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Mortgage FICO much lower than FICO 8

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Regular Contributor

Mortgage FICO much lower than FICO 8

Can anyone, I mean anyone tell me why my mortaeg FICO is so much lower than my regular FICO 8 and how to fix it?  My FICO 8 is 722 and my mortagage FICO is 649.  I realize they use different calculations, but really 70pts difference?!

Message 1 of 28
27 REPLIES 27
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Established Contributor

Re: Mortgage FICO much lower than FICO 8

You need to get all three scores. They will go by the lowest middle score.
Message 2 of 28
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Regular Contributor

Re: Mortgage FICO much lower than FICO 8

Mortgage FICO. 629, 645, 649.  All scores some 70 pts lower than my regular FICO 8 scores.  What gives?

Message 3 of 28
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Moderator Emerita

Re: Mortgage FICO much lower than FICO 8


@tjmolly wrote:

Mortgage FICO. 629, 645, 649.  All scores some 70 pts lower than my regular FICO 8 scores.  What gives?


A different formula is used.  The mortgage score algorithms are older forms of FICO scores. They are what is used by mortgage lenders for mortgages. 

 

Do you have any long term installment loans on your CR?  Any installment loans at all?  If not, consider getting a shared secured small loan from Alliant CU. That may pick up your mortgage FICOs. Right now your mid score is 645.  Good for FHA type mortgage, not so good for a conventional loan as conventional mortgages are score sensitive for both interest rates and PMI rates (if you have PMI). 

Message 4 of 28
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Re: Mortgage FICO much lower than FICO 8

I don't know the answer but I am right there with ya!  My FICO8's are all around 750.  My mortgage scores are anywhere from 650ish (really  Equifax <sigh>) to 690s.  Mid-score was low 690s..  Drives me nuts because I've seen people ask this before and no one, absolutely no one, has been able to really explain other than to say it's a different formula.  I get that, I really do, but that's an enormous variation in score which makes me wonder what in heck kind of algorithms they've got over there at FICO to account for such an enormous swing.

Message 5 of 28
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Moderator Emeritus

Re: Mortgage FICO much lower than FICO 8

TBH without a non-trivial disclosure of what's in your file(s) it's impossible to point at anything in particular.  Same applies to credit file optimization advice.

 

A few quick tidbits:

 

Installment utilization factors on FICO 8 and FICO 98, it does not on FICO 04 (which TU/EQ on the mortgage trifecta is).  Vis a vis if you have the share secured loan trick or similar pretty utilization, that can be a 20+ point swing between the two right there, with FICO 8 being higher.  I actually started out higher on my mortgage scores and then after playing with my baby installment loans wound up higher on FICO 8 during my own mortgage process (though it did kick up my EX 98 score to qualify me for a 720 tier which was nothing but goodness).  

 

Older derogatories are counted more heavily on FICO 04; there's a different aging factor where FICO 8 weights recent history more heavily seemingly... case in point when I got a new tax lien added on to my reports (with an old one already on there) my FICO 8 scores dropped by 50 points, and my EQ Beacon 5.0 score (mortgage score from Equifax) moved a whopping 5 points.  We've seen similar data on collections / CO's getting updated, and recent deliqencies as well.

 

Collections under $100 aren't counted under FICO 8, if this is you, it's a big deal score wise if it's your only collection (or all of them are small "nuisance" collections).

 

FICO 8 penalizes not having open credit cards massively, mortgage models isn't nearly as big of a deal (635 vs 680 from multiple reports when Scorewatch changed for people that just had installment history).

 

Beyond that there seems to be some differences in the revolving utilization calculations too, though what is pretty on one is pretty on every other FICO model and if at all possible that should be prettied up before a mortgage application anyway making it somewhat moot.

 

Those are the big changes that we're aware of, but not a lot of folks track their mortgage scores any longer (I only really track EQ's regularly since I get that from DCU monthly).




        
Message 6 of 28
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Moderator Emerita

Re: Mortgage FICO much lower than FICO 8

Excellent post Rev....people only track their mortgage scores when they are preparing to app for a mortgage (no doubt). Otherwise, they track what they use most often - FICO 8s

Message 7 of 28
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New Contributor

Re: Mortgage FICO much lower than FICO 8

Just to add my two cents, I also suffer from lower mortgage scores.

 

I have one paid collection from 2013 for $70

I have one CC, $750 limit, 3 years old, never late

One joint car loan, 3 years in with 2 years left, never late

Two student loans, 2x120 day lates 07/15-08/15.

12 student loans consolidated into the above two, mid 2015. 6x120 day lates (each account!) before consolidation.

 

My guess is that the mortgage scores rely more heavily on payment history than the Fico 8's do.

 

 

Message 8 of 28
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Regular Contributor

Re: Mortgage FICO much lower than FICO 8

When I started the process in May/June, my Fico 8 scores were lower than my mortgage scores. I attributed this to the fact my student loans were close to 90k in balance and current.

 

The mortgage scores certainly seem to weigh installment loans more heavily.

Message 9 of 28
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Moderator Emerita

Re: Mortgage FICO much lower than FICO 8


@garagebandking wrote:

When I started the process in May/June, my Fico 8 scores were lower than my mortgage scores. I attributed this to the fact my student loans were close to 90k in balance and current.

 

The mortgage scores certainly seem to weigh installment loans more heavily.


^^^I agree with this ....

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