topic Re: How to increase my MORTGAGE credit score? in Mortgage Loans

How to increase my MORTGAGE credit score?

Anonymous — Sat, 05 Sep 2015 01:27:02 GMT

I was going to apply for a mortgage loan. My credit scores showed as Transunion 674 and Equifax 665 on Creditkarma.com, so I thought I was FINE. The LO told me that based on everything (he hadnt ran my credit) I would be approved for 150000, which is right at my budget! I was estactic so I told him to run my credit to begiin the process! BUT then the LO shows me my mortgage credit scores are actually Transunion - 628 and Equifax 624 and experian was 549 (??). THIS would have been FINE but I have about 10 student loan accounts I am in the middle of disputing, so he advised that I contact equifax directly to remove them, which, he said would probably lower my score and because you need a 620 to get the 3% down payment, I would no longer qualify. I am so disappointed as I have been working pretty hard the past few months and(thought) I brought my cedit score up almost 60 points! Why are the scores so different and what can I do to RAISE my mortgage credit score as I guess my regular credit scores do not matter.

Oh and get this, after he did his credit inquiry, my equifax score went down 25 points- UPDATE - aftter checking my reports fromyesterday and today , I see that it went down 25 points because one of my disputes came off - a collections for 589 ! and transunion down 2 points! So now I am stuck in a hard place AS I was HOPING to get a case number on a house before sept 14th when the new student loan laws take place (it was a stretch yes but I was willing to work for it) Now that all seems shot to hell as I am sure my equifax mortgage score is now below 620, which means I cant get the down payment assistance. Sorry if this is more of a rant, I am just so frustrated! I wish someone had told me about this a long time ago so I couldve been working on a house long before sept 14th! Or at least about the credit score differences before I had my credit run by the LO!!

Oh and just a sidenote - I had no DTI but now that the law is chaning on sept 14th ill have an 850 a month debt added based on my student loan amount! MY luck!

Re: How to increase my MORTGAGE credit score?

youngcreditcarduser — Fri, 04 Sep 2015 21:40:00 GMT

I'm curious as to where you got your credist scores from? What is it from myFICO or some other site?

Re: How to increase my MORTGAGE credit score?

Anonymous — Fri, 04 Sep 2015 21:54:44 GMT

I had a 70 point difference in my mortgage scores for a while. It turned out to be an old collection account. I was able to get it removed and my mortgage scores are identical to my fico scores now. It's hard to say where your difference is, but there is something there that the newer models don't weigh as much as the older mortgage score models.

Re: How to increase my MORTGAGE credit score?

Anonymous — Fri, 04 Sep 2015 21:56:08 GMT

Creditkarma.com and I have credit.com but they are even more far off (says I have a 680 and 675) Do you think its because they are free sites? Is it worth paying for myFICO to get accurate scores??

Re: How to increase my MORTGAGE credit score?

Anonymous — Fri, 04 Sep 2015 22:06:03 GMT

Maybe it weighs previous missed payments more? Because I do have missed payments from my student loans but I have been paying them on time for the past 9 months and am deferred now. (I am HOPING the "missed payments" will be removed soon since I have competed the 9 month rehab program but I heard they dont ever actually go away, it just closes the acct so idk)

I also have one collection account (that I do not believe I owe but the dispute was denied) for 589 but I was told to wait to pay it off and that if its under 1000 it shouldnt be a problem. And the LO didnt mention paying that off so Idk. My only guess is the student loans missed payments, the mortgage company probably weighs more though. Which I could see a few points maybe even 15 or 20 but 40 for me and 70 for you! Thats crazy! I wonder if itll increase my score if I pay the 589 (they wont pay for delete, Ive asked)

Re: How to increase my MORTGAGE credit score?

youngcreditcarduser — Fri, 04 Sep 2015 22:06:02 GMT

creditkarma.com and credit.com use was is sometimes called a 'FACO' score because they are using their own formulas which try to approximate what your real credit score is (FICO). I found it pretty useful and much more accurate to pull it from myFICO, yes its pricy, but you're getting your true scores which gives peace of mind (or at least for me it did).

Re: How to increase my MORTGAGE credit score?

Anonymous — Fri, 04 Sep 2015 22:13:00 GMT

Yea, lesson learned now! They have one for 30 a month which isnt bad. Better then being jipped into thinking you have a decent credit score and not finding out until AFTER your credit is pulled smh

Re: How to increase my MORTGAGE credit score?

Anonymous — Fri, 04 Sep 2015 22:45:18 GMT

The fico8 scores myfico has will also be different than your real mortgage scores. Mine differ by 40 pts! The reason for this is mortgage companies pretty much all accross the board use previous scoring models from over 10 years ago or more. And all three bureaus use different models. But when you purchase your fico scores you will also get the mortgage scores which is good, however the mortgage scores don't automatically update like the fico scores do. So to see any differences as you clean up credit you'll have to do a whole new credit report purchase. BUT if your myfico scores are going up then the mortgage fico scores should be going up too. And student loans have a BIG impact on your score. I'm suffering because my student loan company will not remove late pays from March of this year when my loans fell out of forebearance and I didn't call to get them out back in in time. Because they report as so many lines of credit. Also you should know that credit karma inaccurately dings your report for inquiries. Your inquiry maybe cost you a couple of points and no more.

Re: How to increase my MORTGAGE credit score?

Anonymous — Fri, 04 Sep 2015 23:06:09 GMT

WOW! That makes sense but it sucks they using old models. I guess my only chance will be to try and keep increasng my credit scores until they are at least 60-70 points above the 620 I need for the mortgage credit score (the only catch is I believe the FHA 3 % down payment assistance grant I need ends this month!) And yea my student loans are like 36 lines! I hope they will agree to delete your late payments! And yea I was shocked when it said minus 25 for a inquiry

Re: How to increase my MORTGAGE credit score?

Anonymous — Fri, 04 Sep 2015 23:19:13 GMT

Minus 25 doesn't sound right at all. The most I've seen is 3 or 4.

Don't hold me to this because I'm not an expert on all of these different credit scoring models, but I believe paying the collection may help your consumer scores, but I don't think it will have any effect on your mortgage score. If it is a really old collection, it may actually drop a bit.

Re: How to increase my MORTGAGE credit score?

Anonymous — Fri, 04 Sep 2015 23:32:24 GMT

It didnt seem right to me at all either, but that wasthe only change. And the collection is new.It just got put on this year (even though the incident was over 4 years ago) but yea the LO didnt seem too concerned about that.I guess we will see where I am once these dispute comments get removed and go from there.

Re: How to increase my MORTGAGE credit score?

Wovenyarn — Sat, 05 Sep 2015 00:07:24 GMT

This happened to me when I first started looking for a house. My scores on the old USAA website were over 700 on 2 and over 680 on 1. When the LO pulled my credit, I was over 680 on 2 and at like 660 on the last one. I was shocked but I hadn't found this forum yet. I was still under the impression that there was one credit score for everything. Boy was I wrong...lol

Re: How to increase my MORTGAGE credit score?

Anonymous — Sat, 05 Sep 2015 02:15:01 GMT

Yes it is crazy. Luckily you were still above the 620 mark. I was only4 points over the 620 I need, so now that y score has gone down 25 points, Im sure ive gone down at least 25 on my mortgage credit score. Wish I had came here first!

Re: How to increase my MORTGAGE credit score?

Revelate — Sat, 05 Sep 2015 17:12:16 GMT

@Anonymous wrote:
Yes it is crazy. Luckily you were still above the 620 mark. I was only4 points over the 620 I need, so now that y score has gone down 25 points, Im sure ive gone down at least 25 on my mortgage credit score. Wish I had came here first!

As you noted in your original post, it was probably the dispute clearing; most people dispute negative tradelines, and disputes can do whacky things up to and including discounting the entire tradeline from scoring.

Which is why you can't get a file automatically underwritten with a dispute (or a dispute remark but that's a different issue).

Frankly we'll need a lot more information of what's in your file to optimize it, and how much cash you have to try to do it with that doesn't torpedo your downpayment. Short term increases come down to two things:

Airstriking derogatories (vis a vis Pay for Delete or otherwise on collection accounts, or Fresh Start on a Fed tax lien)
Prettying up utilization metrics

That's pretty much all you can do within a couple week time frame.

I will state though that the DTI guidelines are there for consumer protection, not to damage their chances of getting a loan; taking a mortgage that I could easily afford way less than my max DTI is almost assuredly the second smartest thing I've ever done... which came immediately after the smartest thing I've done by actually doing a real post mortgage budget; not saying that everyone should do this even though being house poor absolutely sucks, but look really hard at your budget if you have an $800 / month payment and going for max qualification: yes that mortgage interest deduction can sure be sweet, but rushing into a potentially unaffordable house isn't where you want to be.

Re: How to increase my MORTGAGE credit score?

Anonymous — Sun, 06 Sep 2015 04:58:01 GMT

The only things I have are the 589 collections and the "bad payment history" from when I defaulted on my student loans. This actually takes up about 36 lines on my credit report. That is SUPPOSED to come off by September 17th, as my accounts have all been transferred to a new agency (which is also on my credit report but listed as current) but we will see if they actually follow through with what they said they will do.

As for the collection I have asked the collection agency to "pay for delete" even though I do not honestly believe I owe (Ive explained to them why a million times) but they refuse. My next step is to call again and ask again (ask for a manager if need be).

I have no credit cards. I am an authrorized user on two of my moms credit cards that she has had for ten years. I guess my next step could also be to open a secured card myself.

As for the DTI, I understand why they have it. And youre right I am a little antsy to get the highest loan I can because I do want a nice house. However, my student loan payment is not 800 a month on my salary. It is AT MAX 300 and no more. So, what the LO suggested I do, was get off my deferrment and request an Income Based Repayment from my student loan creditor. Then, I can show that my Debt will be 300 or less and not 800, which will be calculated into my DTI (might be a lower laon amount, but itll be more realistic for my future). But the new rule starting Sept 14th is not realistic and basically just punishes people that have student loans and want a house because they make the debt so much higher then it really will be. And even if my student loan repayment WOULD BE 800 a month after I graduate, my salary will also be much higher and I would be able to afford such a cost, if that makes sense, but theyre calculating that 800 into my current salary BEFORE I graduate which doesnt make sense and why I was trying to avoid it.

But I completely understand your point. Ive been paying rent for the past 3 years now so I know how much I can afford. And from the calculators Ive done I will significantly save by buying a house versus renting. But thanks for the advice as I will definitely go over a post mortgage budget!

Re: How to increase my MORTGAGE credit score?

Anonymous — Sun, 06 Sep 2015 13:05:09 GMT

I feel like m response about the new DTI rule was confusing - so let me say in more or less words,

The new DTI ratio would be adding a debt to my current income that I do not have to actually pay and by the time I actually will owe any of that debt, I will have a much higher salary and it will not be as much as they are anticipating.

So I feel ill be getting jipped out of a house I CAN actually afford because its factoring in a debt that I actually do not have to pay.

Re: How to increase my MORTGAGE credit score?

Anonymous — Mon, 07 Sep 2015 02:52:41 GMT

One thing I can't understand is why you would start the process of buying a house and it all be a guessing game as to where you scores were/are. This is myfico.com. It is a great investment to spend the $30/month to actually know your Fico scores of all versions so you can plan the process before even heading to meet with a LO. That's doing your due diligence and being on top of your own financial affairs to avoid being blindsided or taken advantage of.

Before starting the house buying process, you need to get your financial house in order. You want the house to be a blessing and not some curse or nightmare that you struggle to pay, while paying on student loans, utilities, car note, insurance etc. And depending on where your actual and not guessing scores are, you may or may not be ready to buy a house.

I'd advise you to start at the beginning.

Re: How to increase my MORTGAGE credit score?

Anonymous — Tue, 08 Sep 2015 16:30:08 GMT

It was not a guessing game as to where my credit scores are/were because, as you can see from the title of my thread and others on this post, mortgage credit scores are different then credit scores and as people have stated, even those who bought the myFICO scores, ended up having different mortgage scores. The reason why I started the process was because I obviously did not know that there were different scores to begin with. But after hearing from others, there was still a difference in scores whether you bought myFICO or not.

And my finances are in order, which is why I was able to pre-qualify, as I stated. The only issue right now is my mortgage credit score, due to past missed payment on my student loans that, as I said, are expected to fall off mid September so I am confused as to what you are talking about. I do not pay student loans as I am deferred until 2019, But when I was paying, I paid $5. I pay ultities now, and have been renting for 3 years, never had a late payment. And my mortgage will be about the same. I do not have a car note (car paid off), and my insurance is 40 a month. So, I am very much ready to buy a house. I am unsure how that was even into question. And I know how much I can afford because, as I said, I have been renting. Even with my mortgage credit score as it is, I can afford a house. However, in order to get the best rates and the down payment assistance, I need to up my mortgage credit score, which is why I asked the question in the first place. I do know my mortgage scores NOW, which I listed in my original post so i am not guessing anything. I am not sure how you missed all this information. However, Thank you for your concern.

Re: How to increase my MORTGAGE credit score?

Anonymous — Thu, 10 Sep 2015 00:40:10 GMT

Creditkarma.com does not show FICO, they use Vantage 2.0

here is a link https://www.creditkarma.com/article/vantageScore

I was very excited about my score on Creditkarma.com but then learned the difference the hard way.

My scores 2 years ago were less than 600 and I have used secured cards and then a car loan along with disputing some old items to raise my scores.

Now:

Creditkarma: TransUnion 739, Equifax 749, Experian (not shown)

MyFico 8: TransUnion 717, Equifax 667, Experian 698

Creditkarma Vantage 2 is a very different scoring system and not widely used. Myfico.com has been a much better tool though not free.

Re: How to increase my MORTGAGE credit score?

Anonymous — Thu, 10 Sep 2015 00:56:44 GMT

OP...I wasn't going to even comment further, but your response called for it. The fact that you would use Creditkarma scores as the basis for applying for a mortgage underscored my point about taking care of the first things first or the basics. Sometimes we take things too personal, when the truth is offered. My intention was to underscore the need to do one's due diligience before embarking on such a difficult venture as buying a house and that's not using the questionable scores of CK as the basis for mortgage shopping.

I wish you the best. I hope you find a great home and a great mortgage offer.