I've never had a personal, auto or student loan but about 4 months ago got a mortgage loan to buy a home (FHA if that makes a difference).
FICO Score between 700-710 depending which CRA you ask.
So I'm wondering will this mortgage loan, if paid on time, help my credit (as an account in good standing with on time payment history as well as add to my credit mix which is 10% of FICO scoring) or will it damage my credit?
If it does help how long will it take to see the improvements ?
Mix of credit is instant: as soon as it's tacked on, you win.
The usual tradeline bonuses for payment history and eventually age of course count too. For the rest, modern algorithms (FICO 8 and 9, so does 98 incidently) look at installment utilization, and with a brand new mortgage it's going to be a while before you see any points on that front.
That said, from a UW perspective, having a mortgage is probably the single most important tradeline, as a result just because it's not FICO wonderful, it's still handy to have on one's reports.
Since closing on my home, I have lost a ton of points (100+), due to my utilization (financed furniture, etc). I do not see my credit score raise due to making payments on my home on time. I am sure this will change going forward, as I build a good payment history on everything.
What I HAVE noticed is that even though my credit score is crappy doo doo compared to when I bought my house, I get many pre-approved credit offers and I keep getting CLIs without asking on my tradelines. It seems that having a home is a good thing, even if the numbers don't really match. I tear up the pre-approved offers and move along, but the last 4 months have really been a credit whirlwind.
Thank you for the response!
When you say it's gonna be awhile before any points come for payment history on the mortgage or any points being added in relation to it how long would you say is awhile on my CR it says term 360 months and the current balance is showing $116,000. Would you say after a year, 2, 3? Just wondering so I can manage expectations.
There seems to be a line somewhere around 90 or 80%, hard to say explicitly but it's not a big point getter, like 6 points on my file; whereas getting aggregate installment utilization under 10% is worth total 22-24 on my file again, and on clean ones can be 30-35 total.
I wouldn't worry about it much as anything north of 760 is gravy for everything but a buffer, and if you're clean that's not hard to hit, and can reach an 850 even with suboptimal installment utilization, so don't sweat it.
Giving percentages as I haven't looked at amortization tables to figure out when it passes breakpoints, I don't care enough about 6 points to worry about that and it'll be a looooong time before I get under 10%. .
Prior to the loan I was at about 700-710 my total UT was 36% (I know good is under 30 and Prime is under 10 but not much income to do that at the moment).
I'm hoping to get up to 760+ and have no derogs on my report (I have 3 separate 30 day lates from WF from 2011-2012 but have read those only ding you for 1-2 years right?). Other than that no collections, public records and perfect payment history.
Other than that the only thing bad was my credit mix and possibly UT any advice on how to get to 760 from here?
That 30 day lates don't count after a year or two I think is suspect; I saw some indication that was true under FICO 8 *if* I had other lates on my report, but I read similarly about 60 day lates not counting after 5 years and they absolutely do every model in the past 20 years apparently as all the Experian algorithms complained about deliquent payments when my tax lien temporarily came off, and the lates were all from 2010.
You'd likely need to pull a 1B report or something that gives you reason codes to see whether or not the 30 days are scoring against you, I unfortunately screwed up my TU report with a dumb dispute and won't be able to see that till late 2018 now.
Also your credit mix is fine, and I don't think you're losing anything having dirty installment utilization with the mortgage there you're just not gaining anything beyond mix of credit.
If those are your only issues dirtying up your report, then cleaning up revolving utilization and time passing are your two big ones. How many inquiries do you have on your reports? A lot of folks (on this forum) go on sprees post mortgage-closing, and those can depress your score for a year. I have somewhere around perhaps 20 points lost because of inquiries on EX FICO 8 for example sitting at 6 scoreable on that bureau, and I just lost 10 of those recently going from 5 to 6, all in the breakpoints there too.
How many credit cards do you have and what's your AAOA if known? Also depending what those APR's on those credit cards are, you may want to go talk to a CU and see if they'll give you a consolidation loan, that'd pretty up the revolving utilization in a hurry and might reduce your payment as well... double bonus, at the cost of an inquiry (temporary) and a new tradeline... I would suggest saving money is more important.