Investing Lowered Fico Scores?
Help!! In the last 30 mos. I have purchased 6 good rental homes and refi'd the one I had. My fico scores have dropped from mid 7's to mid-high 6's. I am a perfect payer and worth much more than 2.5 yrs. ago. Problem seems to be that 3 helocs are near top(for 10% down payments), and several credit cards are 50-90% usage per excellent leveraging rates (2.99, 5.99 until pay off). Now, my longest standing credit card w/a zero balance was canceled by creditor per 'too many inquiries'. This looks bad and lowers my unused credit and therefore my percentages. What can I do to rebuild my numbers other than paying way down the cards?? I need to keep my scores up for investing reasons. Thanks for all thoughts, ideas, advice. C :-?
I would dispute the inquiries and hope for the best, pay down the cards to under 30% utilization. All of the inquires probably brought your score down rapidly. Since you don't have any negative accounts your score may bounce back within 6 months (mine jumped 40 pts in 6 months). Go figure!
Also it seems that 680 is very good as far as obtaining loans at a decent rate so as long as you are in the ballpark you are fine. Any decent broker or banker would be able to determine the decrease due to newly opened accounts. If you are in the business of investing bankers money or obtaining loans from bankers that probably won't be the last time your score will be that low. It will be ok!
No offense meant, but this is all because of poor credit/money management. Using HELOCs and credit cards to get your downpayment is not a bad idea. However, not getting that debt off of them is a bad idea.
Revolving debt (ie CCs and HELOCs) affect your credit much more than straight loans do, especially when they get near their limits (in fact, anything over 50%). The short answer of why is that creditors seem to think that you can't handle debt well if you continually max out your credit lines.
The best thing that you can do to solve this problem is to refinance the entire purchase of your rentals into a standard mortgage and payoff your credit lines everytime you use them. Doing this will quickly jump start your credit again, as creditors seem to think if you can manage your revolving credit well, then you can handle debt better.
Roger
Thank you: I am working on the Planet Feedback as we speak. [ Edited by ceinvests on Date 10/05/2004 ]
Hey Raj,
I'm not offended, but I don't think that usage of 3 - 5% money falls under bad money management. I concur that the fico module is not prepared to 'see me properly' and I could be suffering those consequences and there may be Nuttin' I can do about it. Aarghgh. So far, my money mind just won't let me give up those good rates.
In my area, a refinance costs good chunk of change so I don't refi. lightly. I can't see if I am being penny wise/pound foolish. 8-)