topic Re: Help improve Mortgage Scores!!! in Mortgage Loans

Help improve Mortgage Scores!!!

yizza — Wed, 14 Oct 2015 03:20:07 GMT

So my scores are:

Fico8 mortgage scores:

Equifax:650 584

Trans:641 599

Experien:630 558

What is the best way to improve my mortgage scores so that they can mirror my fico8 scores? I am using 55% of my available credit on my cards will i see huge improvements if I reduced that to 1 or 2%? I currently have a mortgage and had a loan modifcation aprroved on December 2014 and since then i have been making on time payments, could this be the factor that is weighing heavy on my mortgage scores?

Re: Help improve Mortgage Scores!!!

Anonymous — Wed, 14 Oct 2015 03:22:48 GMT

The fastest way to increase your scores is to reduce revolving debt. Pay all your credit cards down to zero except one and carry only <10% balance on my that one. In addition comb your reports for any collection inaccuracies. Good luck!

Re: Help improve Mortgage Scores!!!

yizza — Wed, 14 Oct 2015 03:27:44 GMT

I will pay all my credit cards down to zero this month. do you think that I will see a huge jump in my mortgage scores once that is done?

Re: Help improve Mortgage Scores!!!

Anonymous — Wed, 14 Oct 2015 03:32:47 GMT

If you pay them ALL down to zero FICO will punish you (I know it's dumb but that's the truth). Pay them all to zero except one. On that one have a small balance report ($7 or $5) and that will give you the max score. You may see a +20 jump on your score or more depending on the rest of your credit profile.

Re: Help improve Mortgage Scores!!!

Mouseman — Wed, 14 Oct 2015 12:50:41 GMT

Actually, the law of diminishing returns apply here . . .

If your credit usage is high (55%) and you reduce that to 15% - you will see a big jump in your score. After that, you may see minor improvements. Example: you owe 20K on credit cards, pay down 15K. Your score may jump 20 points or more. Next month you pay 3K more - your score may jump 5 points. After that, even if you leave them at 0 - you may not see any additional increase in your score.

Lenders look at total amount owed across the board (to calculate DTI - front and back end), percentage utilization per each line of credit, overall utilization. It is usually recommended for the overall usage to be at 30%, and each individual line to be also below/at 30%. Better yet is for overall/individual to be at 15% or below.

And FWIW, I followed this process and I saw the increases I just mentioned.

Another thing to consider: once you reduced debt, don't go into debt again. If you pay $15K out of 20K, your score will go up. If a month later your balance jumps up (from 5K to 8K), you will lose points. So if you leave the balance at $0 - stop using that line of credit. For me it took a couple months, because I had a bunch of stuff tied to my credit card (gym membership, cable, etc). I had to move them to another card (the one I planned to leave w/ a balance < 15%) and that took in some cases two billing cycles to happen.

I would recommend to reduce debt and overall credit utilization (based on previous explanation), but don't spend all your money on this. Don't try to skate too close to the edge - remember you'll need cash for down payment, closing costs, move, inspection, EMD, DD, etc. If you spend all of your cash on reducing debt, you'll need to use your credit cards again to finance SOME of those.

Re: Help improve Mortgage Scores!!!

StartingOver10 — Wed, 14 Oct 2015 13:41:12 GMT

@yizza wrote:
So my scores are:
Fico8                  mortgage scores:
Equifax:650        584
Trans:641           599
Experien:630      558

What is the best way to improve my mortgage scores so that they can mirror my fico8 scores? I am using 55% of my available credit on my cards will i see huge improvements if I reduced that to 1 or 2%? I currently have a mortgage and had a loan modifcation aprroved on December 2014 and since then i have been making on time payments, could this be the factor that is weighing heavy on my mortgage scores?

I see two issues: the scores and the recent mortgage modification.

Are you planning to sell your current home? Will the next home have a payment that is higher or lower? Are you refinancing the current mortgage?

Look at your modification paperwork. Does it have a portion of the principal balance that was "forgiven" for X amount of time? Different modifications have different features, sometimes the portion that was removed from your remaining principal balance is owed back to the bank if you sell within a certain time period. Read your paperwork carefully.

My concern comes from the process of a mortgage modification whereby you have to show you CAN NOT afford the mortgage and the modification is to stop a foreclosure. Now, not even a year later you are going to go through the mortgage process to show you can qualify for a new mortgage. You successfully showed you could not afford the mortgage a few months ago (10 months) what has changed that now ?

I think you need to be very careful here

Here is a link about mods: http://www.nolo.com/legal-encyclopedia/whats-the-difference-between-loan-modification-forbearance-agreement-repayment-plan.html

Re: Help improve Mortgage Scores!!!

yizza — Wed, 14 Oct 2015 13:46:40 GMT

No I am not, the current loan is a conventional loan that is attached to a two family home that is generating rental income. As far as the modification goes it did not reduce the principle. The next home will be a multi family as well and I expect the payments to be the same or even more, however I will be able to count the rental income to help me afford the loan (70-85% towards my gross monthly income)

It is going on 12 consecutive on time payments as of December and I have read on here that after 12 months of consecutive on time payment on the modification that should clear me from not being qualified based on a loan mod.

Re: Help improve Mortgage Scores!!!

DallasLoanGuy — Wed, 14 Oct 2015 14:43:08 GMT

@yizza wrote:
So my scores are:
Fico8                  mortgage scores:
Equifax:650        584
Trans:641           599
Experien:630      558

What is the best way to improve my mortgage scores so that they can mirror my fico8 scores? in my experience, paying off all cards but one.... and leaving 1% on that card is best you can do. but you should ask this in the credit forum as i dont claim to be a guru on credit. some actually disagree with this advice, as it isnt universal to every file. but, regardless, paying down revolving is always a winner. I am using 55% of my available credit on my cards will i see huge improvements if I reduced that to 1 or 2%? I currently have a mortgage and had a loan modifcation aprroved on December 2014 and since then i have been making on time payments, could this be the factor that is weighing heavy on my mortgage scores? depends on how it is being reported. do you have lates? how many? how late?

also. was any principle forgiven in the mod? to be eligible for a mortgage after loan mod you have to meet certain criteria for conventional. i can try to look up fha criteria later

Re: Help improve Mortgage Scores!!!

cartwrna — Fri, 16 Oct 2015 03:34:51 GMT

YMMV on score changes from credit balances. My EQ04 (mortgage score) was a 707 in March of this year. Over the months I slowly added debt to 3 of my CCs just hitting peak at close to 90% usage on them all (15k). I just paid all of them off this month so I can report back what my score comes back as when I get the updates. My score currently is a 662, so I lost relatively 45 points from it. I have had a few other changes but hardly stuff that would change my score too much or cause a point loss. I had some inquiries fall off, I traded in a vehicle for a new one so the old loan shows as paid off and I have a new trade line for the new loan, added one new credit card in June. I'd go with what they have offered and get that utilization down!

Re: Help improve Mortgage Scores!!!

yizza — Fri, 16 Oct 2015 03:48:59 GMT

@DallasLoanGuy wrote:
@yizza wrote:
So my scores are:
Fico8                  mortgage scores:
Equifax:650        584
Trans:641           599
Experien:630      558

What is the best way to improve my mortgage scores so that they can mirror my fico8 scores? in my experience, paying off all cards but one.... and leaving 1% on that card is best you can do. but you should ask this in the credit forum as i dont claim to be a guru on credit. some actually disagree with this advice, as it isnt universal to every file. but, regardless, paying down revolving is always a winner. I am using 55% of my available credit on my cards will i see huge improvements if I reduced that to 1 or 2%? I currently have a mortgage and had a loan modifcation aprroved on December 2014 and since then i have been making on time payments, could this be the factor that is weighing heavy on my mortgage scores? depends on how it is being reported. do you have lates? how many? how late?

also. was any principle forgiven in the mod? to be eligible for a mortgage after loan mod you have to meet certain criteria for conventional. i can try to look up fha criteria later

It was a HAMP tier 2 modification and absolutley no principal was forgiven in the mod. It isnt being reported correctly because on my report it shows the old mortgage paymemt and not the new payment amount after the loan mod. I have been going back in forth for months with specialized loan servicing to try to get them to fix this issue.

Re: Help improve Mortgage Scores!!!

yizza — Fri, 16 Oct 2015 03:52:38 GMT

@cartwrna wrote:
YMMV on score changes from credit balances. My EQ04 (mortgage score) was a 707 in March of this year. Over the months I slowly added debt to 3 of my CCs just hitting peak at close to 90% usage on them all (15k). I just paid all of them off this month so I can report back what my score comes back as when I get the updates. My score currently is a 662, so I lost relatively 45 points from it. I have had a few other changes but hardly stuff that would change my score too much or cause a point loss. I had some inquiries fall off, I traded in a vehicle for a new one so the old loan shows as paid off and I have a new trade line for the new loan, added one new credit card in June. I'd go with what they have offered and get that utilization down!

Yes, please let me know what your new score comes back as. I know that my increase will not match yours but it will give me an idea on how much affect it could have.

Re: Help improve Mortgage Scores!!!

cartwrna — Fri, 16 Oct 2015 03:57:36 GMT

Id say if there high balances you will have good gains by paying them off. As the other poster said though carry a small balance on ONE card.

Re: Help improve Mortgage Scores!!!

yizza — Fri, 16 Oct 2015 04:00:36 GMT

I will do that and pay them off this month and report my updated scores!