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Established Contributor
Posts: 662
Registered: ‎02-20-2013
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TU04 vs TU08

I'm sure this has been discussed to death, but let's ressurect this for my benefit. Smiley Happy

 

As I understand it, TU04 is used by most mortgage lenders still for a variety of reasons, some because it is more "lender friendly", sometimes because lenders don't want to upgrade their internal underwriting processes to handle new scoring algorithms.

 

But TU04 was a distinct part of the reason for the mortgage crisis. The scoring model itself allowed for piggybacking of tradelines which offset those with low scores, sometimes to the tune of 100 points or more.

 

TU08 as i understand it, does not take into account paid collections under $100, and lates in the more distant past affect scores very little if at all. For these reasons (and probably more), it is considered "borrower friendly". however, I've heard/read that TU08 does not allow for piggybacking on tradelines. 

 

If I were applying for a mortgage, three months beforehand, I would find relatives with old, high limit cards and piggyback on them as AU's, esspecially amex in preparation for my mortgage. in my view this is the same practice as lenders using outdated more lender friendly models to their own advantage. 

 

Does that about sum up the differences between the two?


DCU ( pulled 3/29/13) EQ04 683 | Amex (pulled 3/28/13) EX 760 | US Bank (pulled 3/28/13) EX 753
CreditKarma (4/19/13) TU-TR 701 | TU Vantage 788 | USAA FAKO (3/31/13) EX 728, EQ 699, TU 737 |
Inquiries (4/18/13) EX 13 | EQ 13 | TU 14
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Posts: 32,869
Registered: ‎08-04-2007
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Re: TU04 vs TU08


NJTurnpike wrote:

I'm sure this has been discussed to death, but let's ressurect this for my benefit. Smiley Happy

 

As I understand it, TU04 is used by most mortgage lenders still for a variety of reasons, some because it is more "lender friendly", sometimes because lenders don't want to upgrade their internal underwriting processes to handle new scoring algorithms.

 

But TU04 was a distinct part of the reason for the mortgage crisis. The scoring model itself allowed for piggybacking of tradelines which offset those with low scores, sometimes to the tune of 100 points or more.

 

TU08 as i understand it, does not take into account paid collections under $100, and lates in the more distant past affect scores very little if at all. For these reasons (and probably more), it is considered "borrower friendly". however, I've heard/read that TU08 does not allow for piggybacking on tradelines. 

 

If I were applying for a mortgage, three months beforehand, I would find relatives with old, high limit cards and piggyback on them as AU's, esspecially amex in preparation for my mortgage. in my view this is the same practice as lenders using outdated more lender friendly models to their own advantage. 

 

Does that about sum up the differences between the two?


Correct up to the piggybacking. Piggybacking (AUs) are allowed under FICO08. At first they were not allowed and if you google around you'll see press releases from FICO and lenders announcing that. However, they reveresed course after a month of that announcement because of concerns over the Equal Credit Opportunity Act. FICO didn't want to do anything to prohibit the scoring of family members, spouses, significant others, etc. due to shared AUs. AUs are fully scored.

 

However, lenders can decide whether or not to allow AUs. There are many examples in Mortgage Loans where lenders have asked posters to remove themselves as an AU as a condition to being approved. The mortgage industry has really cracked down.

Established Contributor
Posts: 662
Registered: ‎02-20-2013
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Re: TU04 vs TU08

Learn something new every day. Thanks for the info. I'll keep that in mind in the future.


DCU ( pulled 3/29/13) EQ04 683 | Amex (pulled 3/28/13) EX 760 | US Bank (pulled 3/28/13) EX 753
CreditKarma (4/19/13) TU-TR 701 | TU Vantage 788 | USAA FAKO (3/31/13) EX 728, EQ 699, TU 737 |
Inquiries (4/18/13) EX 13 | EQ 13 | TU 14
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