Increasing Mortgage Score

[Sackadonk]

Hello,

I'm thinking of buying a second home in the next 3-5 months. My income and DTI are not a problem.

I just pulled the FICO 2, 4, and 5 and was surprised at how low they were: 682, 673, and 703 respectively which is around 50 points less than FICO Score 8 for each and 80+ points less than what CK uses. 

I do currently have 1 medical account in collection that is reported on TU and EX that I will be working on having it removed.

Most of my bad stuff come from my student loans that I almost defaulted 5 years ago and still owe around 20K of the original 26K or so. There's a bunch of late 90 and late 120 payments spread into 8 student loan accounts (two are late payments from 2011, two from 2012, and four from 2013). 6 of those accounts are still active, and I have been paying them on time past 4-5 years.

I was wondering if it was a good idea to pay off a good chunk of the student loans to the point that I have paid 50% of the starting loan amount? I can also pay off the whole 20k, but I feel that they are currently helping me with the average age of accounts.

I have also heard about the AZEO method which I will be implementing for next month. Currently my Equifax shows a utilization of 4% while the other two show over 10%. My credit limit for all my CCs combined is $31,100.

I have an open mortgage account from July 2015. All payments have been made on time. Does this recent mortgage account affect my score?

I also have an auto lease from 1.5 years ago.

I would appreciate any feedback.

[NC_Mtg_Loaner]

I think the student loans are the issue here that's got your score depressed. 

[Anonymous]

In general, FICO versions 2, 4 and 5 all have different algorithms from bankcard 8. So its normal for those scores to be a bit lower than your 8 score. I don't know the actual algorithm but mortgage factors are weighted different from auto and bank loans. As for Credit Karma score being higher, its because they dont use the FICO score model but Vantage 3.0...different algorithm again. 

As far as increasing your score, I would not value avg age of accts over credit utilization since util is 30% of your score. If you can pay down any debt to reduce util that will give you the greatest increase in score. Ideally under 30% is recommended but from experience I say under 10% to really get the highest score possible.

Hope that helps.

[Sackadonk]

Thanks for the responses.

My revolving credit card utilization is low, and I'll be doing the AZEO method for next month. So the installment loan utilization is also counted like I suspected? Best bet for me is to pay down my student loans to 30% or ideally 10% in order to boost my score, correct? My goal is to get to at least a middle score of 720 when the time comes to purchase.

[Anonymous]

Yes correct.

Again no guarantees on reaching a 720 as I am more familiar with the FICO 8 bankcard algorithm but it will definitely increase your score.