Refinance + HELOC

[xdhatcherx]

My wife and I bought our first home back in June of 2014. We bought through FHA and have been diligently paying but now we'd like to refinance to get rid of the FHA PMI and we were looking at adding a HELOC (to go up to 90% CLTV) to take care of some things around the house that could use improving. 

We started refinancing through one lender (working with our previous loan officer who switched companies) and came to find out after the credit pull and paperwork that my credit score with them was 641 (they're using FICO 5 score) and that to be approved for the HELOC you need 700 credit rating (my wife is actually over 700 but they go with the lower of the scores).

Does anyone have any recommendations we might look at for a lender who uses a newer FICO Score version and will do up to a 90% CLTV refi + heloc with us?  My scores under the newer versions are between 679 and 710'ish so I'm hoping we could be more easily approved that way and get a little bit lower rate on the primary mortgage. 

[DallasLoanGuy]

i know of no lender using the new scores.

if they used the new scores..... then it would only make sense that you would need an 800 score under the new score to get what you want.

[xdhatcherx]

According to the loan officer I'm working with, they're losing business and one of the primary reasons is because their customers get better credit scores in the same month at Bank of America and Wells Fargo. In my case, those places don't work because they won't do 90% cltv. Otherwise, I'd check them out. I wouldn't be surprised though if they were using the newer lending guidelines. I'm sure there have to be lenders out there using the newer guidelines.

[DallasLoanGuy]

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@xdhatcherx wrote:

According to the loan officer I'm working with, they're losing business and one of the primary reasons is because their customers get better credit scores in the same month at Bank of America and Wells Fargo. In my case, those places don't work because they won't do 90% cltv. Otherwise, I'd check them out. I wouldn't be surprised though if they were using the newer lending guidelines. I'm sure there have to be lenders out there using the newer guidelines. <= what new guidelines? 

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i am confused

[xdhatcherx]

When you login to myfico (if you're doing credit monitoring there) they show you your scores based on the FICO Score 8 model (according to myfico this is the most commonly used model or, set of FICO guidelines for lending). In my case, the lender I'm working with right now uses the FICO Score 5 model (older FICO guidelines for Equifax). FICO has just released their latest scoring model (or set of guidelines) which they call the FICO Score 9 model.

If you look at my credit score right now lets say for Equifax

FICO Score 5 = 655

FICO Score 8 = 679

FICO Score 9 = 712

Those are all still based on the 300-850 score range.  

What you might be thinking of is the VantageScore 3.0 scoring system that places like USAA's credit monitoring solution via Experian uses or CreditKarma. They use the VantageScore 3.0 scoring system and I've never encountered a lender that uses that scoring system either. That's the one with the range all the way up to 900 pts. 

In the case of the updated FICO guidelines, basically what FICO has changed for the Score 9 model is they ignore 3rd party collections on a credit report because of various problems cropping up in the debt collection industry.  

[iv]

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@xdhatcherx wrote:

When you login to myfico (if you're doing credit monitoring there) they show you your scores based on the FICO Score 8 model (according to myfico this is the most commonly used model or, set of FICO guidelines for lending). In my case, the lender I'm working with right now uses the FICO Score 5 model (older FICO guidelines for Equifax). FICO has just released their latest scoring model (or set of guidelines) which they call the FICO Score 9 model.

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You aren't going to find a mortgage lender using FICO 9. (Or FICO 8.)

Effectively every conventional/FHA/USDA/etc... mortgage from any lender will use:

• Equifax FICO Score 5

• Experian FICO Score 2

• TransUnion FICO Score 4

These specific scoring models are required by Freddie/Fannie for loans that will be sold to them, and in practice, lenders also use these models for loans that they hold internally.

Literally 99.9+% of the mortgage market uses these exclusively.

Short of hard money loans, maybe superjumbo multi-million $ speciality loans, or oddball thin file/alternate credit loans - any standard loan from any lender, major or minor, will use these scores, and no others.

[Anonymous]

Lenders don't use the newer scoring model. Even dropping the mortgage insurance, your rate will be in the 4.5-4.625% range at 640 w/ an 80% LTV on a conventional first. Lowest score I've ever seen be eligible for a HELOC is 680. Your best bet would be doing what you can to get your score up to 680-700.

[xdhatcherx]

Makes me curious how Bank of America and Wells Fargo are pulling better scores than this place then in the same month for the same client. Well, I will keep working on my scores and pay the closest attention to the older scoring models. Thank you everyone!

[StartingOver10]

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@xdhatcherx wrote:

Makes me curious how Bank of America and Wells Fargo are pulling better scores than this place then in the same month for the same client. Well, I will keep working on my scores and pay the closest attention to the older scoring models. Thank you everyone!

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I can tell you that Bank of America and Wells Fargo also use the mortgage scores mentioned up thread.

There can only be two reasons that the scores were higher for a consumer that went from the lender you mention to  BOA and WF:

• the consumers had a change in their credit reports between the first pull and the pull by BOA and/or Wells
• the information you are getting is not correct

FWIW, I have never seen BOA or Wells use different scoring models so I lean toward option two AND the fact that the guidelines at Wells and BOA are different from the lender you used.