topic Re: FICO score and mortgage balance in Understanding FICO® Scoring

FICO score and mortgage balance

Anonymous — Fri, 25 May 2007 04:21:18 GMT

Anyone out there know how a mortgage balance effects the FICO score. If the mortgage balance is larger (ie. not much principle paid down), does the mortgage balance get factored into the dept picture negatively? Are some bureaus paying more attention than others to mortgage balance?

Your thoughts, comments...

Re: FICO score and mortgage balance

Tuscani — Fri, 25 May 2007 11:24:57 GMT

aplus wrote:
Anyone out there know how a mortgage balance effects the FICO score. If the mortgage balance is larger (ie. not much principle paid down), does the mortgage balance get factored into the dept picture negatively? Are some bureaus paying more attention than others to mortgage balance?

Your thoughts, comments...

Not a whole lot as the account is installment. Now, that does not mean the account is not important. Installment loans provide a good mix of credit.. it just means revolving util is much more important than installment util.

Re: FICO score and mortgage balance

MidnightVoice — Fri, 25 May 2007 11:30:15 GMT

It does not seem to have facored much in my score, except when I refinanced my average age of accounts went down (I think)

Re: FICO score and mortgage balance

Anonymous — Fri, 25 May 2007 14:28:24 GMT

Doesn't matter how high the mortgage balance is... It's the Hx on the loan that make an impact in the FICO algorithim. The longer the mortgage is reported and paid current the more impact it has.

Unlike Revolving debt that takes into consideration the utilization first, then the Hx.

Take Care.

Rob

Re: FICO score and mortgage balance

MidnightVoice — Fri, 25 May 2007 14:34:48 GMT

FICO_Focused wrote:
Doesn't matter how high the mortgage balance is... It's the Hx on the loan that make an impact in the FICO algorithim. The longer the mortgage is reported and paid current the more impact it has.
.

Rob

Do you know what happens to scores with refinancing/moving?

Just curious

Re: FICO score and mortgage balance

Anonymous — Fri, 25 May 2007 14:55:12 GMT

The mortgage is paid, the hx remains even after the account is closed. The refi reports as a new loan... Seems like the typical scenario is there is an initial hit to the FICO comes as a result of the new account for ~180 - 270 days... Then the rebound.

The rebound can be expedited if there is a cash out used to pay down previously high debt loads.

When people move, there is another thing to take into consideration - credit is often used to finance the items needed to take up the new residence. This may create difficulties when it comes time to pay down your revolving balances - otherwise the refi scenario stays the same.

The best advice to those that are moving and want to maintain the FICO they worked so hard to raise prior to loan market entry --- is to wait 6 - 8 months after the move to make the additional purchases (i.e. furniture, floors, bathroom remodels, etc.) And use as much cash as is possible.

Take Care.

Rob

Re: FICO score and mortgage balance

MidnightVoice — Fri, 25 May 2007 16:49:12 GMT

Many Thanks

A move is a possibility in my future. As I have no oustanding debts other than the mortgage, that is not a problem. And I have enough junk to fill two houses

Re: FICO score and mortgage balance

Anonymous — Tue, 25 Sep 2007 23:13:25 GMT

@Anonymous wrote:
Doesn't matter how high the mortgage balance is... It's the Hx on the loan that make an impact in the FICO algorithim. The longer the mortgage is reported and paid current the more impact it has.
Unlike Revolving debt that takes into consideration the utilization first, then the Hx.
Take Care.

Rob

In light of the recent mortgage crisis I decided to check my credit score. One of the areas that is negatively impacting my score is: "Your mortgage account balances are too high in comparison with your credit limits. [TransUnion]" So it does make an impact. Don't misslead people. The worst part about it is that I refinanced this loan so that I would have better cashflow on a rental property. I did not take any extra money out, but the loan to balance is high because the limit is lower. To me that is very good use of credit, my income is higher and payments are lower and my payment history is perfect (never missed or late on a payment in 20 years).

Re: FICO score and mortgage balance

haulingthescoreup — Wed, 26 Sep 2007 00:07:42 GMT

@Anonymous wrote:
In light of the recent mortgage crisis I decided to check my credit score. One of the areas that is negatively impacting my score is: "Your mortgage account balances are too high in comparison with your credit limits. [TransUnion]" So it does make an impact. Don't misslead people. The worst part about it is that I refinanced this loan so that I would have better cashflow on a rental property. I did not take any extra money out, but the loan to balance is high because the limit is lower. To me that is very good use of credit, my income is higher and payments are lower and my payment history is perfect (never missed or late on a payment in 20 years).

sgh, out of curiosity, did you happen to pull all 3 FICO (not FAKO) scores, and was your TU lower than the others? I ask because each CRA seems to get snippy about different areas than the others.

Also, it seems that those few and lucky people who have high scores often get some weird and wacky criticisms, where as the rest of us slobs get broadsides addressing overall age of accounts and so forth. I saw an explanation on another thread that the companies feel obliged to scold you for something, unless you're 850 x3, so they make some pretty ludicrous comments when they can't find a genuine problem. Just a thought.

Re: FICO score and mortgage balance

andyaycw — Wed, 26 Sep 2007 01:35:53 GMT

I agree, TU seems to be more "snippy" about balances on installment loans than the other two CRAs.

Re: FICO score and mortgage balance

Anonymous — Wed, 26 Sep 2007 05:56:06 GMT

- sgh, out of curiosity, did you happen to pull all 3 FICO (not FAKO) scores, and was your TU lower than the others? -

No, I did the free annual credit report for all 3. TU was the only one offering free credit scores so I used them to get my score. I figured since the info is pretty much the same on all the 3 credit reports then the credit scores would be too. I was just surprised that the refinance showed up as a negative. The other 2 items seemed a bit petty too. Here they are in order: 1. There are too many inquiries on your credit report. 2. There are not enough accounts in good standing on your credit report. 3. Your mortgage account balances are too high in comparison with your credit limits.

Looking at the credit report I have 5 inquiries showing, which isn't so bad. I have 2 Visas an Amex and 1 store credit card (all in good standing), 2 mortgages and a HELOC (also in good statnding). The mortgage on my rental property was refinanced to get a better rate and lower my monthly payments, but the balance to limit changed (what used to a $500K loan is now $365K).

From what I have read in the FICO 101 and other FAQ's my credit score should be close to perfect. I have never had a late payment or anything negative on my credit reports. My oldest credit card is 15 years old and I don't have have any credit cards with balances over 20% of their limits.

In the last 3 years I have paid off both my cars and all my student loans so I don't have any other debt except for my mortgages. So, when I hear that the Fair Isaac algorythem for calculating a credit score does not penelize you for high mortage balances I get a little leary. Needless to say I am not a fan of the company. Most of us would get fired from our jobs if the product we put out was this flawed