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I know the best mix for everyday FICO scoring but how about the mortgage scores? They do not seem to change like the others. I am wanting to refi again early next year but my scores are all over the place, especially after paying everything off including my mortgage.
First they went way up, then as closer to zero happened on my balances, they consistently dipped back down. Although they are not as low as when I started paying attention to my scores a couple of months ago, I want the opportunity to get them back up. These are the FICO 8 scores. What will actually affect my mortgage scores?
I am thinking once my new mortgage from refi a couple months ago reports, the scores will take yet another hit at first and then go up. I will also have the last of all baddies coming off in 2016.
Hello VBC! Always nice to see you on here.
You have raised both a general question and a specific one. Generally, you are wondering what ways the mortgage scoring models might be a little different from FICO 8. Specifically, you are asking whether the mortgage models might begin to penalize you if your CC utilization gets too low, e.g. is it possible that the mortgage models give you a penalty for having a 2% overal utilization compared to (say) a 7-8% utilization.
I'm curious to hear whether the veterans here can comment on either question. Personally I would be skeptical that the mortgage models punish you for getting too low, as long as have some positive CC debt, and it isn't absurdly low (like $1.50 out of a credit limit of 20k). Therefore if it seems like you saw that on your own profile, it was almost certainly the result of other factors going on at the same time. An example might be, your total CC debt going from 8% to 1 % but the number of cards reporting that month went from 2 to 3. In that case you might experience a penalty but it wasn't because your util % went down, but because the number of cards reporting a positive balance increased. That's only one example of what could have happened.
Again, curious to see if anyone more experienced can comment further or more authoritatively.
In terms of practical advice, it's hard to imagine that you will do anything but help yourself by the standard methods used to prepare for any major credit pull
Strive to get rid of all negatives
Bring total CC utilization to 1-4% (assuming there's no financial hardship in so doing)
Make sure all CC's report a $0 balance except one
If you have 3+ cards already, stop opening any new accounts
etc.
@Anonymous wrote:Hello VBC! Always nice to see you on here.
You have raised both a general question and a specific one. Generally, you are wondering what ways the mortgage scoring models might be a little different from FICO 8. Specifically, you are asking whether the mortgage models might begin to penalize you if your CC utilization gets too low, e.g. is it possible that the mortgage models give you a penalty for having a 2% overal utilization compared to (say) a 7-8% utilization.
I'm curious to hear whether the veterans here can comment on either question. Personally I would be skeptical that the mortgage models punish you for getting too low, as long as have some positive CC debt, and it isn't absurdly low (like $1.50 out of a credit limit of 20k). Therefore if it seems like you saw that on your own profile, it was almost certainly the result of other factors going on at the same time. An example might be, your total CC debt going from 8% to 1 % but the number of cards reporting that month went from 2 to 3. In that case you might experience a penalty but it wasn't because your util % went down, but because the number of cards reporting a positive balance increased. That's only one example of what could have happened.
Again, curious to see if anyone more experienced can comment further or more authoritatively.
In terms of practical advice, it's hard to imagine that you will do anything but help yourself by the standard methods used to prepare for any major credit pull
Strive to get rid of all negatives
Bring total CC utilization to 1-4% (assuming there's no financial hardship in so doing)
Make sure all CC's report a $0 balance except one
If you have 3+ cards already, stop opening any new accounts
etc.
You'd be in good company; people have said they have sweetspots when it comes to revolving utilization, but I'm pretty detailed in my testing and I never found one. $2 was the same as pretty much any other number for me unless I either passed an aggregate or an individual utilization line... and the individual utilization line is pretty high.
The standard practical advice was actually built during the EQ Scorewatch Beacon 5.0 era here on the forums, and that explicitly is one of the mortgage trifecta and TU Classic 04 acts pretty much identically in terms of how it responds to changes.
The only outlier is EX 98 (EX Risk Model v2) which does take installment utilization into the mix, and as such paying off an installment loan might hurt there whereas the other two ignore it.
There are some other changes but in terms of optimizing your file, there's nothing you can really do short of putting a bow on your revolving utilization, getting derogatories off and limiting your inquiries and new accounts. Get as clean as you can for the refi application, as CGD describes, and then take the swing when you're financially capable of doing so.
no difference in my mortgage scores between $2 revolving utilization and 8% aggregate
Thank you all! My new mortgage has not reported yet and I do not have a heavy debt/balance reporting because of the payoffs for my student, car, and mortgage loans. Once the new mortgage with an open balance reports, I am hoping this will help but possibly take a hit for a while? I ask because if I am going to take a huge ding to my mortgage scores for a new mortgage, then I am thinking I should app sooner than later for my refi.
I know right now I should qualify for what I want as far as mortgage scores but if I wait a couple more months like I was planning, the scores may not be high enough. If this is the case, then when could I expect to recover?
I cannot stand the fact that I have not paid PMI in I don't know how long, my house is worth almost double what I now owe, and only the refi can reduce this extravagant fee!
Hey VBC! Hope you are well.
Both for my benefit and the benefit of anyone else reading your last post, here is a recap of what I think are the facts of your situation. Can you confirm that I have all of it right?
* About two months ago, you refinanced your mortgage. The new mortgage account has not yet appeared on your credit reports, though you expect it to very soon.
* With the refinance from two months ago, you paid off your old mortgage, along with all of your student laons and your auto loan.
* Therefore, as of today, you have no open installment loans on your credit reports. (Though very soon, as mentioned above, the new mortgage will appear.)
* Your current credit goal is to refinance your new mortgage (the one that has not yet appeared but will appear in the next week or two, we expect). You hope to do this three months from now (roughly). Therefore you have been interested in tweaking your mortgage scores over the next few months.
Is that all correct?
When your new mortgage begins to report, it will be both a benefit and a harm to your score. The harm comes from it lowering your AAoA. The benefit comes from the fact that you have no open installment loans right now, and this will be one. On the whole I would guess that you will get more benefit than harm. That would certainly be true if we were talking about FICO 8 scores.
But in truth, I think that speculating in this case is a bad idea. Much better is to wait for your new mortgage to report (wouldn't be suprised if that happens in the next week). When it does, make sure it is reporting on all three reports. During that time make sure you are making all of your other scoring factors as pretty and perfect as possble, especially credit cards. Then, after your CC balances are reporting just the way you want, pull your mortgage scores and find out what they are.
Yes, you have all these facts correct. I have been and probably will be obsessed with watching my FICO 8 scores for the next year. As for the mortgage scores, I have to wait until Jan to see the new scores on MF. I usually have all my CCs reporting a zero balance except for my CU CC. TJ Maxx pulled a fast one and reported before I even got the chance to pay the bill (which I do as soon as I see charges posted)! I still show a 3% usage but individually, it had to hurt a little. In going forward it will now report zero along with the rest.
Yes, the mortgage was recently paid off (12 yrs old), the new mortgage should report next month but it may report in Jan. I will not have any open installments reporting. My wish is to refi the new mortgage within the first quarter of the year for a better rate, term, and reduction in PMI.
Hope this helps with the info you are asking. I am very appreciative!
@Anonymous wrote:Yes, you have all these facts correct. I have been and probably will be obsessed with watching my FICO 8 scores for the next year. As for the mortgage scores, I have to wait until Jan to see the new scores on MF. I usually have all my CCs reporting a zero balance except for my CU CC. TJ Maxx pulled a fast one and reported before I even got the chance to pay the bill (which I do as soon as I see charges posted)! I still show a 3% usage but individually, it had to hurt a little. In going forward it will now report zero along with the rest.
Yes, the mortgage was recently paid off (12 yrs old), the new mortgage should report next month but it may report in Jan. I will not have any open installments reporting. My wish is to refi the new mortgage within the first quarter of the year for a better rate, term, and reduction in PMI.
Hope this helps with the info you are asking. I am very appreciative!
You mention above (if I read you right) that you plan for the future to have all credit cards report $0. This would be a mistake. When FICO sees all of your credit cards reporting at $0, it imposes a substantial penalty. The best CC setup, if you want to get every extra available point, is for all cards to be $0 except one -- with your total utilization being (say) in the 1-3% area. Remember that FICO rounds up, so even if you have all cards at $0 except one with a balance of $10, that will still round up to 1% utilization.
But note that this "all cards at $0 except one" scheme is only necessary in the month before you are trying to get every available extra point. Most months you can let as many cards report positive balances as is natural. It causes a score loss but it doesn't matter because you gain it all back the month before the major pull (when you zero out all but one).
If I were you, I would use a tool like Credit Karma to watch your credit reports on a weekly basis for two things:
(a) Your CC balances
(b) To see if the mortgage has begun to report.
I would also pick a major card that is easy to control and track. For the next few months make that the one that always reports a positive balance. Keep all others at $0. Once the mortgage is reporting on all three reports, pull your full credit scores at myFICO. My guess is that the mortgage will cause your FICO scores to go up, both mortgage scores and FICO 8 scores.
Best of luck! :-)
PS. You should look into what happened when "TJ Maxx pulled a fast one and reported before I even got the chance to pay the bill." That sounds strange. It's unlikely that they did anything deceitful. In all likelihood, they report to the CRAs at roughly the same time each month. You may have bought something on your card shortly before they reported, but that's not quite the same thing as them pulling a fast one. The only way for a CC user to control exactly how many cards report and exactly how much is being reported is for her to know when each card reports and plan accordingly.
Yes, I will allow one card to report a small balance each month. I usually allow my CU CC to report a balance each month. As for TJM CC, I do not know the statement cut date. I do not generally use the card but did recently because I received a CLI and had not used it in quite some time. They reported it before I received a statement. In fact, I still have not received the statement. This is why I said they pulled a fast one. Thanks CGID!