topic Re: How to increase my Fico Scores Used for Mortgage in Understanding FICO® Scoring

How to increase my Fico Scores Used for Mortgage

Anonymous — Sun, 04 Sep 2016 21:24:06 GMT

Hello Community;

I have been working hard to improve My Fico Score to get a mortgage loan. I need the advise on the following questions:

(1) Why is my Fico Score 8 for the three bureaus is increasing and updating on weekly basis, while my Mortgage FICO Score for Experian, Equifax and Transunion as showed below from FICO web page DO NOT CHANGE ? Please, ADVISE.

Versions used in mortgage lending

FICO® Score 2- Experian

FICO® Score 5- Equifax

FICO® Score 4- Transunion

(2) I have been paying all my credit cards and Two Auto Loans and my mortgage BILLS on time. I have noticed that only my Credit Card Payments impact is Reflected on my FICO 8 report BUT NOT my AUTO and Mortgage Payments I'm making on time have NO IMPACT on IMPROVING my FICO 8 or any of FICO , 5, 4 & 2 above, any explanation why is that?

(3) DO you think that if I made 4 or 5 months PAYMENTS on MY AUTO LOAN. will that help improve MY FICO Mortgage SOCRED (FICO 5- for Equifax, 4- for Transuinon & 2- for EXPERIAN)?

Would highly appreciate answer or give me advises on these questions.

Re: How to increase my Fico Scores Used for Mortgage

ArmyWifeMBA — Sun, 04 Sep 2016 22:52:00 GMT

If you are using the monitoring servivce, it will not update the other FICO scores (mortgage, credit card, auto, etc.), only the FICO 8. You will have to purchase the individual CRs or 3 CRs from MyFico.com to see the other scores. This is what I have noticed. I have the monitoring service for all three CRAs.

If this is not what you mean, please clarify.

Thanks!

FormerArmyWifeMBA

Re: How to increase my Fico Scores Used for Mortgage

ArmyWifeMBA — Sun, 04 Sep 2016 22:55:36 GMT

By the way, if you are getting weekly updates, this is because your credit cards are updating at different times during the month. However, your installment loans are probably all scheduled to update at the end of the month; hence, wait until a few days after the end of the month to see what balances are reported.

Whether or not you should pay ahead, I am not sure how much effect that will have on your score. What score are you trying to get with your mortgage scores and how far are you off?

Re: How to increase my Fico Scores Used for Mortgage

SouthJamaica — Mon, 05 Sep 2016 12:56:16 GMT

@Anonymous wrote:
Hello Community;

I have been working hard to improve My Fico Score to get a mortgage loan. I need the advise on the following questions:

(1) Why is my Fico Score 8 for the three bureaus is increasing and updating on weekly basis, while my Mortgage FICO Score for Experian, Equifax and Transunion as showed below from FICO web page DO NOT CHANGE ? Please, ADVISE.
Versions used in mortgage lending
FICO® Score 2- Experian
FICO® Score 5- Equifax
FICO® Score 4- Transunion

(2) I have been paying all my credit cards and Two Auto Loans and my mortgage BILLS on time. I have noticed that only my Credit Card Payments impact is Reflected on my FICO 8 report BUT NOT my AUTO and Mortgage Payments I'm making on time have NO IMPACT on IMPROVING my FICO 8 or any of FICO , 5, 4 & 2 above, any explanation why is that?

(3) DO you think that if I made 4 or 5 months PAYMENTS on MY AUTO LOAN. will that help improve MY FICO Mortgage SOCRED (FICO 5- for Equifax, 4- for Transuinon & 2- for EXPERIAN)?

Would highly appreciate answer or give me advises on these questions.

1. If you have the Ultimate 3B package, the only score that updates daily is the FICO 8. The others are updated only when you pull your quarterly report, or a paid report.

2. When your overall installment utlization percentage gets lower your score improves, but the MyFICO alerts don't mention it. It is a matter of debate what percentage you need to get to in order to see score increases from that factor, but there is a consensus that below 10% but above 0% is the sweet spot.

3. Yes paying ahead on your auto loan will help, but, as mentioned above, it is a matter of debate what percentages you need to reach to see score improvement, with the only consensus being that >0% but < 10% is the sweet spot.

Re: How to increase my Fico Scores Used for Mortgage

echoecho — Mon, 05 Sep 2016 14:29:26 GMT

I guess I can use my case as a hard data point to use as a reference. In Jan 2016 a year after I bought a new car in 2015 with Penfed when the other one finally died. One year of car payments gave us confidence that everything is good to go for refinance. I appd with Penfed for my first va refi and pre approved for 3.25 rate zero points/zero origination with 727 mid score. Long story to short I did not meet the va DTI. Not having any car loan in 8 years, the new car loan payment raised it pretty high.

Next six months I worked on my DTI by lowering my real estate tax, paying down cc and bringing my Chase cc to zero since it had a 5% minimum monthly payment compare to 2% to my other 3 cc.

Aug 2016 I re appd again with Penfed and got the same rates of 3.25 0/0 points with now a 750 mid score. Difference was Chase cc is zero balance, Dicover in 20%. File is with UW with no conditions needed, just waiting after the weekend for the word.

Lesson learned lowering uti on two or more cc will increase not jus fico 8 but also mortgage scores. My BOA cc still have high uti but is not affecting the rest of my scores. All 3 went up ~20-25 points in six months by lowering 3 out of 4 cards. YMMV that's my story and I'm sticking with it.

Re: How to increase my Fico Scores Used for Mortgage

ArmyWifeMBA — Mon, 05 Sep 2016 15:16:30 GMT

Also, your car installment loan balance has also decreased during those 6 months. This too will increase your mortgage score because your overall installment loans has decreased.

OP, I don't want to say pay the auto loan too far in advance because I don't know what the sweet spot is. I would hate for you to tie up $s by paying ahead when the funds can be used towards down payment, closing cost, or reserves.

Don't forget to allow time for each payment or paid in full $0 balances to show up on the credit reports. I am dealing with that now. I have two accounts I paid in full totalling $5000+ and NEITHER creditor reported, as of today, the paid off balance. Really? I disputed one, but waiting until Wednesday before disputing the other.

Scores 8/ Mortgage:

Transunon: 755 / 760

Experian: 768/ 792

Equifax: 768/ 757

Re: How to increase my Fico Scores Used for Mortgage

Thomas_Thumb — Mon, 05 Sep 2016 16:11:00 GMT

@echoecho wrote:
I guess I can use my case as a hard data point to use as a reference. In Jan 2016 a year after I bought a new car in 2015 with Penfed when the other one finally died. One year of car payments gave us confidence that everything is good to go for refinance. I appd with Penfed for my first va refi and pre approved for 3.25 rate zero points/zero origination with 727 mid score. Long story to short I did not meet the va DTI. Not having any car loan in 8 years, the new car loan payment raised it pretty high.

Next six months I worked on my DTI by lowering my real estate tax, paying down cc and bringing my Chase cc to zero since it had a 5% minimum monthly payment compare to 2% to my other 3 cc.

Aug 2016 I re appd again with Penfed and got the same rates of 3.25 0/0 points with now a 750 mid score. Difference was Chase cc is zero balance, Dicover in 20%. File is with UW with no conditions needed, just waiting after the weekend for the word.

Lesson learned lowering uti on two or more cc will increase not jus fico 8 but also mortgage scores. My BOA cc still have high uti but is not affecting the rest of my scores. All 3 went up ~20-25 points in six months by lowering 3 out of 4 cards. YMMV that's my story and I'm sticking with it.

^ Very good points.

A critical factor for loan approvals is debt to income ratio (DTI). DTI is based on monthly payment obligations relative to income. Not sure that paying ahead on the car loan buys you anything as the loan, unless paid off, will list a monthly installment payment obligation.

Credit card payment obligations are also part of the DTI calculation. Paying off the credit card balances will help with the DTI calculation and reduce aggregate utilization on your revolving credit accounts. Maintaining aggregate utilization below 9% is beneficial to all Fico scoring models.

Fico mortgage scores are rather sensitive to # of open accounts showing a balance. For optimum score you should allow only one CC account to report a balance every month (avoid no accounts reporting a balance as 0% credit utilization can drop score 10 to 25 points). Please note: you can use more than one CC each and every month but, select one to report a non zero statement balance and then PIF the balance before the due date. Outstanding balances on other cards should be paid a couple days before their respective statements cut. Then avoid using those cards until "a couple days" after statements issue. That way balance reported to CRAs will be zero dollars.

Important tip: Do use all CCs that you want to keep periodically to avoid potential closure due to inactivity. Each creditor has their own criteria on how long an account can remain inactive before closure. The shortest time frame I have seen reported is 7 or 8 months. Suggest using cards at least once every 6 months to be safe.

For best short term results on improving mortgage score, manage revolving accounts to drive down utilization and limit number of open accounts reporting a balance.I would not advance pay on your car loan. As mentioned by another poster, those funds may provide more benefit if applied toward a downpayment or closing costs.

Good luck.

Re: How to increase my Fico Scores Used for Mortgage

echoecho — Mon, 05 Sep 2016 16:30:11 GMT

The only card that was close for inactivity was also my oldest of 27 years. I have SD the card for low SL/high apr and forgot about it. After 4 years of inactivity. Last year I tried to log in and did not recognize me, called them and stated closed two years ago. Oops. Oh well still got 8 years of history.

Re: How to increase my Fico Scores Used for Mortgage

Anonymous — Mon, 05 Sep 2016 17:19:05 GMT

Hi ArmyWifeMBA;

my susbcription does cover showing all the scores including Mortgage, Credit cards, Auto.....etc. This is why I could notice that my Mortgage scores are not changing.

Re: How to increase my Fico Scores Used for Mortgage

Anonymous — Mon, 05 Sep 2016 17:22:17 GMT

Hi ArmyWifeMBA;

Yes, I dod have all socres monitoring services including Mortgage Scores,.....etc.

Re: How to increase my Fico Scores Used for Mortgage

iv — Mon, 05 Sep 2016 17:30:51 GMT

@Anonymous wrote:
Hi ArmyWifeMBA;
Yes, I dod have all socres monitoring services including Mortgage Scores,.....etc.

Nope! The monitoring is only for the three FICO 8 scores, unfortunately.

The "additional score versions" ONLY update when a full 3B Report is pulled (quarterly on Ultimate, monthly on Premier, or when you pay for a fresh 3B Report...)

It's unfortunate that the mortgage scores aren't included in the daily monitoring... but currently it's JUST FICO 8.

The mortgage scores will not update with the monitoring, just the 3B pulls.

Re: How to increase my Fico Scores Used for Mortgage

Anonymous — Mon, 05 Sep 2016 18:19:34 GMT

Hi Thomas_Thumb;

Many thanks to detailed response. For my (3B) program i don't see any changes in my Mortgage scores while only my FICO 8 is changing. My next credit repor is due in one month , do you think I will be able to see my UPDATED Mortgage Scores (FICO 4, FICO 5, & FICO 2).?

Also, what you have said about paying in advance (4 or 5 months) of Car payments may not be agood idea in imprving my Mortgage FICO score, I agree with that as it may not

But if it lowers my DTI ration, will that hlep?

Currently, I'm using my revovoling credit in the range of 9% to 12%, do you think this is a good ration to improve my Mortgage score?. Last month because I brought one of my CC balance to ZERO balance (my Experian FICO 8 dropped by 15 points). On the same time My Equifax FICO 8 went up to by 3 point. Sometimes managing (my Revolving Credit balance % could have a contaditionary implication). If you could advise with the best CC revolving Balance % approach to follow will be great.

Thanks!

Re: How to increase my Fico Scores Used for Mortgage

Revelate — Mon, 05 Sep 2016 18:36:57 GMT

@Anonymous wrote:
Hi Thomas_Thumb;
Many thanks to detailed response. For my (3B) program i don't see any changes in my Mortgage scores while only my FICO 8 is changing. My next credit repor is due in one month , do you think I will be able to see my UPDATED Mortgage Scores (FICO 4, FICO 5, & FICO 2).?

Also, what you have said about paying in advance (4 or 5 months) of Car payments may not be agood idea in imprving my Mortgage FICO score, I agree with that as it may not

But if it lowers my DTI ration, will that hlep?

Currently, I'm using my revovoling credit in the range of 9% to 12%, do you think this is a good ration to improve my Mortgage score?. Last month because I brought one of my CC balance to ZERO balance (my Experian FICO 8 dropped by 15 points). On the same time My Equifax FICO 8 went up to by 3 point. Sometimes managing (my Revolving Credit balance % could have a contaditionary implication). If you could advise with the best CC revolving Balance % approach to follow will be great.

Thanks!

Yes all of the non-baseline FICO 8 scores only update with the refreshed report, they don't change with the monitoring solution.

DTI doesn't work that way, if the account is on there (with very very few exceptions with some loans near the end of their lives with some individual lenders) it's factored into DTI; however, DTI isn't factored at all into FICO it only determines how much loan you're able to get and nothing else when we're talking mortgages.

Therefore unless you pay the car loan completely off, it won't improve your DTI calculation paying it ahead 5 months... keep as much cash as possible in hand for when you start into the mortgage process, fact is you can always tweak DTI during it if you have to but talk with your LO about that (and maybe here too, DTI isn't a complex calculation fortunately) but more cash is more better when getting financed (downpayment, reserves, etc ad naseum).

Generally for revolving utillization, having one credit card report a small amount (non zero though) and everything else at $0 is optimal for everyone on every file; that holds true for both the monitored FICO 8 scores, and also the FICO scores used for a mortgage.