Is this normal?

[Thomas_Thumb]

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@Anonymous wrote:
My Experian Fico score (from MyFico) is a 640, my mortgage score is 540! Everyone in the forums and pretty much everywhere else say that the mortgage score shouldn't be far off from the fico score. Mine is 100pts off/lower ... How is this possible?

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1) Last December my EQ Fico 08 was 850 and my EQ Fico 04 (mortgage) was 809.

2) This February my EQ Fico 08 remained at 850 but my EQ Fico 04 (mortgage) dropped to 764 - awesome drop, now 86 point difference between the models but easily addressed.

What gives? - I think it was increasing the # cards reporting a balance from 3 to 6 and having one NPSL card report over 50% utilization (based on HB since no listed CL).

Generally speaking, Fico mortgage models ding your score more than Fico 08 for # cards reporting a balance, "high" individual card utilization levels and recent new credit/inquiries.So... if you need to optimize mortgage scores - No new credit, only one card reporting and keep the card that reports under 10% utilization.

Do you have a fair amount of new credit and multiple cards showing balances with some cards in the 80% or above utilization range? Any 30 day lates? I think isolated, older, 30 day lates hurt mortgage scores more than Fico 08. Conversely, consecutive, recent lates might result in a bigger hit on Fico 08.

[Anonymous]

Balances are less than 10% on all cards reporting. I do have a very new retail card (under 10% as well).

From what you said about "older lates" I have a bunch (24) late payments from 2.5 years ago on student loans when I didn't understand how credit worked and how much late payments would effect me later on. I really think these late student loans may be the biggest contributing factor on the mortgage scoring side. I tried calling to see if they would help me out with removing these lates but they told me "they legally have to report these to the credit bereaus."

Do I just let these affect me lesser as time goes on or should I look into a company like credit repair to try at all cost to remove these?

[Thomas_Thumb]

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@Anonymous wrote:

Balances are less than 10% on all cards reporting. I do have a very new retail card (under 10% as well).

From what you said about "older lates" I have a bunch (24) late payments from 2.5 years ago on student loans when I didn't understand how credit worked and how much late payments would effect me later on. I really think these late student loans may be the biggest contributing factor on the mortgage scoring side. I tried calling to see if they would help me out with removing these lates but they told me "they legally have to report these to the credit bereaus."

Do I just let these affect me lesser as time goes on or should I look into a company like credit repair to try at all cost to remove these?

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Ok, it looks like # cards reporting a NON ZERO balance and the boatload of older lates are pulling down your mortgage scores relative to Fico 08 and in general.

First, the number of open revolving CC accounts reporting a non zero balance is a factor in scoring regardless of the card's utilization. For example let's say you have 5 cards with a $1000 credit limit on each card.

1) Case #1 - all 5 cards are used and you allow $10 to report on each of the 5 cards. Utilization on each card is 1% and overall utilization is 0.5%.

2) Case #2 - One card reports a balance of $50 and all other cards report a balance of ZERO. Utilization on the one card is 5% and overall utilization is 0.5%.

The Fico models see 5 of 5 cards reporting in case #1, a flag gets triggered and your score gets dinged (rather significantly with Fico mortgage scores - particularly EQ). In case #2 the Fico models see 1 of 5 cards report and all is well, no point loss. Based on personal experience, case #1 may drop your Fico mortgage score up to 40 points relative to case #2. By contrast, impact on Fico 08 might be only 10 or 15 points.

Note: It is ok to use multiple cards every month but, if you need points, minimize # cards reporting a balance as well as holding down utilization.

With respect to lates, DO NOT use a 3rd party in an effort to remove lates. YOU have more negotiating power than does a 3rd party. Really there are a couple things to consider: removing them completely and getting 60/90/120 day lates dropped to 30 day lates if removal is out of the question. Others on the forum (consider seeking advice in the rebuilders section) can help you develop a strategy on working with creditors to remove lates.