That is exactly what I am doing (except real estate values in my area a a bit lower than your example). I applied for a $250k mortgage (not approved yet but likely to fund 45-60 days). I'm waiting on the appraisal on my house which is being delayed due to the fact that it is currently being painted and won't be finished for about 2 weeks).

I'm going to take $200k and fund my LLC which will purchase a rental property. After refurbishing and getting tenants, I will get a mortgage on that property and pay myself back. Hopefully, I can do this over & over until I have enough rental income to stop working.

My primary purpose of this post was to inquire about improving FICO score. I realize it's not that important as I prefer to be debt free but in this case, I am taking our a new loan and need my score to be as high as possible.

Yes, I've been paying off prior to receiving my statement. I guess it's a bad habit but I like to pay everything as incurred.

Regarding my paid-off mortgage dropping off my credit. It's still there but only show up on my credit report in the history but I'm not getting any credit due to the fact that it's a closed account. When I applied for a car loan last year, I was initially declined for the amount I needed but when I went into the bank with my deed and pay-off documents, they approved the loan.

This is your problem. Because you're paying it off before receiving the statement, it's reporting a $0 use to the CRA so to anyone reviewing your credit it looks like you're not using it. A $0 account balance is just as bad as no account. Wait until your CC generates a statement to pay it off and then it will show use on your report which will up your FICO score.

My credit report shows 4 late payments in 2014. This is an error and I have written to the bank to get corrected. In 2014, I started paying extra on my mortgage. At some point, I looked at my balance and noticed that the principle had not changed as expected and I was also charged some late fees. This was impossible since I had been paying extra.

I called the bank and it turned out that in a couple of cases, the extra principal payment went into my escrow account since the bank did not know what the extra was for (sounds pretty dumb to me). In four cases, I paid the monthly mortgage payment prior to the first and so the payment either posted or principal or escrow and then the following month was recorded as non-payment. After discussion with the bank, we agreed that any extra payment would go to principal and I would never pay before the first, unless I wanted that added to principal. They also reversed the $42 late fee (x 4).

I had no problems after that but now that I am checking my credit report (5 years later), I see that my good intentions were not applied correctly and it is affecting my current credit score.

I previously filed a dispute to the credit reporting agencies and the complaint was denied and returned as "reported correctly". I have since followed up with the mortgage company.

When I bought my new car last year, I went through this. Zero debt, haven't had a CC balance in years, no house loan in my name.. Here I am thinking how great I'm doing but got declined by three different banks because of "no recent credit history". Yes, my 80 year old mother had to co-sign for me.. true.. WTF?

Although those 4 lates are fairly old at 5 years, they may loom a bit large as you don't have much other positive, offsetting items. Plus a lender will consider them more relevant towards another mortgage.

It's hard to believe your lender could justify any sort of late payment and should be compelled to give you a DELETION LETTER which you would forward yourself to all three bureaus. That's the only way to insure this is done promptly and correctly.

You can go to annualcreditreport.com and get a free copy of your credit report once a year. Any report obtained from Experian, Equifax, or Transunion will not show as an inquiry on your credit report or knock points off your score. You might be able to pay extra and obtain your score, which should include the 4 top reasons your score isn't higher (at least it used to). Those are the 4 worst things they can say about you, and they might not be bad. They will point you in the direction of getting your score up, though.

If you've already gotten your free reports within the last year, just pay for them from the individual credit reporting agencies and pay extra for the score. You've got a vested interest in this now, so it'll be money well spent.

Ahhh, the black art of FICO scores, lol.

If you want to maintain/increase your scores, you might:

* Maintain small balances across multiple revolving accounts (credit cards). Around 5% total, but no more than 30%. This goes towards the number of open/active accounts (more = better, to a point), and utilization rate (lower = better).
Key word being "active accounts". So, open a couple and just set up each one to auto-pay things like cell phone bill, insurance, cable, etc.

* Request/obtain higher credit limits on your revolving accounts. This also goes towards your utilization rate (ratio of CC balances to available credit).
If you are at/above 30% on one card and/or the total average of all cards, a credit-line increase can give you an immediate bump in FICO scores.

* Don't close any accounts, if able. This goes towards your credit history.

* Try to have different types of accounts (revolving, installment, mortgage, etc.). This goes towards your "credit diversity" or whatever they call it.

* Try to avoid multiple hard-pull credit inquires. Typically, you will get a time-window for inquires wherein multiple pulls will not count against you during that period (usually 30-60 days, depending on the type).
Whenever possible, soft-pulls are the way to go. On some things you may be able to waive a hard-pull credit inquiry altogether, and/or put down a deposit in lieu of a credit-pull (utility companies, etc.).

* Don't ever take out a "credit repair" or "debt consolidation" type loan if you can avoid it.

* Use credit cards instead of/in place of debit cards. This goes towards your credit activity, but also offers you WAY more protection.
If you use debit cards everywhere for POS transactions and/or online, you are playing with fire, especially if the account(s) linked to your debit cards carry significant balances.

* Then the obvious stuff like, no late payments, no BK/foreclosures, collections, etc.

SmileWavy

Vern's been carrying a zero balance, in fact paying the balance to zero before the billing statement (not FICO friendly unless paying the balance down to around 5-10% of the limit before the statement comes out). I don't think a credit limit increase will help him like it would with somebody who owes more than 10% of their limit. A limit increase should be requested without a hard pull, of course. Some lenders are fine with that, some need to see a report.

I bet mine sucks. No debt. Pay off credit card every month. Haven't checked in 20 years.

You have an 837.

I'm going to do that but not for the purpose of increasing my score. I want to have available credit because I am going to invest in rental property, either single family homes or 4-plex. I'm looking at slightly distressed properties so I will need funds for refurbishing. Hopefully I can swing it without the need to borrow too much but it may come in handy if major repairs are suddenly needed (i.e., HVAC or something like that). I have a formula that I will follow so as to not pay too much and then lose my shirt.

I work in the mortgage business. A 732 fico is not stopping you from getting a mortgage, and at a bank like wells or boa, you will get either the same or really close to the best rates with a 720+ fico. 740 is the absolute most you could need to get their best rate. Talk to an LO about that.

A fico score that high will never affect your borrowing capacity. That is far more dependent on your debt ratios, so if you are not over extending yourself, I wouldn't worry. Remember that CCs are unsecured, so they are more cautious about giving out big lines of credit at first. Go back in a year with a good pay history and they will up it.

The issue with the mortgage being recently paid off is that you closed the account. FICO scores suffer when you close an account, but they will go back up slowly. Opening new accounts also hits your fico, so if you haven't already, don't go opening up a bunch of credit cards.

Manual underwrites are silly for your scenario because you will not need it and if you insist, your rate will be higher for a manual underwrite. Your issue is not getting an approval, it is about getting the best rate. Don't go there.

DO NOT keep pulling credit to see if its higher. All hard pulls within a 30 day period for the same type of loan (mortgage, auto, etc) count as one pull and will hit your score a few points, but if you do it again after the 30 days, it counts again.

Advice that I give borrowers when they are buying a house is stay home, don't buy anything, don't close any cards, don't open new credit and don't make a move without consulting first. Its amazing how many people screw themselves when trying to improve their credit or just being oblivious, when if they had literally done nothing, they would have been fine.

I wait until the cc bill arrives and pay it in full during the 25 day grace period. Zero interest but still helps the FICO score. As far as late payments are concerned, one of the little known facts is that some late payments are more harmful than others. The mortgage is a big no-no because it is a necessity and the banks feel that being late with something so important is a reflection of your attitude toward debt obligations. It is good you tried to correct it and even filed a dispute. It sucks that it wasn't your fault and yet the credit bureaus won't do something about it. Have you tried getting the bank to write you a letter to present to the bureaus? I don't know if the bank would do so and if the bureaus will accept it but, it never hurts to ask.

Payed off the mortgage, my score dropped 20+ points, its BS. According to the free BS score you get from the CC company was a 836 out of 850. Had all the boxes checked, no late, 30y history, 2% utilization, all type's of credit, CC's, auto loans, HELOC and don't carry a balance on CC's. Well I am not about to go get a mortgage to get a higher score. So it is what it is.

Have you tried calling that guy on TV :)?

Well, my score updates every Tuesday (according to Chase) and I also get a weekly e-mail from Experian noting any changes to my credit. Yesterday it went up 9 points to 741. I somehow missed reducing my balance to zero since there was a pending charge so my total balance was $3 dollars. It's funny, Chase has a credit score simulator and when I change the $3 balance to zero, my score increases 20 points. This tells me that the entire scoring system is flawed.

There was a thread here some time back, a speech done by the real life "Catch me if you can" man...Abernathy? Did a quick search but couldn't find the thread. I found it a fascinating hour to watch. Anyway, near the end, he said to never use a debit card because of fraud risk. He said to use a credit card, pay it off when the bill arrives, to build your credit score. Why credit? Because of the protections from fraud the banks must, under law, provide.
Since the man now works for the FBI's fraud division, I figure he might know what he's talking about.

Personally, other than credit card used as above, Cindy & I haven't borrowed for decades. Can't see any future reason we'd want to. Don't know our credit score..don't care.

And proprietary. Thus secret.
So they can libel you in front of everyone (lenders, landlords, employers, etc).

And in the end, you as a citizen-consumer have no recourse but to play the game with apparently no rules.

But it's all 100% 'government'...controlled by a select few.

He might technically be correct, and still be FOS too, as it applies to the reality of today. Banks will not kill the goose...CC or debit losses....not an issue for the customer....unless something REALLY amiss. Just doesn't happen...I use mine with no fear. I'm different ;)

My CU debit card fraud protection has been awesome since I've had it....WAY better than back then too.

He's livin' in the past....twas true initially....fer sure.

The profit margin on CC is much higher....follow the $$$ ;)