Credit Score Conspiracy

[Anonymous]

My husband have been working towards buying a house for months now and just when we think we got the hang of the credit score game something changes. We did everything the mortgage company told us to do. The informed us to pay something off instead of taking the full 2 years of the payment plan. We paid it off and my husband's score DROPPED because we paid it off. If that wasn't bad enough the credit score simulators instructed us that a 30 day late payment would ADD ten points to his score and taking out a personal loan of $5000 would raise his score another 103 points. Can't be less than $5000 though. None of it has made sense and quite honestly it's not fair. 

[Brian_Earl_Spilner]

You can't trust scoring simulators. They're nowhere near accurate. If he doesn't have a current installment loan, getting one will boost his score because it creates an optimal credit mix. If when he paid off the card, he has no cards with a balance, that will drop a score because FICO needs a balance to report on one of the cards to show use.

[Trudy]

OP, are you looking at your MTG scores or FICO 8 scores as the lender is most likely using your MTG scores which can respond a little different to circumstance than FICO 8.  Although the simulator is mostly useless, it attempts to predict your FICO 8 score.

[Remedios]

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@Anonymous wrote:

My husband have been working towards buying a house for months now and just when we think we got the hang of the credit score game something changes. We did everything the mortgage company told us to do. The informed us to pay something off instead of taking the full 2 years of the payment plan. We paid it off and my husband's score DROPPED because we paid it off. If that wasn't bad enough the credit score simulators instructed us that a 30 day late payment would ADD ten points to his score and taking out a personal loan of $5000 would raise his score another 103 points. Can't be less than $5000 though. None of it has made sense and quite honestly it's not fair. 

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Hi @Anonymous  and welcome to the forums 

Fortunately, there is no conspiracy there. 

What happened it, you had a negative account on your CR. Something you must have owed money on for a longer period of time. When you paid, it caused an update to a negative account. Updates make time since negative "appear" shorter, so scoring drop is expected. Good news is, once you pay, updates stop if that's your last unpaid negative, and gradual recovery can start. 

The problem here is that you guys waited till you started the mortgage process. Normally you'd want to take care of this well in advance to raise scores as high as possible. It's a common requirement for mortgage that any and all negatives be addressed before process is complete. Points loss is just a fall out from that situation.  

Simulators are toys. They are as reliable as 8ball. 

I'm sorry you had this experience 

[Brian_Earl_Spilner]

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@Trudy wrote:

OP, are you looking at your MTG scores or FICO 8 scores as the lender is most likely using your MTG scores which can respond a little different to circumstance than FICO 8.  Although the simulator is mostly useless, it attempts to predict your FICO 8 score.

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Good point. Mortgage scores have different criteria for scoring.

[RSX]

I think the fact that a Simulator told you that a Late 30 day would raise your score, should be the perfect example of how useless they are

[Anonymous]

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@RSX wrote:

I think the fact that a Simulator told you that a Late 30 day would raise your score, should be the perfect example of how useless they are

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Agreed, and I'm actually going to reference that example going forward when I post about simulators being garbage.

[Anonymous]

Actually your wrong the account has always been in good standing and never was negative

[Anonymous]

Who are you addressing in above reply?

[Anonymous]

If you're taking such bad advice at face value rather than doing the necessary due dilligence and learning about the "credit game" for yourself, the resultant problem(s) is not due to a conspiracy. You wandered into a forest without a map or a compass -- is it any surprise you're lost?

There's plenty of direction available here if you choose to stick around, and do the work.