topic Re: Specific question for the Mortgage Fico Experts in Mortgage Loans

Specific question for the Mortgage Fico Experts

Focker69 — Tue, 12 Oct 2021 16:39:20 GMT

Hey everyone,

Just had a question that i'm looking for some certainty on related to utlization % calculations with the Mortgage 5,4 & 2 versions.

I've heard that the credit limit is not factored as the limit but rather it's the high credit or highest balance amount. In an example, if you open up a $10,000 limit card but only bring the balance up to $1,000, Mortgage Fico will use the high credit as the limit and if the balance is at the high credit amount, then the utilization % is at 100%.

If anyone has any insight on that, i would greatly appreciate it.

Re: Specific question for the Mortgage Fico Experts

4sallypat — Thu, 14 Oct 2021 13:48:34 GMT

@Focker69 wrote:
Hey everyone,

Just had a question that i'm looking for some certainty on related to utlization % calculations with the Mortgage 5,4 & 2 versions.

I've heard that the credit limit is not factored as the limit but rather it's the high credit or highest balance amount. In an example, if you open up a $10,000 limit card but only bring the balance up to $1,000, Mortgage Fico will use the high credit as the limit and if the balance is at the high credit amount, then the utilization % is at 100%.

If anyone has any insight on that, i would greatly appreciate it.

I am not an expert, but I did recently have a meltdown when this happened to me.

Been looking at houses for over 6 months and my mortgage broker had to run my mortgage scores again to qualify for a larger amount house offer (new $625K conforming loan limit).

After a Hawaii trip for the family, I put over $5,000 of charges on my Amex Platinum personal card (which was an all time monthly high).

As a result, it reported 100% utilization and my broker freaked out and asked me to pay it off plus take my wife as AU as it is hurting her score.

I called Amex and they said they don't report utilization as my account has no limit.

My other scoring models did not show such a high utilization.

I argued with their credit dept for hours and got nowhere.

Apparently it has to do with the credit scoring method some mortgage brokers use - answered by another member here....

I ended up paying it off, sending proof and my mortgage broker requested a rapid rescore.

Re: Specific question for the Mortgage Fico Experts

HowDoesThisAllWork — Thu, 14 Oct 2021 20:56:29 GMT

@Focker69 wrote:
Hey everyone,

Just had a question that i'm looking for some certainty on related to utlization % calculations with the Mortgage 5,4 & 2 versions.

I've heard that the credit limit is not factored as the limit but rather it's the high credit or highest balance amount. In an example, if you open up a $10,000 limit card but only bring the balance up to $1,000, Mortgage Fico will use the high credit as the limit and if the balance is at the high credit amount, then the utilization % is at 100%.

If anyone has any insight on that, i would greatly appreciate it.

It is the utilization that will get you. I just participated in a forum post about revolver credit utilization and mortgage score (I will go back to said post and link it here for you....so that you can look at it for yourself).

FICO 5/4/2 scores are extrmely sensitive to:

1. Recent activity (hard pulls or new accounts....and "recent" is defined as "in the last 18 months")

2. Revolver Utilization

3. Number of accounts reporting a balance

This post that I referenced (and will link shortly) might be a good read for you....

Re: Specific question for the Mortgage Fico Experts

HowDoesThisAllWork — Thu, 14 Oct 2021 20:59:15 GMT

Here it is....look at all 13 of the contributions (if I might suggest).

FICO 5/4/2 and FICO8 improvements