FUN with FICO

[captpackrat]

Been researching loans and stuff lately, and finally got around to getting my FICO score.  Not too great, but not too bad, only 688, but the web site indicated that was mostly because my "currect balance" is 48% of my credit limit.  It doesn't take into account the fact that I've paid off the full credit card balance every single month so far,  or that this was an unusual month.  Loan guy at the bank had told me it was OK to use up to 50% of my available credit.  I wonder if he delibrately gave me bad information hoping to drive up my loan rate.  Anywho, if I keep my credit balances at about 5-10% (that's about $50-100), my credit score should jump up to between 730 and 780 by next month.  Yay! Not using the credit cards at all and keeping a 0 balance would improve my score, but not by as much, only about 710 to 750.

Apparently my credit report still contains the credit card I applied for, got approved for, signed for, and then immediately closed when I learned that the bank lied to me about the fees (different bank, but I'm beginning to see a pattern here).  This turns out to be a good thing, because it inflated my FICO score by increasing my credit history, even though I only had the account for less than 5 minutes.

On to the loan.  Ditech claims they can offer me a 30 year fixed at 5.875% with 0 points and a $3100 closing cost.   I can afford the closing cost, and the monthly payments would be about $1480.  If I pay 2 points, I can drop the rate down to 5.375%, which translated to a monthly payment of $1400, BUT I'd have to fork over over $8000 in closing costs.  An extra $5000 to save $80 a month?   That's over 5 years to make up the points.  I don't plan on moving any time soon, but I don't think I could afford $8000 in closing costs.

Of course, all of this is contengent on either my getting a raise and/or increase in hours, or my SO returning soon and getting employed and helping with the payments and/or bills.  At my current salary and hours (32 per week), I'd have enough to pay the mortgage, insurance and taxes, but nothing left for bills.  Fortunately, events happened Friday that should help prove the need for my being there 5 days a week instead of 4.

 

Comments

[mortonfox.livejournal.com]

That's funny. Having credit cards but not using them improves your score. Not having credit cards at all, which is arguably the same thing, is worse because then you would have no credit history. Ah well. The credit industry will eventually collapse anyway on its own folly.

[exitzero.livejournal.com]

I'm curious, how much of a down would you need for the Ditech loan?

[captpackrat.livejournal.com]

I think that was with 0 down.

[exitzero.livejournal.com]

Wow, okay, that sounds great. Interest only, then, I'm guessing?

[captpackrat.livejournal.com]

Nope, just a regular old 30 year fixed.