Mortgage score improvement when inquiries fall of

[Anonymous]

Hi

   I'm in the process of buying home . Its under construction. I got pre-approval for 627 middle score in Dec 2015. By May last week or June 1st week 2016 home will be completed.

Since Dec 2015 to till date , i reduced debt UTL from 56% to 29% , but I got max increase in FICO 8 score but my mortgage score increased only few points.

Dec 15- 2015 scores

EQ - 609 mortgage , 638 (FICO 8)

TU - 627 mortgage , 660 (FICO 8)

EX - 656 mortgage , 672(FICO 8)

Utilization - 56 %

Mar -3 -2016 scores

EQ - 619 mortgage , 679 (FICO 8)

TU - 633 mortgage , 682(FICO 8)

EX - 664 mortgage , 698 (FICO 8)

Utilization - 29%

After so much effort I noticed only few points increase in mortgage score. I doubt is my inquiries hurting my mortgage score.

TU
Inquiries 24 (Mar 15- Mar16)
 Apr 2015 - 1 
 May 2015 - 3
    June 2015 - 4
 Jul 2015 - 4
 Aug 2015 - 4
 Sep 2015 - 1
 Oct 2015 - 2
 Nov 2015 - 2
 Dec 2016 - 3
 
EX
 Inquiries 42 (Mar 15- Mar16)
 Mar 2015- 1
  Apr 2015 - 3
 May 2015 - 2
    June 2015 - 13
 Jul 2015 - 6
 Aug 2015 - 8
 Sep 2015 - 2
 Oct 2015 - 2
 Nov 2015 - 1
 Dec 2016 - 3
 
EQ
 Inquiries 56 (Mar 15- Mar16)
 Mar 2015- 1
  Apr 2015 - 5
 May 2015 - 7
    June 2015 - 14
 Jul 2015 - 7
 Aug 2015 - 12
 Sep 2015 - 2
 Oct 2015 - 2
 Nov 2015 - 2
 Dec 2016 - 3 

How much points increase I will get when each inquiries fell off. Looks like by Apr 2016 , 4 inquiries will fall off from Experian , 6 from Equifax and 1 from TU .

How much point i can expect

[Anonymous]

To see a decent jump in scores pay your revolving debt down to 6%

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[GirlMelanie89]

I bet if you did like the user above stated, you could get that middle mortgage score to 640 and your interest rate may decrease. Keep pushing for 1%-9% and you should be good!! 

[Anonymous]

Hi 

Thanks for your reply. I need to pay $5000 to bring my UTL to less than 9% which I can't afford. Is there any other way to gain 20 points

[Revelate]

You might get non-trivial points from those inquiries being gone if you have time to wait.

As near as I could determine at least on FICO 04 (EQ / TU portions of the mortgage trifecta) inquiries were counted throughout the entire year that they were in the scoring profile; simple sum of all inquiries.

I went from 3 -> 2 -> 3 -> 2 -> 3 inquiries on EQ Beacon 5.

I went from 693 -> 700 -> 693 -> 700 -> 693.  This was with my file which wasn't clean, so numbers will be different, and inquiries have diminishing returns and are counted on a step function anyway in terms of score impact... so you aren't going to get 7 points for each (I don't know that there is any difference between 0 and 2 inquiries on my file actually) but 20 points for a slew of inquiries on a random file?  Maybe.  Inquiries typically stop hurting after 10 on a single report or thereabouts as an example.

Anyway, my data did show that small numbers of inquiries can hurt you on an explicit mortgage score for the full 12 months, and in my case, 700 vs. 693 is a tier (fortunately my EQ was my low score anyway).

[StartingOver10]

What type of mortgage are you getting, FHA or conventional?

[Anonymous]

Thanks for your reply. By April 9th four inquiries will fall off 1 year period and have to see how much points i will gain.

I already qualified for FHA and Conventional. I want my score to move up before closing in order to reduce PMI

[StartingOver10]

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@Anonymous wrote:

Thanks for your reply. By April 9th four inquiries will fall off 1 year period and have to see how much points i will gain.

I already qualified for FHA and Conventional. I want my score to move up before closing in order to reduce PMI

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That's why I asked.  FHA loans all have the same MIP rate (it is called PMI for conventional loans).  The rate is .0085 which is also known as 85 basis points. If you qualify for an FHA loan then you automatically qualify for MIP at the .0085 rate.  Neither your interest rate nor your MIP rate is score sensitive for an FHA loan.

If you get a conventional mortgage, then yes both the interest rate and the PMI rate are score sensitive.  The approx breakeven score for similar PMI rates is 680.  Qualifying for PMI and qualifying for a mortgage is two separate qualifications. It is possible that you qualify for a mortgage and the PMI co turns you down.  There are limited PMI companies across the nation.  Here is an example of the PMI matrix for a conventional loan and the associated LTV's and credit scores to determine the PMI rates for one of the companies:

https://www.mgic.com/pdfs/71-61210_bpmi_monthly.pdf

www.mgic.com/rates/rate-cards.html

Notice that to get a similar rate at 95% LTV (slightly lower at 82 basis points) your mortgage mid score would need to be 720 to 759.  If you are above 760 then you get the best rate: 78 basis points. 

However if you put down 10% rather than 5%, there is a big difference in PMI rates.  Look at the rate matrix to see all the different rates available.