Equifax FICO Beacon 5 question

[pat0812]

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@Anonymous wrote:

Great to hear!

Sorry that I was mistaken.  It sounded as though you were not listening.  A number of people (me. Revelate, TT -- but me especially) were explaining a very clear easy to take course of action to assist you in achieving the practical aim you had at hand.  In response, you did not say "OK I am absolutely going to do that -- I'll let you know how things are a month from now."  Instead you were asking an almost endless series of questions, the surface interpretation of which was:

Well, I haven't decided whether I am going to do any of this or not, it all depends on eactly how much benefit you can assure me I will get out of it.

For example, asking a whole bunch of questions about your charge card was very relevant if you were very doubtful that you wanted to pay it to zero.  But if you were sure you were going to do that, you took up a lot of your time and other people's time in a discussion that was irrelevant, since you were going to solve the charge card question by paying it zero.

Likewise, you seemed unsure whether you really wanted to reduce your CC utilization from 10% to under 8.99% -- you wanted first us to tell you how much scoring benefit you'd get.

At any rate, it's pleasant to discover now that you actually are certain that you'll be paying almost all your cards down to $0, including your charge card.  Given that you have done that (or will be doing it), here is a recap of the advice I gave you on the other thread, to which you did not respond:

Your steps should be:

First to get your CC balances reporting the way you want them.  That means a $0 charge card and either one or two credit cards showing a positive balance.  Make sure that at least one of the two cards is in your name (not an AU card).  And get your utilization lower than it is now.  You should not count your charge card and an AU cards for your total credit limit.  You want your total utilization < 8.99%.  anything in the 1-8% range is fine.

At the same time that you are working on getting your balances reporting right, you should be signing up for free tools so that you can look at carefully at all three credit reports.  It's unclear to me whether you are possibly only seeing your EX report.  You need to be seeing your EQ and TU reports too.

Then, after all three of your reports are reflecting the new CC balances, pull all your scores at myFICO.  You can do this for $30 by signing up for the 3B monitoring product.  (You can then cancel it a few days later.) This will include your mortgage scores.  You will then have the true mortgage scores and won't have to rely on speculation from people here regarding what they might or might not be.

The middle mortgage score will be what you care about.  I think it is likely that it will be above 740 at that time.  If it isn't, there's one more thing we can do, depending on what your EXperian score is.  (If you pay down your loan without paying it off you can raise your EX mortgage score though not your TU/EQ scores.  I think that is not a good idea to do right now because we don't know (a) if you need to do that or (b) if improving your EX score would improve your middle score.)

By improving your card balances I think you have a very good shot at having a middle score above 740.

Best of luck, pal.

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Thanks for the advices.

I have only the experian monitoring service that gives me my FICO 8 scores and lets me refresh my credit report every day.

I use credit karma to see my equifax and transunion reports, and it lets me refresh once a week (I mainly check it to see if balances are updated)

Are there other free tools you recommend ?

I haven't pulled my mortgages scores yet because I'm still waiting for 2 accounts to report my updated $0 balances.

Once it all looks good I will do the $30 3B Monitoring service and hope for the best.

By the way how often can you refresh the mortgages scores with this subscription ?

My charge card will report $0 only on 1/12 so for just that one I need to wait 2 extra weeks, because all rest will be ready already this month, and that's why I was asking if charge card would make a big difference in my score, because I wanted to check them already this month. But I guess might be better to wait

[Anonymous]

Good to hear that you are using Karma.  That plus the Experian service will allow you to check your reports frequently.

After you buy your house I would cancel the Experian service (for which you are paying money) and replace it with some free Experian based tools.  You can a free FICO 8 based on Experian each month and a free monthly credit report from Experian.  But right now keep the service you have right now, at least until you are certain your mortgage scores are well over 740.

With the $30 myFICO package you will only get updated mortgage scores only once every 90 days.  There's a $40 package that will get you mortgage scores every 30 days.

The one thing you'll need to balance regarding the pre-approval vs. the final underwriting is that the pre-approval will involve a hard inquiry, and unless you buy the house very soon thereafter, it will do whatever possible damage it will do before the final underwriting begins.  So here's an example of how it could all play out:

     Jan 15.  You pull your mortgage scores through myFICO.  They are 742.

     Jan 16.  You apply for the pre-approval which involves a hard inquiry on all three bureaus.  For the next 30 days this inquiry does not count against your score.

     Feb 15.  The inquiry begins to affect your score.  It might lower it by 0 points, but 5 points is a reasonable guess.  That causes your score to go down to 737.

     Feb 27.  You have found the house you want and final underwriting begins, but based on a credit score of 737.

My suggestion is to circle back here when you get your mortgage scores from myFICO but before you do a pre-approval and get some advice from people here.  Revelate is an example of a good possibility because he's just recently bought a house and been through it, but there are others.  There's really no point to imagining all the possibilities until you have actually got your MF mortgage scores in hand.

[pat0812]

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@Anonymous wrote:

Good to hear that you are using Karma.  That plus the Experian service will allow you to check your reports frequently.

After you buy your house I would cancel the Experian service (for which you are paying money) and replace it with some free Experian based tools.  You can a free FICO 8 based on Experian each month and a free monthly credit report from Experian.  But right now keep the service you have right now, at least until you are certain your mortgage scores are well over 740.

With the $30 myFICO package you will only get updated mortgage scores only once every 90 days.  There's a $40 package that will get you mortgage scores every 30 days.

The one thing you'll need to balance regarding the pre-approval vs. the final underwriting is that the pre-approval will involve a hard inquiry, and unless you buy the house very soon thereafter, it will do whatever possible damage it will do before the final underwriting begins.  So here's an example of how it could all play out:

     Jan 15.  You pull your mortgage scores through myFICO.  They are 742.

     Jan 16.  You apply for the pre-approval which involves a hard inquiry on all three bureaus.  For the next 30 days this inquiry does not count against your score.

     Feb 15.  The inquiry begins to affect your score.  It might lower it by 0 points, but 5 points is a reasonable guess.  That causes your score to go down to 737.

     Feb 27.  You have found the house you want and final underwriting begins, but based on a credit score of 737.

My suggestion is to circle back here when you get your mortgage scores from myFICO but before you do a pre-approval and get some advice from people here.  Revelate is an example of a good possibility because he's just recently bought a house and been through it, but there are others.  There's really no point to imagining all the possibilities until you have actually got your MF mortgage scores in hand.

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So basically reaching a 750 score before pre approval should give me some cushion for later

[Revelate]

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@pat0812 wrote:

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@Anonymous wrote:

Good to hear that you are using Karma.  That plus the Experian service will allow you to check your reports frequently.

After you buy your house I would cancel the Experian service (for which you are paying money) and replace it with some free Experian based tools.  You can a free FICO 8 based on Experian each month and a free monthly credit report from Experian.  But right now keep the service you have right now, at least until you are certain your mortgage scores are well over 740.

With the $30 myFICO package you will only get updated mortgage scores only once every 90 days.  There's a $40 package that will get you mortgage scores every 30 days.

The one thing you'll need to balance regarding the pre-approval vs. the final underwriting is that the pre-approval will involve a hard inquiry, and unless you buy the house very soon thereafter, it will do whatever possible damage it will do before the final underwriting begins.  So here's an example of how it could all play out:

     Jan 15.  You pull your mortgage scores through myFICO.  They are 742.

     Jan 16.  You apply for the pre-approval which involves a hard inquiry on all three bureaus.  For the next 30 days this inquiry does not count against your score.

     Feb 15.  The inquiry begins to affect your score.  It might lower it by 0 points, but 5 points is a reasonable guess.  That causes your score to go down to 737.

     Feb 27.  You have found the house you want and final underwriting begins, but based on a credit score of 737.

My suggestion is to circle back here when you get your mortgage scores from myFICO but before you do a pre-approval and get some advice from people here.  Revelate is an example of a good possibility because he's just recently bought a house and been through it, but there are others.  There's really no point to imagining all the possibilities until you have actually got your MF mortgage scores in hand.

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So basically reaching a 750 score before pre approval should give me some cushion for later

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Yep, but a lot of lenders won't re-pull unless there's been an extended period of time between pre-approval and closing or you do something awkward like I did (like utterly change gears after walking away from a deal).  750 would be a good spot, my EX FICO 2 current 742 not so much if I needed a second pull haha.  Buffers are good, and they kept me above 720 even when I had to take a second set of mortgage pulls outside the original inquiry's grace period.

I would suggest getting your mortgage scores before you walk into the LO's office: beyond knowing exactly where you stand, it shortcut a tremendous amount of discussion when I simply said "I'm at this mid score, and based on your tier sheet this will be my rate, let's do this."  The LO just blinked hahaha.

[Anonymous]

Yup.  That's it. But wait till the scores come through, circle back with the folks here, and develop a plan.

You'll remember that I told you there still might be further score boosting steps that could be taken, but these extra strategies were completely dependent on what your scores turn out to be.  To give you a preview, these strategies would have to do with your EX mortgage score (only works for EX).  If your three mortgage scores (low, middle high) were

      EQ: 730      EX: 735    TU: 748

... you'd have a middle score of 735.  But if you were to pay down your installment debt further, while keeping all loans open, we could probably get you another 12-13 points on your EX score.  That would raise your middle score to 748.  If your highest score turned out to be your EX, however, then that would be a pointless and expensive exercise, since your middle score would still be 735.

The other reason to circle back here in a month is that people other than me have a lot more practical experience with the actual experience of buying a home and working with a lender.  I can walk you through the key things you need to do to get your scores up, but then you need to circle back and finalize your plan with people who have actually been through the process.

Best of luck, bud.

[pat0812]

So what you saying is that installement balances only hurt experian score?

If that's the case than I should maybe have transunion and equifax be the highest scores and then experian score wouldn't be important at all.

[Anonymous]

My comments in blue! 

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@pat0812 wrote:
So what you saying is that installement balances only hurt experian score?

Not quite right.  I am saying that, for the three mortgage scores, Experian is the only one that rewards you paying most of your loans off but not the full amount (still keeping them open).  The EQ and TU mortgage scores use a FICO model (FICO 04) that does not reward you for doing that.  The EX mortgage score uses a model (FICO 98) that does reward you.

   If that's the case than I should maybe have transunion and equifax be the highest scores and then experian score wouldn't be important at all.

I am unclear what you mean here.  It sounds like you are under the impression that you could choose which scores are the highest.  It's not under your control.  The three scores will be whatever they are going to be based on the particular scoring model asscoiated with that bureau and with the data that is on that particular report.  That's why you need to do your best with the CC balances, then pull your mortgage scores and you will find out which is your highest, middle and lowest score.

After you do that, circle back and people here will help you plan further.

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