FICO Score

[Homunculus]

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ok, so we looked i nto the bank of america physician lender program, and need a 720 to qualify. we scored a 709. the loan person said that we should close some of our credit cards as this is seen as "potential" debt even though currently they are near paid off. after some research online, i've found that they tell you *not* to do this, as it will increase your debt/credit ratio. so who's right?

basically i'm asking how to squeeze 11 more points out of our score. anyoen have any experience with this?

thanks in advance

your friendly neighborhood caveman

 

[edmadison]

Originally posted by Homunculus
ok, so we looked i nto the bank of america physician lender program, and need a 720 to qualify. we scored a 709. the loan person said that we should close some of our credit cards as this is seen as "potential" debt even though currently they are near paid off. after some research online, i've found that they tell you *not* to do this, as it will increase your debt/credit ratio. so who's right?

basically i'm asking how to squeeze 11 more points out of our score. anyoen have any experience with this?

thanks in advance

your friendly neighborhood caveman

I think what you need to do is decrease some of your available credit that you are not using. The bank is worried that if you have a bunch of outstanding available credit that you might run up your debt and get over your head. I don't know about your situation, but I know several people that have 10+ MC/Visas.

Wish I could be more helpful,

Ed

 

[discolphie]

go to the website www.bankrate.com There you can find a great deal of information, tips on credit cards, mortgages, loans...etc.. In general it is recommended you have no more than 2-4 credit cards so if you have more than that, consider getting rid of some. Do this wisely, however. You want to keep your oldest cards (and hopefully a mid range credit limit) Remove unnecessary cards like Gas cards, department stores...etc.. because while they may have a low limit, it still counts as a revolving charge account.

If you still think that amt of cards you have out is low, consider your overall debt (or potential debt)/ income level. I think it is best to have something a bit lower than 28% or so of your gross income ( it hink its gross.. maybe net...not sure) So (if its gross) and you make about 30K/ year , you wouldnt want to have your total credit limit to be above 8-9K.

Hope that helps a bit.... definately check out the website..
and btw, your credit score is still pretty damn good... i dunno why they're being so anal bout 11 points... you're gonna be a doctor for cryign out loud.... their loss...

 

[discolphie]

forgot to comment on one thing...

when they said 'it will increase your debt/credit level" i believe they were referring to this scenario:

Lets say you have 10 credit cards (hopefully not!) with a limit of 1K each... 5 cards have a balance of $750 while the other 5 have a zero balance. If you close the 5 zero accounts, your debt/credit ratio is now 3750/5000 or 75% versus 37% if all cards were still open. But the fact that you have 10 credit cards open is a big no no as well...

hope that helps..