I was hoping for a answer to a quick question.
I am looking to buy a house. Getting financing is not a problem, getting the mortgage insurance is.
The finance company tells me that my wife’s score is about 25 points too low (to get the loan we want) due to having used to much of her credit in ratio to her limits. We need to get her from 655 to 680. She was off work about 3 1/2 years ago due to illness and basically lived off her cards for 2 months. Prior to our getting married about a year ago she was only able to make small payments. She was never late, she just could not get ahead enough to make much head way on paying the cards off.
Since we have been married, we have taken the cards one at a time and have paid 3 totally off and cut three more balances by more that half, but we still have three with 75% of the high limit used. This is hurting her score.
Here is my question-I could pay down the score, but I need to use the cash on repairs necessary to get FHA financing and for the down payment.
Could I reduce balance to limit ration and improve the score, if I get her credit limit raised? If I do this would the credit companies pull her credit report again and would that hurt her score more than raising her limit would help? I would need to ask four different cards for higher limits.
Thanks for your help.
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Sat, Mar 20, 2010
March 20th, 2010 at 1:36 pm
If you are getting an FHA loan your scores have nothing to do with getting approved for the mortgage insurance. If you are getting a conventional loan then your scores do matter. So which loan are getting?
One trick I have used to help my clients is to have them spread the balances out over several cards thereby reducing the balance to limit ratio. If you can get all of the cards under 50% (30% is even better) you should see an increase in the scores.
March 20th, 2010 at 1:36 pm
If you need your wife’s credit score to improve, you need to pay down her credit. You cannot get credit if you do not pay off your wife’s. If you ask for more credit the company that is going to leaned you money will see you as a risk.
March 20th, 2010 at 1:36 pm
If you could get her limits raised, that would improve your debt to limit ratio. However, credit card companies are doing more decreasing than increasing limits. You may not be able to get sufficient limit increase to get below the 30% overall mark.
Another thing that might work against you, is that the credit card companies run a credit check before approving the increase. The mortgage company might view this as applying for additional credit.