Quick questions about raising my mortgage score

Anonymous · ‎06-21-2017

Hi guys!

New to the forum and looking for quick simple answers to a few questions regarding raising my mortgage score.

Situation: Closing on a house next month but recently found that my credit scores did not qualify for the best interest rates from NFCU. This was a shocker to me because I've had great credit scores for the past 10 years and never had a problem qualifying for the best interest rates. I pulled my credit report and saw that I had a mark on my credit report for two of the bureaus due to being 30 days late on my final car payment 2 years ago. This was a simple mistake on my part. I got the notice that my last autopay was being drawn and didn't realize that there was one last payment that needed to be submitted manually. I quickly paid it once I realized the mistake, but apparently Nissan reported it to the credit bureaus (jerks). I called Nissan recently and they said they weren't showing the late payment as being reported and the account was in good standing on their end. I put a dispute in with the credit bureaus and it SHOULD be cleared from my report soon (it might take a rapid rescore from my lender to get it to show in time however).

Also, at the time of my application for mortgage, I did not realize my credit would be pulled at that time (was putting in information up to the point of submission). My credit card balances and overall utilization were high at that time. For example, I believe my Amex card showed a balance at the time of the report even though I pay it off fully every month. I admit that my revolving cards had a rather high utilization as well. I have since made sure that my Amex card will show $0 balance when my report is pulled and also significantly brought down my balances, although the overall utilization is still over 30%.

So I have a few quick questions that are hopefully easy for someone to answer here.

1. How much does having 1 negative mark on your account bring down your mortgage scores? If I successfully get that mark off of my credit report, how much should I expect it to increase my mortgage score?

2. Does paying down your credit card balance and decreasing your credit utilization rate increase your credit score linearly, or do you have to reach certain waypoints for your score to increase? I have some cash on hand to pay down my balance and the myFICO simulation shows it will increase my FICO 8 scores by 25-30 points. How much should I expect my mortgage scores to increase?

For reference, my scores are currently showing EQ 5 693 TU 4 711 EX 2 713. The proceeds from the sale of my current home will completely pay off my credit card debt, so this is strictly a short term issue. Trying to get my middle score to the magic number of 720!!!

Anonymous · ‎06-21-2017

A single 30 day late payment hurts the most for a full 2 years. You said "2 years ago" did you mean December 2015 or January 2015? It matters.

The utilization is a crusher. If any cards are over 89% utilization individually you are in the "maxed out" bracket there. Having aggregate utilization over 28.9% hurts as well. Bring it down by any means possible.

Anonymous · ‎06-21-2017

That last car payment that is showing up as late is from 2 years ago meaning January 2015.

As far as bringing down my credit card utilization, I have already paid down my credit card balance since the lender pulled my credit report. Also planning on making a payment today prior to the statement closing. The credit card balance that myFICO is using is 2 months old, so once that updates my utilization rate WILL go down. I'm just trying to determine whether it will be enough to bring up my mortgage scores. If it doesn't, then it's not the end of the world. I'd just have to pay a higher interest rate. But saving ~$100/month on M&I would be great!

Anonymous · ‎06-22-2017

So just got a notification that my Equifax report just had the late car payment removed and my Equifax FICO8 score just jumped 23 points! Since the auto loan is something that's included in the Equifax mortgage score, should I expect the Beacon 5 score to go up by a similar amount? Still waiting on my Transunion report to have the late auto payment removed (still showing pending), as that is the all important middle score for me.

I also reduced my credit utilization from 44% to aboue 35%, although the new balances haven't been reported to myFICO yet. Even though I didn't get the utilization under the desired 30% threshold, the myFICO simulation still indicates that my scores should increase by another 25-30 points. So HOPEFULLY with all of this movement I can get my mortgage scores to bump up by 10-15 points.

Do the mortgage scores tend to move proportionally with the FICO8 scores?

Anonymous · ‎07-11-2017

I would love to know what your final mortgage scores were after your report updated. My experience was my FICO 08 scores jumped up 20+ points when I payed down revolving debt, but my mortgage scores stayed the same or went up 3-4 points. Very disappointing when I pulled a new report! I really wish myFICO would update all score versions as they do the FICO 08. Pulling a new 3B report is so expensive when trying to monitor your mortgage scores! Best of luck to you!

Revelate · ‎07-12-2017

@Anonymous wrote:
So just got a notification that my Equifax report just had the late car payment removed and my Equifax FICO8 score just jumped 23 points! Since the auto loan is something that's included in the Equifax mortgage score, should I expect the Beacon 5 score to go up by a similar amount? Still waiting on my Transunion report to have the late auto payment removed (still showing pending), as that is the all important middle score for me.

I also reduced my credit utilization from 44% to aboue 35%, although the new balances haven't been reported to myFICO yet. Even though I didn't get the utilization under the desired 30% threshold, the myFICO simulation still indicates that my scores should increase by another 25-30 points. So HOPEFULLY with all of this movement I can get my mortgage scores to bump up by 10-15 points.

Do the mortgage scores tend to move proportionally with the FICO8 scores?

They do not.

On the flipside my getting some lates off helped my TU FICO 04 (same model as the Equifax score on the trimege report) more than it did FICO 8 so it's somewhat YMMV.

To answer an earlier question, there are breakpoints; below the 28.9% ABCD mentions (stupid FICO rounding) the next aggregate one is 8.99^ unfortunately which might be too far to go.

Anyway many congrats on getting the late sorted, I was kinda hoping my last big negative (state tax lien) would come off from EX/EQ this month with NCAP so that I could refinance my condo to a 30 year to reduce my payment by ~700/month if I go down that route on the path to renting it out long term. No luck on that as of this morning when I pulled my reports, so time to go pull that court docket that EQ has listed as their case number looks to be from the wrong year even.

Anonymous · ‎07-12-2017

@Anonymous wrote:
I would love to know what your final mortgage scores were after your report updated. My experience was my FICO 08 scores jumped up 20+ points when I payed down revolving debt, but my mortgage scores stayed the same or went up 3-4 points. Very disappointing when I pulled a new report! I really wish myFICO would update all score versions as they do the FICO 08. Pulling a new 3B report is so expensive when trying to monitor your mortgage scores! Best of luck to you!

My mortgage scores went up by the following:

EX 713 -> 739, TU 711 -> 737, EQ 693 -> 743

So they DID move mostly linearly to my FICO8 scores. REALLY surprised at the Equifax score rising so much. Clearing the negative mark on the two reports obviously did play a factor, but even my Experian score (which wasn't reporting any negative marks) jumped by 26 points! Granted, I had one credit card that was reporting as maxed out at the time of the initial pull (didn't realize individual card utilization played a factor) so it's hard to say how much bringing that one card down made a difference vs. bringing my overall credit utilization down.

But needless to say, I easily qualified for the best interest rates now from NFCU. I close on my new house on the 28th!

Anonymous · ‎07-12-2017

Thank you for sharing your outcome! Great news and congratulations on your new home!