Fico Scores on Experian accurate for Mortgage scores?

[Anonymous]

Hi everyone,

I recently made a post about getting pre-approved for a mortgage loan and your advice helped. I have removed all collection accounts by either paying and getting them removed or disputing any inaccuracies. I have a capital one charge off still lingering but it was closed in 2015. I have heard different things to do from different lenders and I am a little confused. One says to pay it, the other says to leave it as is. All I know is, it is impacting my score. 

All of my credit cards (6) are either paid down or less than 10% and I have no other debt besides student loans. My car will be paid off next month. I have a student loan balance of $112k but was advised to take the loans out of deferment and start making my monthly payment so it can report on my credit report. 

My fico scores on Experian as follows:

Experian - 647 

Equifax - 645

Transunion - 643

My question really is, are these scores closely related to the mortgage score? Or will they be lower? Should I pay off the capital one charge off or leave it alone? Any advice will help, thank you!

[ShanetheMortgageMan]

I believe the FICO scores from Experian are based on the FICO 8 model, which mortgage lenders aren't using yet. 

Is the charge-off reporting late payments each month?  If so, then it is damaging your chances of getting approved through automated underwriting and could be best to pay it off so it stops reporting new late payments each month.  I assume it's probably a revolving account, which after paying it would also reduce balances on revolving accounts which looks better to automated underwriting as well. 

FHA's automated underwriting is much less sensitive than conventional automated underwriting, in case you were leaning towards FHA financing... so if you are going for FHA financing I wouldn't be too concerned with the charge-off impacting anything other than your scores.

[Slabenstein]

The Experian 3-bureau scores are FICO8, but they also give you various other score models for Experian only, one of which is mortgage.  On the Experian tab on the FICO scores page, select Additional FICO Scores and then the Mortgage Lending tab.  That will give you your EX2 score.

[Anonymous]

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@Slabenstein wrote:

The Experian 3-bureau scores are FICO8, but they also give you various other score models for Experian only, one of which is mortgage.  On the Experian tab on the FICO scores page, select Additional FICO Scores and then the Mortgage Lending tab.  That will give you your EX2 score.

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Thank you so much, it shows my score for Experian for mortgage as 664. 

[Anonymous]

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@ShanetheMortgageMan wrote:

I believe the FICO scores from Experian are based on the FICO 8 model, which mortgage lenders aren't using yet. 

Is the charge-off reporting late payments each month?  If so, then it is damaging your chances of getting approved through automated underwriting and could be best to pay it off so it stops reporting new late payments each month.  I assume it's probably a revolving account, which after paying it would also reduce balances on revolving accounts which looks better to automated underwriting as well. 

FHA's automated underwriting is much less sensitive than conventional automated underwriting, in case you were leaning towards FHA financing... so if you are going for FHA financing I wouldn't be too concerned with the charge-off impacting anything other than your scores.

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This is a relief, I am hoping to qualify for FHA. I am nervous to apply again because I have been denied twice in the past year and a half. I just want to have all of my ducks in a row. Paying this charge off will require me to tap into my savings, which i do not want to do, but will if it is the difference between pre-approval.

[Anonymous]

If the charge off has not been regularly reporting for a long time and you pay it, it’s probably going to result in a score drop, depending on how long it’s been since it updated and depending on the utilization.

With that said lender may require you to pay it before they give you a mortgage; and as a consequence it may lower your score to a point where it makes it more difficult to get approved.