topic Re: What's the FICO score above which interest rates don't change much in Mortgage Loans

What's the FICO score above which interest rates don't change much

aubie1kenobie2 — Tue, 12 Jan 2016 15:51:38 GMT

Hi everyone. Trying to figure out a strategy here. My scores were rebucketed, so it dropped 20-30 points. I was at 740-750 prior to the rebucket. Anyway, my DTI is around 4% right now between an auto loan and 3 credit cards reporting. Is there a FICO mortgage score above which tweaking your DTI and having only 1 card report with <9% balance will not be necessary? Let's say if you have a 750, will aiming for a score of 760 matter? Thanks.

The reason why I ask is because a friend of mine (who recently bought a house) told me I shouldn't stress too much since my scores were good enough

Re: What's the FICO score above which interest rates don't change much

Anonymous — Tue, 12 Jan 2016 16:29:40 GMT

You will get the best interest rates at 740, and the best PMI rates at 760.

Re: What's the FICO score above which interest rates don't change much

bdhu2001 — Tue, 12 Jan 2016 17:14:45 GMT

@aubie1kenobie2 wrote:
Hi everyone. Trying to figure out a strategy here. My scores were rebucketed, so it dropped 20-30 points. I was at 740-750 prior to the rebucket. Anyway, my DTI is around 4% right now between an auto loan and 3 credit cards reporting. Is there a FICO mortgage score above which tweaking your DTI and having only 1 card report with <9% balance will not be necessary? Let's say if you have a 750, will aiming for a score of 760 matter? Thanks.

The reason why I ask is because a friend of mine (who recently bought a house) told me I shouldn't stress too much since my scores were good enough

Is that your mortgage FICO score? If it's your mortgage FICO score, the only reason to shoot for 760 is to give yourself breathing room. If you have the funds for the down payment, now is the time to pre-qualify and start searching for a home.

Normally you find lower prices when it's not spring or summer (unless you're in a hot market).

Re: What's the FICO score above which interest rates don't change much

aubie1kenobie2 — Wed, 13 Jan 2016 01:56:20 GMT

No, those are not my mortgage scores. I have a few more months left on my lease before I make the big move sometime near the end of spring/start of summer. I have a couple of months to see what my scores would be like if I just used one CC and paid it to <9% of the CLI before the statement cuts. Plus I was hoping one more INQ from my car loan 2 years ago would drop off.

Anyhow, hopefully I make the 740 minimum by then. I have some money saved for the DP and if I stick to my budget and not be lured by higher priced homes, I should be ok without needing to get PMI. Thanks!

Re: What's the FICO score above which interest rates don't change much

bdhu2001 — Wed, 13 Jan 2016 16:52:38 GMT

@aubie1kenobie2 wrote:
No, those are not my mortgage scores. I have a few more months left on my lease before I make the big move sometime near the end of spring/start of summer. I have a couple of months to see what my scores would be like if I just used one CC and paid it to <9% of the CLI before the statement cuts. Plus I was hoping one more INQ from my car loan 2 years ago would drop off.

Anyhow, hopefully I make the 740 minimum by then. I have some money saved for the DP and if I stick to my budget and not be lured by higher priced homes, I should be ok without needing to get PMI. Thanks!

You don't have to use only one card. You simply have to allow only one card to report. I would suggest that you subscribe to the 3B report so that you can know where you truly are. Even if you end up canceling in a month or two, it's still better to know.

In addition, you can use the simulators to see what is the best recommendations to improve your score. You mentioned an auto loan. Do you also have a second installment loan (i.e student, etc)? If not, I suggest you get a shared loan. But get the report prior to the shared loan so that you can see how the shared affects your score and when it improves. Don't shoot in the dark. You have plenty of time to move your scores in the right direction. Good luck to you.

Re: What's the FICO score above which interest rates don't change much

DallasLoanGuy — Wed, 13 Jan 2016 19:17:05 GMT

https://www.fanniemae.com/content/pricing/llpa-matrix.pdf

They dont change after you get north of 740

the link is the actual adjustment for score/ltv that we use.

the hits to the rate are a hit to the price to buy that rate.... not an actual hit(rise) in interest rate

Re: What's the FICO score above which interest rates don't change much

Anonymous — Wed, 13 Jan 2016 23:19:05 GMT

@DallasLoanGuy wrote:
https://www.fanniemae.com/content/pricing/llpa-matrix.pdf

They dont change after you get north of 740

the link is the actual adjustment for score/ltv that we use.

the hits to the rate are a hit to the price to buy that rate.... not an actual hit(rise) in interest rate

DLG, have you ever understood the LLPA for 75.01-80% LTV w/ a 740? Never made sense to me.

Re: What's the FICO score above which interest rates don't change much

Anonymous — Thu, 14 Jan 2016 01:01:55 GMT

HI Dpeezy, and others:

When you said 740 was that using Fico 5 for mortgages? My FICO 5 score, 722, is around 25 points higher than my Fico 8.

thanks

Re: What's the FICO score above which interest rates don't change much

Anonymous — Thu, 14 Jan 2016 01:20:15 GMT

@Anonymous wrote:
HI Dpeezy, and others:
When you said 740 was that using Fico 5 for mortgages? My FICO 5 score, 722, is around 25 points higher than my Fico 8.
thanks

740 score they are referring to is the low middle score regardless of CRA

Re: What's the FICO score above which interest rates don't change much

aubie1kenobie2 — Fri, 15 Jan 2016 15:33:47 GMT

@bdhu2001 wrote:
You don't have to use only one card. You simply have to allow only one card to report. I would suggest that you subscribe to the 3B report so that you can know where you truly are. Even if you end up canceling in a month or two, it's still better to know.

In addition, you can use the simulators to see what is the best recommendations to improve your score. You mentioned an auto loan. Do you also have a second installment loan (i.e student, etc)? If not, I suggest you get a shared loan. But get the report prior to the shared loan so that you can see how the shared affects your score and when it improves. Don't shoot in the dark. You have plenty of time to move your scores in the right direction. Good luck to you.

No, I don't have any other installment loans. Is that going to be a problem? My auto loan is in good standing, as is all my other CCs.

Re: What's the FICO score above which interest rates don't change much

bdhu2001 — Fri, 15 Jan 2016 16:06:07 GMT

@aubie1kenobie2 wrote:
@bdhu2001 wrote:
You don't have to use only one card. You simply have to allow only one card to report. I would suggest that you subscribe to the 3B report so that you can know where you truly are. Even if you end up canceling in a month or two, it's still better to know.

In addition, you can use the simulators to see what is the best recommendations to improve your score. You mentioned an auto loan. Do you also have a second installment loan (i.e student, etc)? If not, I suggest you get a shared loan. But get the report prior to the shared loan so that you can see how the shared affects your score and when it improves. Don't shoot in the dark. You have plenty of time to move your scores in the right direction. Good luck to you.
No, I don't have any other installment loans. Is that going to be a problem? My auto loan is in good standing, as is all my other CCs.

It's usually best to have two. Your car, if you're still paying on it is one. A second installment loan would help. The minute you finish paying an installment loan, the benefits of having a credit mix disappear. I think the formula for FICO score basically expects you to have two installment loans: One car & one home to get the most possible points for credit mix. A small $500 shared loan could help.

Based on your signature, your current EQ mortgage score is 729. Thus you aren't shooting in the dark, you simply don't know what your mid score is. EQ is usually my mid-score. I guess you can treat it like your mid-score or lowest score and work on increasing it to at least 740. Some improvement is going to happen in three months just from continuing to pay your bills on time.

Given your access to one of your mortgage scores, I still suggest that you add a shared loan and also pull your credit report so that you can be sure that only card is reporting a balance and that there aren't any mistakes on your report. You can get your report free from the CBAs by going to annualcreditreport.com. Pull only one report.

It's ridiculous, but when I started, I thought I had only one card reporting. I always paid my bill in full. Unfortunately, on two of my cards, I had bills that hit them prior to statement cut date. It's not huge, but seeing your reported CBA balances take the guess work out.

Your doing a great job on your credit journey. Best wishes on your house hunting. It looks like you have everything on the right track.