problem with fico score

[Anonymous]

So when I check my fico score i have 681, 688 and 723. My mortgage lender tells me that I don't qualify for the down payment assistance program because I don't meet the 660 minimum score when he pulls my credit. I don't understand because I was pre-approved a few days ago with another lender for the same program. I know there are different types of fico but what could affect my credit that it changes so much? I have 1 collection of a 25$ At&t bill that recently appeared which I just paid (and I probably shouldn't have) as I explained them that they never told me there was 25$ late when I closed my at&t account a year ago and never heard of it until it appeared a few days ago on my account. Another change that I noticed is the chase card I am an AU on shows a balance of 25$ instead of 0 now. But would that really change my score for lenders that much? What can I do? I made an offer on a home I loved and now this is going to fall through

[Appleman]

Those are likely your FICO 8 scores. The lenders often use a Mortgage based score so that can often be lower.

If you did pull a 3B report from myFICO it does show you all of the various scoring models.

You could always call the person who said you did not qualify and see if they can help explain the situation.

[Anonymous]

Good reply by Appleman.

I agree that the best first step is to contact the lender who gave you the bad news.  It's very likely that you can get the three scores that the lender pulled from him.  What you want to know is the date that the three scores were pulled, the numeric value of the three scores, and exactly what scores they were (the specific model used).  They were almost certainly what most people call your "mortgage scores" (as opposed to your FICO 8 scores, or your Auto scores, etc.) but you should confirm that. The lender might very well give you a copy of a merged three-bureau report that he pulled too.

You also need to get very clear about the scores (and reports) that were pulled on other dates. 

      *  For example, you say "when I check my fico score i have 681, 688 and 723."  You'll need to go back and figure out on what date you did that, where you got the scores from and what kind of scores they were (mortgage scores, FICO 8 scores, etc.).

      * Likewise, you say that another lender pre-approved you a few days ago.  That almost certainly means that this lender also pulled your scores and reports on some particular date.

If you can, you want to also find a copy of your three credit reports.  Ideally you want to a copy of any reports that were pulled on the three dates mentioned above, plus any other time you have pulled your reports.

And finally, it might be nice to pull your EQ and TU reports today or tomorrow.  You can do that for free at Credit Karma.

A key thing you mention is that a $25 collection "recently" appeared on your reports.  You need to try to figure out when that happened.  Has it appeared literally in the last few days?  Does that mean that it has appeared AFTER your pre-approval scores were pulled?

It is certainly true that a new collection on your reports could cause your scores to go down a huge amount, especially if your reports were mostlly clean.  Paying off the collection will not erase the score damage using the "mortgage" score models, though it would have in the new FICO 8 and 9 models.  (Since it is a small collection.)

Basically I am telling you that the thing you need to do is to first assemble as much information as you can.  Then you will be able to figure out what your scores were, what they are now, and why they went down. 

[takeshi74]

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@Anonymous wrote:

I know there are different types of fico but what could affect my credit that it changes so much? I have 1 collection of a 25$ At&t bill that recently appeared which I just paid (and I probably shouldn't have) as I explained them that they never told me there was 25$ late when I closed my at&t account a year ago and never heard of it until it appeared a few days ago on my account.

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Different models evaluate report data differently.  The FICO models used by mortgage lenders do tend to produce lower numbers than FICO 8.  However. we can say that something like the collection you mention can have a signficant impact regardless of model.  You want to get that collection removed if possible and if you have any other derogs then you want to look at removing those as well if possible.

Here's a general guide with typical weights for FICO scoring but keep in mind that the FICO models can vary and one's credit profile may also have an effect on the impact of a given factor.  Derogs will generally kill your Payment History -- note that it is the biggest slice.

http://www.myfico.com/crediteducation/whatsinyourscore.aspx

You definitely want to be able to identify all issues on your credit reports.  If you need assistance in doing so then give us a better idea of what's on your reports.

Unforunately, paying a collection doesn't really help much.  You want removal.  You generally have more leverage before you have paid.  Generally, negotiatiing a pay-for-delete is recommended.  Always carefully research before taking action on negative items.  Don't overlook the Rebuilding subforum as a resource.

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@Anonymous wrote:

Another change that I noticed is the chase card I am an AU on shows a balance of 25$ instead of 0 now. But would that really change my score for lenders that much? 

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It's not so much just the balance itself that matters but the revolving utilization -- i.e.: balance(s) / limit(s).  You need to look at how the revolving utilization changed on that revolving account and overall for all of your revolving accounts.  $25/X is more than $0/X but even without knowing X, the limit on that card, I would guess that the change in revolving utilization is probably not significant.

Revolving utilization does have a significant impact and falls under Amounts Owed so you may want to consider how your revolving utilization looks on your reports for all of your revolving accounts.  However, I recommend looking for derogs on your reports first.

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@Anonymous wrote:

I made an offer on a home I loved and now this is going to fall through

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Did you pull all your reports and carefully review them before even starting the home buying process?  You definitely want to do this to ensure that all the data on your reports is correct and that you have addressed all the issues that you can specifically to avoid this sort of thing.  That said, applying for a mortgage can sometime causes these things to pop up out of the woodwork.