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FICO 8 versus Mortgage FICO Blues

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Established Member

FICO 8 versus Mortgage FICO Blues

I am sure this is a common lament, but I just feel the need to vent.   I have been the mortgage process for three months and while my FICO 8 scores are beautifully over 700, all three of Mortgage FICOs are not, with zero to marginal budges in that same time.   *sigh*

 

EQ:  718 (FICO8) vs.  697

TU:  725  (FICO8) vs. 676

EX:  727 (FICO8) vs.  669

 

Depressing.

Message 1 of 6
5 REPLIES 5
Moderator Emeritus

Re: FICO 8 versus Mortgage FICO Blues

Yeah =/.

 

I'm guessing credit issues in the not-recent past and/or a prettyish installment balance?  The older algorithms were less forgiving for our older sins anecdotally, and installment utilization is a thing on FICO 8 and not on FICO 04 (EQ/TU on the trimerge reports).




        
Message 2 of 6
Established Member

Re: FICO 8 versus Mortgage FICO Blues

Yes, solid guess.    No late payments going on 26 months, but a smattering of 30 days after that.  Plus an oldy 90+ that should thankfully drop off in five months.   Installment utilization is in the 60% range (two car loans and personal loan), so that is probably dinging me too.

Message 3 of 6
Moderator Emeritus

Re: FICO 8 versus Mortgage FICO Blues


@HighlanderDP95 wrote:

Yes, solid guess.    No late payments going on 26 months, but a smattering of 30 days after that.  Plus an oldy 90+ that should thankfully drop off in five months.   Installment utilization is in the 60% range (two car loans and personal loan), so that is probably dinging me too.


Actually you probably get a small bump on the installment utilization if you're at 60% aggregate under FICO 8; there's some breakpoint north of there by my data but we never nailed it down (whereas we know the 10% line exists absolutely). 

 

That 90 day late though is a problem especially under the older algorithms... anecdotally 90 days seem to not count as much under FICO 8 though that's purely conjecture based on people's reports here over time.  If it were me, and I had that 90 day late coming off in 5 months, I'd simply postpone my mortgage till then as any potential rate hike is going to be less than the tier shift diffence in APR you get when talking conventional mortgages.  If you're talking FHA then doesn't matter really.

 

If all you have at that point is a few 30 days from 2+ years ago (and there's been lots of conventional wisdom which suggests they stop hurting after 2 years and that existed back when we had access to EQ 04, TU 98, EX 98 and 2 of those are in the mortgage trifecta) and nothing else wrong with your file at that point, and you have non-trivial positive history which it sounds like you do, you shouldn't be anywhere close to a mid 600 on your mortgage pull.

 

Have you already cleaned up your revolving utilization?  That's easy points there if you haven't as your file just doesn't sound that bad: 1 card reporting a small balance, like $10 on it, and the rest of the revolving tradelines at $0.  I would suggest based on some datapoints we've gotten over time, your FICO 8 scores sound low too with a 90 day late that old unless there's something intrinsic in that 30 day late pattern as has been suggested in FICO marketing literature.




        
Message 4 of 6
Established Member

Re: FICO 8 versus Mortgage FICO Blues

Credit utilization is at 2%.   The 30+ days late was on couple of different accounts and I get the "You have one or more accounts showing missed payments or derogatory indicators" on my Transunion Credit Factor.  Interestingly, another TU credit factor is "You recently missed a payment or had a derogatory indicator reported on your credit report." even though I have been clean for 26 months, so I am doubting the "no pain after two years" conventional wisdom.

Message 5 of 6
Moderator Emeritus

Re: FICO 8 versus Mortgage FICO Blues


@HighlanderDP95 wrote:

Credit utilization is at 2%.   The 30+ days late was on couple of different accounts and I get the "You have one or more accounts showing missed payments or derogatory indicators" on my Transunion Credit Factor.  Interestingly, another TU credit factor is "You recently missed a payment or had a derogatory indicator reported on your credit report." even though I have been clean for 26 months, so I am doubting the "no pain after two years" conventional wisdom.


Well, your "problem" on reason code analysis is you don't have much wrong with your file from what you've stated.  It's hard to say with that 90 day late how much the 30 day lates are hurting you on a mortgage score.  FICO 8 changed some things in how lates were counted, but I have an isolated late on TU from 10/15 and my TU 08 is now higher than it was before the late.  To be clear I have a 30/60 late and other negatives from 2010, it's possible the 30 day late might be hurting more without those... I did see similar behavior with a tax lien under FICO 8 too, where when it got tacked on by an irritated IRS agent it I took a sharp drop, but 6 months later the pain was gone from that but I had a tax lien on there already.

 

For reference, with the aforementioned 30/60 day late from August 2010 (and tax lien and collection both from identical time period), when I made a pull in 6/15 in prep for my mortgage:  You recently missed a payment or had a derogatory indicator reported on your credit report.

 

This on a TU 04 industry option, so that reason code can potentially extend to 5 years or longer.  I wouldn't read much into it personally as a result in terms of debunking the conventional wisdom.  I won't get to test it conclusively myself until about a year from now when I'm clean except for that lone 30 day late on TU.

 

Personally I'd still play the odds especially on the mortgage trifecta that with that 90 day late gone I'd be non-trivially higher.




        
Message 6 of 6
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