FICO Mortgage Score - Buying a Home

[Anonymous]

My wife and I are working on buying a home currently through Quicken Loans.  My credit score was 605 and over the past month have paid $9,000 in credit card debt off although Dell ($4,100) and Target ($850) don't show anything updated as of today.  Over the past month my score has jumped from 603 to 663 which I'm very please and when I do a simulation on all of these credit monitoring type sites it shows only a 3 point increase when these are updated.

Excited more than ever I call Quicken Loans and they pulled another report and show my score of only 610????  I subscribe to 6 different credit monitoring companies and they ALL show 663 - even among the three credit bureaus.  All of the accounts paid off are updated on their view as well.  After arguing with the guy he tells me they use FICO 8 Mortgage and sometimes the numbers are different.  Why would their be a 53 point difference in FICO 8 Mortgage they see and the regular FICO that I see?

I find it extremely difficult to believe there is THAT much change especially when it favors the lender with my potential loan costing a significantly higher amount.  Can someone please explain this to me?  Do I need to go to a different lender?

I have a 663 score on all three bureaus, been on the job for 5 years earning roughly $135,000 and they are acting like this has to go up higher to get a loan through them since THEIR score is so much less?

[Anonymous]

It turns out that there is a scoring model called FICO 8 Mortgage, released in 2010:

https://www.fico.com/en/newsroom/fico-8-mortgage-score-now-available-from-top-three-us-credit-report...

But almost certainly that is not what the person you spoke with meant, since that model was never adopted by the mortgage industry.  Rather the person meant the FICO scores that have been used by the mortgage industry for a very long time.  Experian uses the FICO model released in 1998 and TransUnion and Equifax uses the FICO model released in 2004.

It is very common for there to be huge differences scores generated by FICO 8 (the family of models used for most non-mortgage decisions today) and the old scoring models used by the mortgage industry.  The differences could be enormous.  FICO 8 could be 850 and the EQ mortgage score (for example) could be 690.  (That would be rare but quite possible.)

I encourage you to scrap all credit monitoring services that you currently have (if they cost you money) and replace them with the myFICO Ultimate $40/mo product.  That CMS will give you your three FICO mortgage scores once per month.

I also encourage you to not ask your lender to pull your scores again unless you are sure you will own your home in the next 29 days.  When myFICO gives you your scores, it does not result in a hard pull.  Each time your lender pulls your credit, it is considered a hard pull.  Depending on exactly when those are done, they can harm your score each time.  (For example, suppose the lender pulls your scores every five weeks during the next six months -- that could result in five hard inquiries and five score drops.)

The folks here will be glad to give you practical  guidance on how to raise your mortgage scores.  To do that we'll need to know a lot more about your reports and also when you ideally hope to buy.

[SouthJamaica]

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@Anonymous wrote:

It turns out that there is a scoring model called FICO 8 Mortgage, released in 2010:

https://www.fico.com/en/newsroom/fico-8-mortgage-score-now-available-from-top-three-us-credit-reporting-agencies-10-26-2010

But almost certainly that is not what the person you spoke with meant, since that model was never adopted by the mortgage industry.  Rather the person meant the FICO scores that have been used by the mortgage industry for a very long time.  Experian uses the FICO model released in 1998 and TransUnion and Equifax uses the FICO model released in 2004.

It is very common for there to be huge differences scores generated by FICO 8 (the family of models used for most non-mortgage decisions today) and the old scoring models used by the mortgage industry.  The differences could be enormous.  FICO 8 could be 850 and the EQ mortgage score (for example) could be 690.  (That would be rare but quite possible.)

I encourage you to scrap all credit monitoring services that you currently have (if they cost you money) and replace them with the myFICO Ultimate $40/mo product.  That CMS will give you your three FICO mortgage scores once per month.

I also encourage you to not ask your lender to pull your scores again unless you are sure you will own your home in the next 29 days.  When myFICO gives you your scores, it does not result in a hard pull.  Each time your lender pulls your credit, it is considered a hard pull.  Depending on exactly when those are done, they can harm your score each time.  (For example, suppose the lender pulls your scores every five weeks during the next six months -- that could result in five hard inquiries and five score drops.)

The folks here will be glad to give you practical  guidance on how to raise your mortgage scores.  To do that we'll need to know a lot more about your reports and also when you ideally hope to buy.

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Great advice @Anonymous 

I agree that the Ultimate Package is a powerful tool. But what it doesn't give you is real time daily changes in the mortgage scores. For the OP it might be important to find out what's going on sooner.

There is a way to get real time changes in the Experian mortgage score on a daily basis, and not too expensively...  $10 month plus tax -- Experian.com's Credit Watch [not the Credit Watch Basic which is free, and not the Credit Watch Premium which is $25 month]. They don't seem to advertise the Credit Watch, so I think you need to call up to subscribe.

[Anonymous]

I did the creditwatch free version then you can go in and upgrade and i selected the mortgage score only option to add my mortgage scores to my reporting access. That is one way i think you can do it without having to call and talk to someone. My experian mortgage score is 40 pts higher than my other two now that I had a recent collection removed off it that is still reporting on the other two. But aside from that, my other scores pretty much followed the same increases that i got from experian when my MYFICO monthly updated. 

[expatCanuck]

Here's a data point from my experience, which suggests that the FICO mortgage scores are much more sensitive to inquiries and balances owed, even if overall utilization is negligible.

In my case, my EQ FICO 8 a month or two ago was 805; the mortgage score was over thirty points lower, at 774.  IIRC, I had just received the PenFed card, and 5 of my 12 cards reported balances (tho' 3 of the 5 were under $100).

[Anonymous]

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@expatCanuck wrote:

Here's a data point from my experience, which suggests that the FICO mortgage scores are much more sensitive to inquiries and balances owed, even if overall utilization is negligible.

In my case, my EQ FICO 8 a month or two ago was 805; the mortgage score was over thirty points lower, at 774.  IIRC, I had just received the PenFed card, and 5 of my 12 cards reported balances (tho' 3 of the 5 were under $100).

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Here is a similar case study, this time focusing solely on my EQ mortgage score.  My score went from 817 (and 818 is a perfect score in that model) to 759.  In between those timepoints all my age-related factors improved (AoYA, AAoA, AoOA).  The only ways my profile got worse was going from AZEO to having several cards with a small balance along with a single recent inquiry.