Effect of New Mortgage on Utilization and Age of Accounts

[yapsalot]

I'm getting a new first mortgage soon. Have not had one before.

Two questions regarding the impact on FICO 8 scoring:

1. Will the mortgage be included in determining overall utilization?

2. Will the mortgage affect average age of accounts or age of youngest account?

Current statistics are: FICO 8: EQ 850, TU 850, EX 838, Six open credit cards and one Alliant secured loan for $500 with balance of $45. Total credit line $288,000. Balance reported to credit bureaus runs about $1,000 to $2,000. Total utilization runs about 1% or less. Newest account 19 months. Experian reports oldest account about 20 years and average age of accounts 6.7 years. TU and EQ are reporting one or two old closed accounts that are no longer listed on EX but I don't have a recent full report from either of them.

If the new mortgage is included in utilization or age of accounts, I'm expecting a big drop in my FICO 8 score and would like to be prepared for it.

[ldkcivilservant]

1. Not in the way you mean. It will hit as a 100% balance owed installment loan, which will take points of your score, but it won't be included in your Util for your revolvers since it isn't revolver.

2. All new tradelines impact this, so yes. Your AoYA will reset to 0.

I am expecting a 20-30 point drop when my mortgage reports.

[SouthJamaica]

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@yapsalot wrote:

I'm getting a new first mortgage soon. Have not had one before.

Two questions regarding the impact on FICO 8 scoring:

1. Will the mortgage be included in determining overall utilization?

2. Will the mortgage affect average age of accounts or age of youngest account?

Current statistics are: FICO 8: EQ 850, TU 850, EX 838, Six open credit cards and one Alliant secured loan for $500 with balance of $45. Total credit line $288,000. Balance reported to credit bureaus runs about $1,000 to $2,000. Total utilization runs about 1% or less. Newest account 19 months. Experian reports oldest account about 20 years and average age of accounts 6.7 years. TU and EQ are reporting one or two old closed accounts that are no longer listed on EX but I don't have a recent full report from either of them.

If the new mortgage is included in utilization or age of accounts, I'm expecting a big drop in my FICO 8 score and would like to be prepared for it.

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1. Interesting that you have 850 scores, with an AAoA of only 6.7 years. Many theorize that AAoA must be somewhat higher than that to get an 850. You prove that theory wrong.

2. The mortgage will count in installment utilization percentage. So your installment utilization percentage will be very high. I don't have personal experience with the mortgage scenario but I expect your FICO 8 scores to take a hit.

But I don't expect your mortgage scores to take a substantial hit, if any.

3. The Alliant loan will become superfluous once the mortgage hits.

4. The mortgage will count in average age of accounts and age of youngest account.

[yapsalot]

Thanks South Jamaica. So I'm going to expect a really big drop-in scores once that mortgage hits

[Anonymous]

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@SouthJamaica wrote:

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1. Interesting that you have 850 scores, with an AAoA of only 6.7 years. Many theorize that AAoA must be somewhat higher than that to get an 850. You prove that theory wrong.

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I was thinking the same thing.  OP, do you recall what your AAoA was at the time you first hit 850?  What about your AoOA and AoYA?

[yapsalot]

When I first hit 850 my aaoa was much higher than it is now. What happened is in the last few years I've had some very old accounts that were closed for a long time that have been dropping off my reports in the last couple of years

[HeavenOhio]

Unless I'm reading it wrong, it's the 838 score that has the 6.7yr AAoA. The bureaus that score 850 have older closed accounts that would make the AAoA somewhat higher.

OP, do you know where your "mortgage" scores stand?

[yapsalot]

HeavenOhio yes you're reading is correct. No I don't know what's the mortgage score.

[SouthJamaica]

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@yapsalot wrote:
Thanks South Jamaica. So I'm going to expect a really big drop-in scores once that mortgage hits

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Some scoring models, I'm guessing 25-30 points.

But some scoring models, I'm guessing 0-10 points.

[Anonymous]

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@HeavenOhio wrote:

Unless I'm reading it wrong, it's the 838 score that has the 6.7yr AAoA. The bureaus that score 850 have older closed accounts that would make the AAoA somewhat higher.

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That makes more sense.  Good catch.