every debt, I certainly would have included the CL on it. But, I wasn't asked. The CL could have been reporting in time, and I still would have qualified. The mortgage broker told me "Don't worry about it, your scores are good enough". I just wanted an extra margin on the scores.

sirrowan · #16 (**permalink**) 10.16.2002, 08:47

Greg,

Why can't you just go away. Why do you want to turn on people every chance you get? Please seek help because you definitely need it. Maybe you and Bobby could get baulk rates!

breeze · #17 (**permalink**) 10.16.2002, 09:22

Seems to me, it's not "people" - it's Quixote. Greg hasn't gone after anyone else, to my knowledge. Not that my knowledge is all-encompassing. It appears to me that Greg has an axe to grind with one person in particular.

One of my favorite people, actually. ;)

Quote:

Originally posted by sirrowan
Greg,

Why can't you just go away. Why do you want to turn on people every chance you get? Please seek help because you definitely need it. Maybe you and Bobby could get baulk rates!

G. Fisher · #18 (**permalink**) 10.16.2002, 15:32

Quote:

Originally posted by Quixote
I lied about nothing on my loan app. Because it was a Stated Income, very little documentation was needed. They pulled my credit, called my work to verify employment, and that was pretty much it. If I had been asked to list every debt, I certainly would have included the CL on it. But, I wasn't asked. The CL could have been reporting in time, and I still would have qualified. The mortgage broker told me "Don't worry about it, your scores are good enough". I just wanted an extra margin on the scores.

Quote:

Certification: I/We certify that the information provided in this application is true and correct as of the date set forth opposite my/our signature(s) on this application and acknowledge my/our understanding that any intentional or negligent misrepresentation(s) of the information contained in this application may result in civil liability and/or criminal penalties including, but not limited to, fine or imprisonment or both under the provisions of Title 18, United States Code, Section 1001, et seq. and liability for monetary damages to the Lender, its agents, successors and assigns, insurers and any other person who may suffer any loss due to reliance upon any misrepresentaion which I/we have made on this application.

http://www.alphaloans.com/downloads/...Mae%201003.pdf

Did you sign that form without all your debt disclosed?

You didn't say it was a "Selective Debts Disclosed" loan, along with "Stated Income."

Quixote · #19 (**permalink**) 10.16.2002, 16:34

I'm done answering GF's damned questions; in this or any other thread. There's not enough hours in the day...

Calypso · #20 (**permalink**) 10.16.2002, 17:17

Lizardking--

I use the exact same technique to get those scores up-- it is amazing how much difference it makes.

One caveat though-- be careful not to pay TOO much and end up with a credit-- I have found that Experian, especially, chokes on credit balances and
reports them as debt.

Paying before the bill cycles is a pain, but it is definitely worth it if you are going for a big loan.

Another tip, for several months prior to applying, you might only want to use cards that accurately report each month. I love Citibank, but their reporting S#ck$. Once I got them to (finally) report my correct balances, I put the cards up temporarily.
They sometimes take months to report, and then they get it wrong anyhow.

Cheers--
C