How to get a Quick Credit Score Increase

Question

Hello All
Looking for ways to increase my FICO scores in a short period of time (30-60 days). Here is my situation:
Part time Real Estate investor with several properties owned free and clear
Need to leverage properties to grow business
660 Credit Score (FICO)
45K Credit Card debt
145K Mortgage
80K income (full time job)
One late payment (30 days) 2 years ago

Unable to use 48k year in rental income due to last two years tax shows negative income (properties were purchased and rehabbed during this time)

Bank deal - Approved mortgage with the following stipulations
- Debt to income is too high - Bank would require that 18000K goes to CC Debt at closing
- 2500k Loan Cost

OR - depends on increasing credit score to 680 min 720 optimal

- Bank Line of Credit (for this they will use rental income plus job income
- Low fee's for loan

My question is "How can I achieve a relatively quick score increase by 20-50 points?
How much would I need to pay down my credit cards to get this increase?

Thanks for your time

Joel Owens · Answer

The computer model looks at it this way.

Example credit card limit 1,000

75% or higher use 750 dollars takes a big hit to your score.Computer figures you are using up too much.

50% 500 dollars average is a neutral score

33% or below 330 average or below positively affect credit.

You can change things on your credit and use a  "rapid rescore" to update the results faster.

Inquiries are one part.Inquiries initiated by you with so many in a certain time can affect you.

Inquiries that are not initiated by you do not affect the score heavily.

You can:

1.Pay down all card balances below 33%

2.Ask for a credit limit increase to increase available credit without paying down

3.Ask for an interest rate reduction on your cards to lower monthly average payments

If you have many credit cards keep the longest trade lines open for better scores.If you have a bunch of little credit cards that are only a few months old like Gas Card,Macy's then get rid of those as too many trade lines hurts your score.

If those trade lines are all you have then keep them.You would really have to post your tri-merge credit report to analyze all facets of it for improvements.

Steve M. · Answer

Most have already suggested what I'm about to ... But I was able to go from the 500's, to 720+ in a matter of 6 months or so.

This is what I would do:
1.  GW (Goodwill) Letters - Write a letter every day and send it to the CC company that you have the 30 day lates with.  All it cost is the cost of a single stamp.  I was able to get SEVERAL lates removed.  I apologized, fessed up to being late, but explained I was trying to buy a home and these lates were hindering me from a better rate.  Had all lates removed within about 2-3 months.

2.  Credit Limit Increases - Most CC Companies will do a *soft pull* which won't affect your credit rating.  This will reduce your DTI ration.

3.  Sell a house - pay down your debt, and you'll be in much better shape.  Otherwise, pay down your balances, and take another look at things 6 months down the road.

4.  LAST thing I would try if I REALLY needed to.  Open several 0% balance transfers CC with high limits.  Transfer the balances over several.  You should have 12-18 months to pay them down, and with the additional credit, your DTI will come down.  But you do get hard inq's for new CC's.

There's no quick fix.  Check out www.MyFico.com (no, i am not affiliated with this website) ... I did some simple things, never hired anyone, and literally raised my score 140+ point in a matter of months.

Jon Klaus · Answer

Pay down each credit card account to <50% of the credit limits.

Jim Stardust · Answer

I don't know if this would work for anyone, but some things that have worked for me in the past to boost my score quickly:

1. Move CC debt from your name to spouse's name, we shared a CC and then opened one with 0% in her name alone and transferred the balance to it, improved my score by 18 points in a matter of several weeks.

2. Borrow money from a retirement account to pay down your debt, I know it's controversial, but it worked.

3. Get your credit report and see what your utilization rate on some of the cards, you can shuffle things around to bring down the utilization rate (pay a large amount on some cards and minimum on others)

Cheryl C. · Answer

Can you cash-out refi your personal residence and pay-off the cc debt on the Hud-1?  I wouldn't close these accounts.. I agree that an alternative is to ask for an increase in the credit limits on your cards.  Do you have other cash to paydown the credits cards?

You seems thin having that amount of cc debt compared to your income.  Can the lender you are dealing with place a first trust (paying off the cc) on one of your free and clear rentals?  Mortgage debt is looked at more favorably by fico.

We got caught up a little when heloc's go cancelled/frozen in early '09.  Now it looks like we are using a high amount of available credit.  I tapped several when I felt the cancellations would be coming.  Why  heloc debt is treated as revolving instead of mortgage is beyond me - but very detrimental.

I agree on the Hard Inquiries - avoid them.  Our scores dropped from 810 to 750 after the heloc freeze.  Good thing I don't need any conventional mortgage financing.  I use a small bank that cares more about the equity in the deal and our past relationship.

Edgar B. · Answer

Go to FTC website, go to OPTOUT page and sign on, this will take out of the automated lead generating system for six months and this a have seen an increase from 20 to 80 points, it is free and easy, it will help if you wait a week and then send at least a 60% over your requierd payment to all the open credit lines this will force them to report the better than agreed payment and together with the opt out, you should get what you need, it may take around 2 to 3 weeks. Let me know if it helped.

Brian P. · Answer

quick answer to limits on credit cards and their reporting. Depends on the credit card company. Capital One for example didn't report the account limit but others did. Plus many lenders ask for that info now when you apply and lying can get you in trouble on a RESPA loan now days. They want to see how much hot water you can get into when the plastic flies.

Daniel Sitler · Answer

Some good posts here.

We can't stress it enough. Its your unsecured debt (credit cards) that are hurting your scores. Pay those down and watch your scores skyrocket!

One alternative to paying them off is it consolidate them into one revolving account. While this will not decrease the principle of your debt, it will change the way it is reported to the bureaus. Should raise your scores a bit!

Dick M. · Answer

>1.Pay down all card balances below 33%
>2.Ask for a credit limit increase to increase >available credit without paying down

I thought they didn't know your credit limit, just the highest you've ever had it up to....

Brian P. · Answer

William

You have gotten some good responses. As a lender I would look at that credit card debt of over 50% of your annual income and say no way am I sending any money over there. I wouldn't care if your FICO was 850. You lose your job, get in an accident, whatever your looking up bankruptcy attorney's.

Even the local mouse house doing an E loan, yes there are A.B,C,D loans but the E loan is a they will probably default and we will need to foreclose so we must make sure there is a ton of E-quity, and as much other collateral as we can get loan, e.g. a blanket mortgage covering the main purpose of the loan plus your other properties, etc.

So making some money wholesaling, etc. and putting your financial house in order should be your prime goal. You really don't need banks at this point, you need a little more knowledge about doing business without using your own money, and standing hat in hand looking sad eyed at a banker..

How to get a Quick Credit Score Increase

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