I'm relatively new to the USA and moved here less than 2 years ago from Canada. I am looking to purchase a home within next 3-4 months. When looking into mortgages, mortgage broker at Wells fargo ran credit check and gave me 3 scores. I can't recall all the scores, but they were approximately 620, 650 and 710. Mortgage broker mentioned I had a good score considering I haven't been in USA that long. At the time initial credit score was run, I only had 2 lines of credit: $5000 Visa $2000 Amex I also have other accounts like telephone company, cable tv, etc, but was told these do not count toward scoring. At the time, I was told that i shoudl aim to have 4 lines of credit to help increase my score. I took this advice and recently opened up 2 more lines of credit -- $800 department store credit card, and another $2000 Visa. Now I have total of $9800 in avail credit. Currently, I have about $400 *total* in outstanding credit, meaning $400 of $9800 i owe. The goal is for me to have the highest score possible so that when I do apply for mortgage, I can get the best rates. 1) I have already applied the technique learned on this site by paying down majority of my outstanding credit. 2) I understand from this site that scores are based on a variety of different factors, but the most important are ratios of total credit used to total credit available. Question: Should I apply for increase on my credit card? I coudl easily get another $5000 on my visa card, bringing my total credit available to close to $15,000. I know that when you request credit limit increases on cards, they run credit check. I've read that too many credit checks can be BAD on your credit history. so quesiton is whether or not getting crdit limit increase at this point is wise for me considering I am planning on applying for mortgage in 3-4 months?
If you are going to apply for a mortgage DO NOT APPLY FOR ANY CREDIT, and that includes credit line increases, in the preceding six months. That said, if you can swing a credit line increase WITHOUT RESULTING AN HARD INQUIRY, go for it, as it can only help your FICO score. Ask the rep if they run hard inquiry ... for example, Citi's reps have some discretion to increase your credit limit just by looking at your account history; if you need more, then they have to defer to a supervisor and run a hard inquiry on you. Also, do get letters from your utilities etc, that you have always paid their bills in time. Although they do not report, good payment history to utilities and rents counts towards "alternate credit history", and can help your mortgage process. A simple request to the utilities that you are applying for mortgage, and hence need a letter from them, should be sufficient. Since you said you are "relatively new to USA", it is likely that your credit file is short, and the above-said letters may become the deciding factor on whether you get the loan. Best of luck.
So have i alreayd shot myself in the foot by applying for the 2 new lines of credit just over a month ago? Good tip, i'll investigate this. Shoudl I ask for those letters now? Or wait until closer to my mortgage application?
I've heard that there are ways to artifically increase your credit limit, ie CAP-1 only reports HC not CL. Some people go over thier limit and then return the product. If you do that, will your score go up?????
Re: Re: Increase credit limit == inc score? you do NOT want to go over your limit. Just close to it so that the higher high credit figure will be reported. Cap1 reports high credit, but most actually report the credit limit
Re: Re: Re: Increase credit limit == inc score? I appreciate the advice, and I understand that, but If I read the above statement correctly having a higher limit, will increase you score. I could use a score increase at this time. I going to be applying for a loan. ... I don't care if it ruins my chances of getting a CL increase in the future. My credit card company doesn't report CL anyway!!!!!!
Re: Re: Re: Increase credit limit == inc score? i appreciate info being shared, but I'd like to stick to my original topic
Re: Re: Increase credit limit == inc score? The short answer is, YES. The effect of a new inquiry lingers on your report for at least 6 months, and will have negligible effect after 2 years (bear in mind, these statements are only thumb rules, and not precise mathematical definitive statements) Actually, do you know what your current FICO score is? Since lenders look for a score above 720 for extending prime offers, and if your FICO is way above 720, say 750 and above, even with the inquiry hit, you may qualify. Additionally, if possible, schedule your closing at least 7 months after the last inquiry date if you want to minimize the effect of the inquiry. Lenders will pull your credit report twice, once on the application date, and second time just before the closing date. You wanna be in good shape by the time of closing. Thanks (for saying my tip is good). I found that this is a quick and easy way to boost FICO. Another tip: make sure that none of your credit cards have balances exceeding 15% of your credit limit. Yes, this may mean that you may have to distribute some debt from a lower rate card to a higher rate card. Alternatively, pay your debt off entirely, and avoid using credit cards for at least a month prior to the application date. Utilities take up to 4 weeks sometimes, to get you that letter. You would want to have the letters on hand when you apply for prequalification. So just call your utilities about a month before you actually apply, that should be sufficient. You might want to start organizing your bank statements, brokerage statements, pay stubs, etc. from at least the past year, if you have not done this already. Lenders want to know the amount and source of your downpayment. You may apply for a No-Doc loan and then you do not need to do this, but it will cost you in higher interest rates.
Re: Re: Re: Increase credit limit == inc score? Sorry, I re-read your post and noticed that your FICO scores are in mid-600's to 710; ignore this piece from my previous post.
Re: Re: Re: Increase credit limit == inc score? HEY LAKPR YOU SAID,"That said, if you can swing a credit line increase WITHOUT RESULTING AN HARD INQUIRY, go for it, as it can only help your FICO score. Ask the rep if they run hard inquiry ... for example, Citi's reps have some discretion to increase your credit limit just by looking at your account history; if you need more, then they have to defer to a supervisor and run a hard inquiry on you. " You know for a fact that increasing your CR limit will increase you score, .... I thought FICO only goes by percentage?????? TIA
Re: Re: Re: Re: Increase credit limit == inc score? Hi, The implicit assumption in here is that, the debt level remains the same, and thus increasing the credit limit reduces the debt/limit ratio, and thus increase FICO Hope that answers your question
Re: Re: Re: Increase credit limit == inc score? well this isn't good news.. i thought applying for more credit would actually help me out here. By the way, if I use the MyFico.com service and use the "FICO Savers fo rHomebuyers" for $49.95, it says i have access to teh info for 180 days (6 months). Question is whether or not i can repeatedly view my credit report over the 6 months. When I view it, will it show me updated credit reports each time, or just the same one over and over? I want to get an idea of my credit reports and scores now and see improvement.
