Effect of a new mortgage

ToddLipps · ‎08-07-2008

What should be the expected movement in FICO if a person with excellent credit obtains a conventional 30 year fixed mortgage on an investment property?

Go up?

Go down?

Stay the same?

Assuming the customer has little debt and deep trade history and high 700 scores.

Anonymous · ‎08-07-2008

ToddLipps wrote:

What should be the expected movement in FICO if a person with excellent credit obtains a conventional 30 year fixed mortgage on an investment property?

Go up?

Go down?

Stay the same?

Assuming the customer has little debt and deep trade history and high 700 scores.

Welcome to the FICO Forums, ToddLips.

Is there already an open mortgage reporting?

ToddLipps · ‎08-07-2008

yes. Unsure how long the current mtg has been around- but assume at least 3 years, I suupose.

Anonymous · ‎08-07-2008

ToddLipps wrote:

yes. Unsure how long the current mtg has been around- but assume at least 3 years, I suupose.

You haven't said this person is you, but I'm going to assume so because it's easier to type.

Since there is already an open mortgage reporting, you won't get any boost for adding to your credit mix (i.e., types of credit used).

You will likely be dinged for a new account, along with the associated inquiries, as well as for the inevitable lowering of your average age of accounts. Aside from that, there is nothing damaging about adding a second mortage account, in particular.

Keep in mind, though, that for those with very high FICO scores who rarely seek new credit, the effects of adding a new account of any kind can be quite significant. Much moreso than for those with creidt profiles that are just average.

ToddLipps · ‎08-07-2008

Actually its for a customer of mine. Unfortunately its impossible to tell him how much his score will change. Too many variables, but he is 60+ years old so I assume average age of accounts shouldn't change much.

My guess is that if he is currently a 750, he could dip 10 points, but I doubt it. Anything above 720 is A+ in the Mtg business.

Anonymous · ‎08-08-2008

ToddLipps wrote:

Actually its for a customer of mine. Unfortunately its impossible to tell him how much his score will change. Too many variables, but he is 60+ years old so I assume average age of accounts shouldn't change much.

You're right that it's not easy to predict without knowing all the details of the reports. Even then, it still takes a lot of guesstimation. It's almost more an art than a science.

Since he is 60+, one could assume that he has many accounts reporting with a long history, but often accounts don't report for as long as they should. It would really be a good idea for him to pull his reports and see exactly what's on there, and exactly what his AAoA is and how it would be affected by a new loan.

ToddLipps wrote:

My guess is that if he is currently a 750, he could dip 10 points, but I doubt it. Anything above 720 is A+ in the Mtg business.

That seems about right for a 750. Really depends on a lot of factors, though. When you said "high 700s" I was thinking more like 780 or 790. New inquiries and new accounts won't hurt a 750-ish score quite as badly as if the score were even higher.

Message Edited by cheddar on 08-08-2008 08:40 AM