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Fico 8 versus 3B Mortgage score

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Anonymous
Not applicable

Fico 8 versus 3B Mortgage score

Is there any reason why these scores would be almost a 40 point difference? I thought usually they'd be around the vicinity of each other. My wife's 3B score is 40 pts less than her Fico 8, and we're trying to get a house with her VA. Her Fico 8 is 624and her 3B is 586. DO they update at different times? Maybe it hasn't updated yet? She just pulled her 3B today.

7 REPLIES 7
Anonymous
Not applicable

Re: Fico 8 versus 3B Mortgage score

Yeah.  There are tons of reasons that her mortgage scores (I think this is what you mean by her 3B scores) would be worse than her FICO 8 scores.  The mortgage scores are operating off of very old FICO models that are different from FICO 8.  The Experian mortgage model was created back in 1998, for example.

 

Here's one reason out of many.  If a person has small collections (less than $100) these count against you (pretty harshly) in the mortgage models.  But when FICO 8 was realeased, they changed that, so that small collection had ZERO effect on your score, even if they were unpaid.  Paying off collections in the old models doesn't help you that much.

 

Here's another reason.  Suppose she has five credit cards.  If all five are showing a positive balance (even if it is only $3-4) she will get a substantial scoring penalty in the mortgage models.  You get a scoring penalty in FICO 8 for that too, but it is much less.

 

There are dozens of other scenarios that would cause her mortgage scores to be lower.

Message 2 of 8
DollyLama
Established Contributor

Re: Fico 8 versus 3B Mortgage score

Also if you have a consumer installment loan ie finance company,  it will show as a factor against mortgage scoring. 

 

CGID- while on topic, example have 5 collections, you get 3 PFD, does it affect scoring on FICO 8 or not until the last baddie is off, or ages off. On the scenario of being reported on 1 bureau. Does the amount of collection have the same impact for a small $35 collection versus $2000 (supposing both utilization regardless of amount is still under 8.9 ?

Message 3 of 8
Anonymous
Not applicable

Re: Fico 8 versus 3B Mortgage score

Hey DL!  I am probably being a dummy, but I didn't quite follow your question.  Could you run it by me again?

Message 4 of 8
Thomas_Thumb
Senior Contributor

Re: Fico 8 versus 3B Mortgage score


@DollyLama wrote:

Also if you have a consumer installment loan ie finance company,  it will show as a factor against mortgage scoring. 

 

CGID- while on topic, example have 5 collections, you get 3 PFD, does it affect scoring on FICO 8 or not until the last baddie is off, or ages off. On the scenario of being reported on 1 bureau. Does the amount of collection have the same impact for a small $35 collection versus $2000 (supposing both utilization regardless of amount is still under 8.9 ?


Score is impacted until the last baddie comes off - unless that baddie is under $100. If under $100 it should not impact Fico 8 score but will continue to hurt Fico mortgage scores.

 

1) Fico 8 ignores collections under $100 in scoring whether paid or not. So the $35 collection should not impact score but, the $2000 collection would.

2) Let's say you have 4 non medical collections over $100 on file with two being paid and two not paid. Fico 8 considers them all (paid & not paid) and drops your score accordingly. If you get three of these collections removed so only one remains you won't see much, if any improvement in score. This is true whether or not the collection is paid. The algorithm looks for the presence of an over $100 collection on file and tags bases your risk on YES/NO - not MORE/LESS. Negative impact may lessen over time but, not alot - IMO.

3) Unlike Fico 8, Fico 9 ignores the majority of paid collections regardless of $ amount. Thus, focus on getting unpaid collections removed from your file 1st for this scoring algorithm.

Fico 9: .......EQ 850 TU 850 EX 850
Fico 8: .......EQ 850 TU 850 EX 850
Fico 4 .....:. EQ 809 TU 823 EX 830 EX Fico 98: 842
Fico 8 BC:. EQ 892 TU 900 EX 900
Fico 8 AU:. EQ 887 TU 897 EX 899
Fico 4 BC:. EQ 826 TU 858, EX Fico 98 BC: 870
Fico 4 AU:. EQ 831 TU 872, EX Fico 98 AU: 861
VS 3.0:...... EQ 835 TU 835 EX 835
CBIS: ........EQ LN Auto 940 EQ LN Home 870 TU Auto 902 TU Home 950
Message 5 of 8
DollyLama
Established Contributor

Re: Fico 8 versus 3B Mortgage score

Thank you Thomas. Sorry CGID I should have explained more about it affecting mortgage scores in general, since mine are also significantly lower in the mortgage score models. I was just hoping for a bump getting 3 of 5 (4 of which are under $100) deleted from my reports. Looks like I'm stuck until the last one can be resolved. Not going to be an easy feat by any means with this CA for $34. Argh! On top of that, my AAoA will drop significantly in a year. My husband and I hung our heads in shame when filed BK 17 years ago, never sought credit much. My husband does not even have a FICO score with only 6 year old paid installment on bureau. I started back in 2015, so my 12 yr old longest history when it drops off, will be around 3 years for oldest length. Dreading the score drops then. Sigh-over to rebuild credit forum. 

 

Thank you both for your assistance. 

Message 6 of 8
Anonymous
Not applicable

Re: Fico 8 versus 3B Mortgage score


@Thomas_Thumb wrote:

3) Unlike Fico 8, Fico 9 ignores the majority of paid collections regardless of $ amount. Thus, focus on getting unpaid collections removed from your file 1st for this scoring algorithm.


Hi TT.  I was under the impression that FICO 9 ignored all paid collections, not just the majority of them.  Am I mistaken?

Message 7 of 8
Thomas_Thumb
Senior Contributor

Re: Fico 8 versus 3B Mortgage score


@Anonymous wrote:

@Thomas_Thumb wrote:
3) Unlike Fico 8, Fico 9 ignores the majority of paid collections regardless of $ amount. Thus, focus on getting unpaid collections removed from your file 1st for this scoring algorithm.

Hi TT.  I was under the impression that FICO 9 ignored all paid collections, not just the majority of them.  Am I mistaken?


Hello CGID - I believe you are correct. I was hedging my bet with the qualifier "most". I suspect all collections are 3rd party but, was not 100% sure. Pasted below is an excerpt I posted previously regarding Fico 9.

 

Fico 09 collections.jpg

 

Fico 9: .......EQ 850 TU 850 EX 850
Fico 8: .......EQ 850 TU 850 EX 850
Fico 4 .....:. EQ 809 TU 823 EX 830 EX Fico 98: 842
Fico 8 BC:. EQ 892 TU 900 EX 900
Fico 8 AU:. EQ 887 TU 897 EX 899
Fico 4 BC:. EQ 826 TU 858, EX Fico 98 BC: 870
Fico 4 AU:. EQ 831 TU 872, EX Fico 98 AU: 861
VS 3.0:...... EQ 835 TU 835 EX 835
CBIS: ........EQ LN Auto 940 EQ LN Home 870 TU Auto 902 TU Home 950
Message 8 of 8
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