topic Re: Mortgage FICO much lower than FICO 8 in Mortgage Loans

Mortgage FICO much lower than FICO 8

tjmolly — Mon, 29 Aug 2016 15:16:47 GMT

Can anyone, I mean anyone tell me why my mortaeg FICO is so much lower than my regular FICO 8 and how to fix it? My FICO 8 is 722 and my mortagage FICO is 649. I realize they use different calculations, but really 70pts difference?!

Re: Mortgage FICO much lower than FICO 8

Anonymous — Mon, 29 Aug 2016 16:46:39 GMT

You need to get all three scores. They will go by the lowest middle score.

Re: Mortgage FICO much lower than FICO 8

tjmolly — Mon, 29 Aug 2016 16:54:59 GMT

Mortgage FICO. 629, 645, 649. All scores some 70 pts lower than my regular FICO 8 scores. What gives?

Re: Mortgage FICO much lower than FICO 8

StartingOver10 — Mon, 29 Aug 2016 17:50:16 GMT

@tjmolly wrote:
Mortgage FICO. 629, 645, 649. All scores some 70 pts lower than my regular FICO 8 scores. What gives?

A different formula is used. The mortgage score algorithms are older forms of FICO scores. They are what is used by mortgage lenders for mortgages.

Do you have any long term installment loans on your CR? Any installment loans at all? If not, consider getting a shared secured small loan from Alliant CU. That may pick up your mortgage FICOs. Right now your mid score is 645. Good for FHA type mortgage, not so good for a conventional loan as conventional mortgages are score sensitive for both interest rates and PMI rates (if you have PMI).

Re: Mortgage FICO much lower than FICO 8

Anonymous — Mon, 29 Aug 2016 18:20:53 GMT

I don't know the answer but I am right there with ya! My FICO8's are all around 750. My mortgage scores are anywhere from 650ish (really Equifax <sigh>) to 690s. Mid-score was low 690s.. Drives me nuts because I've seen people ask this before and no one, absolutely no one, has been able to really explain other than to say it's a different formula. I get that, I really do, but that's an enormous variation in score which makes me wonder what in heck kind of algorithms they've got over there at FICO to account for such an enormous swing.

Re: Mortgage FICO much lower than FICO 8

Revelate — Tue, 30 Aug 2016 01:45:32 GMT

TBH without a non-trivial disclosure of what's in your file(s) it's impossible to point at anything in particular. Same applies to credit file optimization advice.

A few quick tidbits:

Installment utilization factors on FICO 8 and FICO 98, it does not on FICO 04 (which TU/EQ on the mortgage trifecta is). Vis a vis if you have the share secured loan trick or similar pretty utilization, that can be a 20+ point swing between the two right there, with FICO 8 being higher. I actually started out higher on my mortgage scores and then after playing with my baby installment loans wound up higher on FICO 8 during my own mortgage process (though it did kick up my EX 98 score to qualify me for a 720 tier which was nothing but goodness).

Older derogatories are counted more heavily on FICO 04; there's a different aging factor where FICO 8 weights recent history more heavily seemingly... case in point when I got a new tax lien added on to my reports (with an old one already on there) my FICO 8 scores dropped by 50 points, and my EQ Beacon 5.0 score (mortgage score from Equifax) moved a whopping 5 points. We've seen similar data on collections / CO's getting updated, and recent deliqencies as well.

Collections under $100 aren't counted under FICO 8, if this is you, it's a big deal score wise if it's your only collection (or all of them are small "nuisance" collections).

FICO 8 penalizes not having open credit cards massively, mortgage models isn't nearly as big of a deal (635 vs 680 from multiple reports when Scorewatch changed for people that just had installment history).

Beyond that there seems to be some differences in the revolving utilization calculations too, though what is pretty on one is pretty on every other FICO model and if at all possible that should be prettied up before a mortgage application anyway making it somewhat moot.

Those are the big changes that we're aware of, but not a lot of folks track their mortgage scores any longer (I only really track EQ's regularly since I get that from DCU monthly).

Re: Mortgage FICO much lower than FICO 8

StartingOver10 — Tue, 30 Aug 2016 01:54:11 GMT

Excellent post Rev....people only track their mortgage scores when they are preparing to app for a mortgage (no doubt). Otherwise, they track what they use most often - FICO 8s

Re: Mortgage FICO much lower than FICO 8

Anonymous — Tue, 30 Aug 2016 14:16:56 GMT

Just to add my two cents, I also suffer from lower mortgage scores.

I have one paid collection from 2013 for $70

I have one CC, $750 limit, 3 years old, never late

One joint car loan, 3 years in with 2 years left, never late

Two student loans, 2x120 day lates 07/15-08/15.

12 student loans consolidated into the above two, mid 2015. 6x120 day lates (each account!) before consolidation.

My guess is that the mortgage scores rely more heavily on payment history than the Fico 8's do.

Re: Mortgage FICO much lower than FICO 8

garagebandking — Tue, 30 Aug 2016 17:10:30 GMT

When I started the process in May/June, my Fico 8 scores were lower than my mortgage scores. I attributed this to the fact my student loans were close to 90k in balance and current.

The mortgage scores certainly seem to weigh installment loans more heavily.

Re: Mortgage FICO much lower than FICO 8

StartingOver10 — Tue, 30 Aug 2016 17:18:50 GMT

@garagebandking wrote:
When I started the process in May/June, my Fico 8 scores were lower than my mortgage scores. I attributed this to the fact my student loans were close to 90k in balance and current.

The mortgage scores certainly seem to weigh installment loans more heavily.

^^^I agree with this ....

Re: Mortgage FICO much lower than FICO 8

Anonymous — Tue, 30 Aug 2016 17:19:16 GMT

For what its worth when I started mortgage shopping my mortgage scores were all 50+ points lower than Fico 8. All Fico 8's were in the mid 600's to low 700's and mortgage scores were mid 600's. Only negatives were late pays on student loans from a year ago, but my credit utilization was at 95%. After paying my cards down under 10% my Fico 8's jumped 80 plus points and mortgage scores jumped even more and ended up being higher than Fico 8's. So the mortgage score seems to weigh credit utilization quite high, at least for my profile.

Re: Mortgage FICO much lower than FICO 8

Revelate — Tue, 30 Aug 2016 18:01:07 GMT

@garagebandking wrote:
When I started the process in May/June, my Fico 8 scores were lower than my mortgage scores. I attributed this to the fact my student loans were close to 90k in balance and current.

The mortgage scores certainly seem to weigh installment loans more heavily.

Did you mean weight less based on what your own data suggests? From extensive testing the mortgage scores (other than Experian which is a FICO 98 model) discount installment utilization.

From my own data, I got no movement when I went from ~80% installment utillization to <10% on EQ Beacon 5.0 or Transunion Classic 04 (two of the three mortgage scores); however I got a ~20 point increase on my FICO 8's.

Similarly when my mortgage reported, I lost those ~20 points on my FICO 8's, and didn't budget at all on the aforementioned two mortgage scores.

Your post also suggests similarly: it's a simple aggregate calculation - aggregate loan balances vs. aggregate original balances - if that's more than 10% and everything else is similar it's likely that your mortgage scores will trend higher as you suggest. There seems to be a higher breakpoint too but we've never isolated it and anecdotal data is only so good unfortunately.

Re: Mortgage FICO much lower than FICO 8

Revelate — Tue, 30 Aug 2016 18:06:54 GMT

@Anonymous wrote:
For what its worth when I started mortgage shopping my mortgage scores were all 50+ points lower than Fico 8. All Fico 8's were in the mid 600's to low 700's and mortgage scores were mid 600's. Only negatives were late pays on student loans from a year ago, but my credit utilization was at 95%. After paying my cards down under 10% my Fico 8's jumped 80 plus points and mortgage scores jumped even more and ended up being higher than Fico 8's. So the mortgage score seems to weigh credit utilization quite high, at least for my profile.

Hrm, you hit 740-780+ on your mortgage trifecta with some pattern of lates from a year prior? Student loan tradeline wasn't in dispute or similar? Would be intested in knowing the explicit score changes if you still have that data available. Interesting datapoint anyway!

Re: Mortgage FICO much lower than FICO 8

Anonymous — Tue, 30 Aug 2016 18:46:38 GMT

@Revelate wrote:
@Anonymous wrote:
For what its worth when I started mortgage shopping my mortgage scores were all 50+ points lower than Fico 8. All Fico 8's were in the mid 600's to low 700's and mortgage scores were mid 600's. Only negatives were late pays on student loans from a year ago, but my credit utilization was at 95%. After paying my cards down under 10% my Fico 8's jumped 80 plus points and mortgage scores jumped even more and ended up being higher than Fico 8's. So the mortgage score seems to weigh credit utilization quite high, at least for my profile.

Hrm, you hit 740-780+ on your mortgage trifecta with some pattern of lates from a year prior? Student loan tradeline wasn't in dispute or similar? Would be intested in knowing the explicit score changes if you still have that data available. Interesting datapoint anyway!

After looking at it I guess my origiinal numbers are off. I started in mid 600's and ended in the low 700's. The only data point I have now is that at 95% utilization my Experian mortgage score was at 630, Fico 8 at 671. (numbers produced from MyFico). Paying my CC down to 8% utilization brought me to a 722 mortgage and 719 Fico 8 with no other changes other than the utilization. Student loan tradeline was not in dispute. I had a string of 30,60,90 days late from last August but is now current. So no, I did not get my mortgage trifecta to 740-780 with recent lates, rather I got my middle mortgage score to 722 with recent lates.

Re: Mortgage FICO much lower than FICO 8

tjmolly — Tue, 30 Aug 2016 18:54:40 GMT

@Anonymous wrote:
@Revelate wrote:
@Anonymous wrote:
For what its worth when I started mortgage shopping my mortgage scores were all 50+ points lower than Fico 8. All Fico 8's were in the mid 600's to low 700's and mortgage scores were mid 600's. Only negatives were late pays on student loans from a year ago, but my credit utilization was at 95%. After paying my cards down under 10% my Fico 8's jumped 80 plus points and mortgage scores jumped even more and ended up being higher than Fico 8's. So the mortgage score seems to weigh credit utilization quite high, at least for my profile.

Hrm, you hit 740-780+ on your mortgage trifecta with some pattern of lates from a year prior? Student loan tradeline wasn't in dispute or similar? Would be intested in knowing the explicit score changes if you still have that data available. Interesting datapoint anyway!
After looking at it I guess my origiinal numbers are off. I started in mid 600's and ended in the low 700's. The only data point I have now is that at 95% utilization my Experian mortgage score was at 630, Fico 8 at 671. (numbers produced from MyFico). Paying my CC down to 8% utilization brought me to a 722 mortgage and 719 Fico 8 with no other changes other than the utilization. Student loan tradeline was not in dispute. I had a string of 30,60,90 days late from last August but is now current. So no, I did not get my mortgage trifecta to 740-780 with recent lates, rather I got my middle mortgage score to 722 with recent lates.

So outofdoors, what is your student loan balance due to original amount %? My student loans are still >100% balance to original amount.

Re: Mortgage FICO much lower than FICO 8

Anonymous — Tue, 30 Aug 2016 19:02:29 GMT

@tjmolly wrote:
@Anonymous wrote:
@Revelate wrote:
@Anonymous wrote:
For what its worth when I started mortgage shopping my mortgage scores were all 50+ points lower than Fico 8. All Fico 8's were in the mid 600's to low 700's and mortgage scores were mid 600's. Only negatives were late pays on student loans from a year ago, but my credit utilization was at 95%. After paying my cards down under 10% my Fico 8's jumped 80 plus points and mortgage scores jumped even more and ended up being higher than Fico 8's. So the mortgage score seems to weigh credit utilization quite high, at least for my profile.

Hrm, you hit 740-780+ on your mortgage trifecta with some pattern of lates from a year prior? Student loan tradeline wasn't in dispute or similar? Would be intested in knowing the explicit score changes if you still have that data available. Interesting datapoint anyway!
After looking at it I guess my origiinal numbers are off. I started in mid 600's and ended in the low 700's. The only data point I have now is that at 95% utilization my Experian mortgage score was at 630, Fico 8 at 671. (numbers produced from MyFico). Paying my CC down to 8% utilization brought me to a 722 mortgage and 719 Fico 8 with no other changes other than the utilization. Student loan tradeline was not in dispute. I had a string of 30,60,90 days late from last August but is now current. So no, I did not get my mortgage trifecta to 740-780 with recent lates, rather I got my middle mortgage score to 722 with recent lates.
So outofdoors, what is your student loan balance due to original amount %? My student loans are still >100% balance to original amount.

They vary significatly between my 7 or so tradelines. Some are paid and closed, some in the 50% range and others upwards of 90%.

Re: Mortgage FICO much lower than FICO 8

garagebandking — Tue, 30 Aug 2016 19:59:10 GMT

@Revelate wrote:
@garagebandking wrote:
When I started the process in May/June, my Fico 8 scores were lower than my mortgage scores. I attributed this to the fact my student loans were close to 90k in balance and current.

The mortgage scores certainly seem to weigh installment loans more heavily.
Did you mean weight less based on what your own data suggests? From extensive testing the mortgage scores (other than Experian which is a FICO 98 model) discount installment utilization.

From my own data, I got no movement when I went from ~80% installment utillization to <10% on EQ Beacon 5.0 or Transunion Classic 04 (two of the three mortgage scores); however I got a ~20 point increase on my FICO 8's.

Similarly when my mortgage reported, I lost those ~20 points on my FICO 8's, and didn't budget at all on the aforementioned two mortgage scores.

Your post also suggests similarly: it's a simple aggregate calculation - aggregate loan balances vs. aggregate original balances - if that's more than 10% and everything else is similar it's likely that your mortgage scores will trend higher as you suggest. There seems to be a higher breakpoint too but we've never isolated it and anecdotal data is only so good unfortunately.

Given my profile at the time: a few judgments marked as open (they were satisfied), an auto-loan charge-off from 2012 that began updating monthly again late last year, and one collection account that was listed as open (but also satisfied) - I'm left to believe that the installment loan (student loan) payment history was weighted more heavily by the mortgage scoring system. Not so much the balance/utilization just the payment history. I'm not sure the student loans reflect in a way that you could calculate utilization. But I am almost certain that the 13+ years of positive payment history on the student loans helped my mortgage score.

The fact that all the judgments and the collection account disappeared and my mortgage score didn't change much also makes me think the payment history on the installment loans is weighted more heavily. But yes, it is clearly all an aggregate. It would, however, make sense, that a mortgage score would look at installment loans differently.

If my credit card (the judgments and collection) were weighted anywhere near as heavily as the installment loan then it would stand to reason the mortgage score would be much closer to my Fico 8 score...instead of being 25+ points higher at the time.

I may have missed it...what were your installment loans?

The mortgage posting could've dropped your score because that does reflect utilization? Because it was a new account?

Re: Mortgage FICO much lower than FICO 8

Revelate — Thu, 01 Sep 2016 00:58:31 GMT

@garagebandking wrote:
@Revelate wrote:
@garagebandking wrote:
When I started the process in May/June, my Fico 8 scores were lower than my mortgage scores. I attributed this to the fact my student loans were close to 90k in balance and current.

The mortgage scores certainly seem to weigh installment loans more heavily.
Did you mean weight less based on what your own data suggests? From extensive testing the mortgage scores (other than Experian which is a FICO 98 model) discount installment utilization.

From my own data, I got no movement when I went from ~80% installment utillization to <10% on EQ Beacon 5.0 or Transunion Classic 04 (two of the three mortgage scores); however I got a ~20 point increase on my FICO 8's.

Similarly when my mortgage reported, I lost those ~20 points on my FICO 8's, and didn't budget at all on the aforementioned two mortgage scores.

Your post also suggests similarly: it's a simple aggregate calculation - aggregate loan balances vs. aggregate original balances - if that's more than 10% and everything else is similar it's likely that your mortgage scores will trend higher as you suggest. There seems to be a higher breakpoint too but we've never isolated it and anecdotal data is only so good unfortunately.
Given my profile at the time: a few judgments marked as open (they were satisfied), an auto-loan charge-off from 2012 that began updating monthly again late last year, and one collection account that was listed as open (but also satisfied) - I'm left to believe that the installment loan (student loan) payment history was weighted more heavily by the mortgage scoring system. Not so much the balance/utilization just the payment history. I'm not sure the student loans reflect in a way that you could calculate utilization. But I am almost certain that the 13+ years of positive payment history on the student loans helped my mortgage score.

The fact that all the judgments and the collection account disappeared and my mortgage score didn't change much also makes me think the payment history on the installment loans is weighted more heavily. But yes, it is clearly all an aggregate. It would, however, make sense, that a mortgage score would look at installment loans differently.

If my credit card (the judgments and collection) were weighted anywhere near as heavily as the installment loan then it would stand to reason the mortgage score would be much closer to my Fico 8 score...instead of being 25+ points higher at the time.

I may have missed it...what were your installment loans?
The mortgage posting could've dropped your score because that does reflect utilization? Because it was a new account?

To clear something up: the FICO Mortgage Industry Option isn't used at all for any lender I'm aware of. 99.999% of the mortgages underwritten in the United States are on the same three FICO scores, and those aren't specific to mortgages: actually they're the general common/classic algorithm versions (no industry option like auto or bankcard or the seemingly ignored mortgage industry option). No skewed weightings.

From what you write the skew was actually simpler: FICO 8 "ages" derogatories more quickly in the sense it looks at recent information and weights it commeasurely more than the older versions of which the mortgage trifecta are all older algorithms. I doubt that it was factoring the lates more heavily on the installment loans when we're talking the classic version (it might, hard to say as that's not well understood between the algorithms); however, I'm not surprised that you didn't get much having gotten the collection and judgements whacked: until you get out of a dirty bucket your score is limited anyway... for example I got 2/3 tax liens removed and a collection removed and my mortgage score moved all of around 8 points in aggregate. /yawn.

On the flipside I went through a really sloppy and stupid part of my life with an awkward credit card after the mortgage closed and after a job fell apart and wound up with a 30 day late on TU... my TU Classic 04 score which is used in mortgages apparently didn't move (checked later on a refinance application), whereas my TU FICO 8 score got clipped by 19 points and hasn't recovered any of those lost points in 10 months.

My installment loans were a couple of baby secured loans, and then the mortgage which apparently counts as a basic installment loan too. This was all aggregate installment utilization though, what you suggest of the relative weight on installment loan lates vs. revolving tradeline lates is harder to tease out... though I would suggest in general a late is a late, that might not necessarily be the case.

Re: Mortgage FICO much lower than FICO 8

Anonymous — Thu, 01 Sep 2016 00:54:18 GMT

My TU fico8 is like 785 but the morgage score was 735... YIKES!

I think its because my paid car loan isnt on my TU because that CU didnt report to TU (and I called and asked .. "we dont report to TU"..

Hmph

Re: Mortgage FICO much lower than FICO 8

elim — Thu, 01 Sep 2016 01:12:29 GMT

Mine are lower also.

ETA: 1 12 month 1k share secured loan (closed a year ago), 3 auto loans (2 closed, 1 at 95% utilization), clean report.