topic Re: Understanding My Mortgage Score in Mortgage Loans

Understanding My Mortgage Score

Mgilbert8605 — Mon, 24 Feb 2020 14:43:04 GMT

Good morning, everyone. I just purchased my credit report on MyFico. I'd like to purchase a home in July 2020 (exactly 2 years post Chapter 7). So I'm trying to get my ducks in a row now. According to the report, my mortgage scores are as follows:

Experian score 2- 673

Equifax score 5- 688

Transunion score 4- 707

I hear that my mortgage will be based off of my lowest middle score. So does that mean in my case, it'd be based off of a score of 688? I know that score will change by the time that I'm able to do a mortgage application, but I'm just trying to understand the concept. Thanks.

Re: Understanding My Mortgage Score

Anonymous — Mon, 24 Feb 2020 14:51:00 GMT

Yes, it would based off of that middle score. Happy home buying!

Re: Understanding My Mortgage Score

donkort — Mon, 24 Feb 2020 15:30:43 GMT

688 is not a bad middle score. You would get a decent, but not optimal, interest rate.

I would actually post this question in the Bankruptcy section. There are people with experience in buying homes after a couple of years of bankruptcy discharge. They could provide you with good advice in this area.

I just saw an entry from a mortgage person on this Site---which would indicate that you would probably be fine.

Re: Understanding My Mortgage Score

AllZero — Tue, 25 Feb 2020 04:10:08 GMT

Great advice from above.

Look into optimizing your scores.

Re: Understanding My Mortgage Score

Mgilbert8605 — Mon, 24 Feb 2020 20:25:12 GMT

Thanks to everyone who replied! As far as optimizing my scores, I don't think that there's much more that I can do, except let time heal my score....Prior to my bankruptcy, I had quite a few 90+ and 120+ lates reported. Since my bankruptcy, I've had 100% on time payments with everything. I follow the AZEO method (1% currently reporting). I have 4 credit cards, and 1 installment loan (student loan). According the derog comments on my report, the balance of my student loan compared to the original balance is hurting me. Though I pay it on time, the interest that accrued while it was in deferment is a killer. So I'm afraid that I don't have any wiggle room to improve my score drastically.

Re: Understanding My Mortgage Score

dragontears — Mon, 24 Feb 2020 20:31:47 GMT

You are going to be 2 years out of BK so presumably you are going FHA.

Getting your scores higher than they are right now will not lower your interest rate on an FHA since rates are not tied to scores once you pass a minimum score.

Best advice is to keep doing what you are doing, don't apply for any new credit and keep building a savings account (owning a home comes with surprise repairs all of the time).

Re: Understanding My Mortgage Score

donkort — Mon, 24 Feb 2020 20:34:06 GMT

That's true. The only thing you can really do is pay down on your student loans. You have almost optimal utilization already.

If you continue to pay your bills on time, your score will slowly rise.

And don't mess around with the student loan (but you knew that!)

Re: Understanding My Mortgage Score

VALoanMaster — Mon, 24 Feb 2020 20:45:29 GMT

@Mgilbert8605 wrote:
Thanks to everyone who replied! As far as optimizing my scores, I don't think that there's much more that I can do, except let time heal my score....Prior to my bankruptcy, I had quite a few 90+ and 120+ lates reported. Since my bankruptcy, I've had 100% on time payments with everything. I follow the AZEO method (1% currently reporting). I have 4 credit cards, and 1 installment loan (student loan). According the derog comments on my report, the balance of my student loan compared to the original balance is hurting me. Though I pay it on time, the interest that accrued while it was in deferment is a killer. So I'm afraid that I don't have any wiggle room to improve my score drastically.

Since you're looking to buy 2 years post BK discharge, you're likely going to go with either an FHA or a VA mortgage. The good news is you'll still qualify for the best available rates with a 688 mid score.

Just work on saving money & continue to rehab your credit.

If you have a family member or spouse with an established credit card that was open prior to your BK, having them add you as an authorized user could push you over 700.

Re: Understanding My Mortgage Score

Mgilbert8605 — Tue, 25 Feb 2020 01:58:10 GMT

VaLoanMaster, I do plan on applying for an FHA loan. Now that I know my scores, and have a target purchase date in mind, I'm trying to decide when I should begin working with a broker. In regards to your comment about becoming an AU on a family member's credit card....I thought that I was already getting the maximum amount of points available, since I have 4 open credit cards. Is that not true? I was under the assumption that at least 3 cards are what's required, to avoid a FICO scoring penalty.

Re: Understanding My Mortgage Score

donkort — Tue, 25 Feb 2020 04:23:55 GMT

The more credit you possess, the higher potential for lower utilization and higher scores.

Re: Understanding My Mortgage Score

VALoanMaster — Tue, 25 Feb 2020 17:43:53 GMT

@Mgilbert8605 wrote:
VaLoanMaster, I do plan on applying for an FHA loan. Now that I know my scores, and have a target purchase date in mind, I'm trying to decide when I should begin working with a broker. In regards to your comment about becoming an AU on a family member's credit card....I thought that I was already getting the maximum amount of points available, since I have 4 open credit cards. Is that not true? I was under the assumption that at least 3 cards are what's required, to avoid a FICO scoring penalty.

I'm not aware of any penalty for having too many credit cards. Since 15% of your score is based on the length of your credit history, it will help to add an account that's in good standing, that pre-dates your BK. In addition to that, 30% of your score is based on how much owe and how much available credit you have so adding another account with available credit will help your scores.

Re: Understanding My Mortgage Score

Revelate — Wed, 26 Feb 2020 05:17:34 GMT

@VALoanMaster wrote:
@Mgilbert8605 wrote:
VaLoanMaster, I do plan on applying for an FHA loan. Now that I know my scores, and have a target purchase date in mind, I'm trying to decide when I should begin working with a broker. In regards to your comment about becoming an AU on a family member's credit card....I thought that I was already getting the maximum amount of points available, since I have 4 open credit cards. Is that not true? I was under the assumption that at least 3 cards are what's required, to avoid a FICO scoring penalty.
I'm not aware of any penalty for having too many credit cards. Since 15% of your score is based on the length of your credit history, it will help to add an account that's in good standing, that pre-dates your BK. In addition to that, 30% of your score is based on how much owe and how much available credit you have so adding another account with available credit will help your scores.

There's a minor reason code on some versions of FICO where "too many revolving accounts" is a thing; however, it's a lot more than 4, more like 14+.

4 is good and maxes out what we understand of the scorecards today though the older mortgage scores aren't as well tracked TBH.