Maintaining 720+ Credit Score for 5-10 Fannie Mae

[Kelvin K.]

As most of you know, one of the Fannie Mae requirements for financing properties 5 to 10 is that you need a credit score of at least 720.

The trouble I am running into, is that the more properties I purchase the lower more score becomes, due to the amount of new fiananced properties.

I have seen my score drop from the high 700s, to a level that is just over 730. In reviewing my credit report, the main reason is that all of the new rental property loans are contributing to a higher overall balance for my revolving credit.

Some points:
- No late payments
- Only 2 credit cards, with revolving credit and less than 30% used
- No other debt besides the 2 credit cards, primary residence loan and 1-4 investment properties.

How do you seasoned investors maintain a score higher than 720 and continue to conventionally finance properties?

[Ed O.]

You have an opportunity to get some points back by paying the balances on your credit cards down. Hard to say how many points you could get, but 1% of use will help you a lot more than being around 30%.

Also, limiting inquires, as already discussed can help as well. I do realize this is tough to do, given exactly what's happening. If you're dead set on buying more and trying to get your score up, the next time you get your score up, buy as many as you can while it's up. Of course, make sure the deal is right. That way, with 1 credit pull, you might be able to acquire multiple homes without as much collateral damage. Check with your lender on that, they should know how viable this idea is.

Personally, I hate the scoring models. About a year ago, the wife's credit had 3 earrant deragatories on her report. We were able to get them all removed. However, when they were on the report, she went from a 780 or so to a 620.

For the heck of it, I figured I'd see how many on-time payments she made on the report. On her report she had somewhere between 9,000 and 10,000 on time payments, with 3 lates. She was rated in the bottom 30% or so of people to lend to.

To beat the dead horse, she paid on time 99.7% or so of the time, but was a worse risk than 70% of the population. That doesn't pass the smell test.

Enough said.