FICO for Mortgage

[Anonymous]

I am one point away from qualifying for a refinance loan.  I have paid off a bunch of debt and all of my scores have change fairly dramatically (including my Vantage Score) except my Fico 2 and Fico 5????  I need a 620 for my middle score and no matter what I do it doesn't change.  Does anyone know why?

[Thomas_Thumb]

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@Anonymous wrote:

I am one point away from qualifying for a refinance loan.  I have paid off a bunch of debt and all of my scores have change fairly dramatically (including my Vantage Score) except my Fico 2 and Fico 5????  I need a 620 for my middle score and no matter what I do it doesn't change.  Does anyone know why?

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Score monitoring systems provide updates on Classic Fico 08 or VantageScore 3.0 depending on what you have. Fico mortgage scores will not update unless/until:

1) You pay for a 1B or 3B report at which time all your Fico scores will be updated.

2) You are part of a myFICO monitoring plan that includes quarterly reports. In that case your mortgage score(s) will update quarterly

You can also purchase your EQ mortgage score (Score Power) directly from Equifax. If you have completed your score "optimization" and think scores are in range, consider purchasing a 3B report to get updated mortgage scores.

[Anonymous]

Thank you fo reply.  I did purchase the 3B.  Long story short...two of the mortgage companies I've been talking to used the same tool...funding suite which gave me direction on what actions to take to raise my score 19 points (18 points higher than I actually needed).  I ended up following the actions and I actually paid off and additional $3,000.  Every score I have went up except the one I needed.  Very frustrating and confusing.  Is it possible that those scores (FICO 2 and FICO 5 are not updated as regularly?  I don't see a tool anywhere that allows you to simulate those specific scores.  Just as an example (and I know it's different) but my vantage score went up almost 50 points.

[Thomas_Thumb]

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@Anonymous wrote:

Thank you fo reply.  I did purchase the 3B.  Long story short...two of the mortgage companies I've been talking to used the same tool...funding suite which gave me direction on what actions to take to raise my score 19 points (18 points higher than I actually needed).  I ended up following the actions and I actually paid off and additional $3,000.  Every score I have went up except the one I needed.  Very frustrating and confusing.  Is it possible that those scores (FICO 2 and FICO 5 are not updated as regularly?  I don't see a tool anywhere that allows you to simulate those specific scores.  Just as an example (and I know it's different) but my vantage score went up almost 50 points.

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Correct, you purchase a 3B report, then data is pulled and all your Fico scores (including mortgage scores) are calculated and provided to you in the report. The scores do not update. Your mortgage scores (EQ Fico score 5, TU Fico score 4 and EX Fico score 2) are only re-calculated when you pay to get a new report or quarterly if the service you are using has that feature.

I suspect your mortgage scores have improved but, a paydown will not trigger a data pull and score re-calculation. You will have to pay for an update. Alternatively, you could try getting an update from a mortgage company - that will lead to hard inquiries.

[Anonymous]

I did pay for the 3B prior to creating this post and the fico 2 and fico 5 scores were the same as they were when the mortgage company initially pulled them 3 weeks ago.  Further, the reports i pulled this morning did reflect the paydowns that I have made.

[Thomas_Thumb]

OK - I had not realized that you purchased a 3B report after paydown. Would you be willing to share some data on your accounts? It would be helpful to know before/after data relating to the paydown on:

1) How many open revolving accounts you have.

2) How many open accounts show a balance

3) % utilization on each CC before/after paydown

4) aggregate utilization for all CCs combined before/after paydown

5) If you have any installment loans balance to loan ratio in %.

The information will enable people on this forum to give you more meaningful feedback and advice on a strategy for optimizing score beyond what the mortgage company provided.

Regarding revolving account scoring factors the impact on score from highest to lowest are

a) Aggregate utilization

b) individual card utilization

c) # (or %) of open cards reporting a balance

A paydown may or may not change score depending on whether the amount of change crosses a threshold and the amount of change is both CRA and Fico score model dependent. Some  thresholds (may differ based on the Fico model) that may impact score include:

1) Aggregate utilization: 9% or less, 10% to 19%, 20% to 29%, 30% to 49%, 50% to 69%, 70% to...

2) Individual card utilization: 29% or less, 30% to 49%, 50% to 69%, 70% to 89%, 90% and above.

3) Percent of revolving accounts with a balance: under 33%, 33% to 49%, 50% to 99%, 100%

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[Anonymous]

No problem....The vast majority of my issue is credit utilization.  I have one late payment which was almost 5 years ago (56 months).  I have...

-18 revolving accounts of which 15 are active

-13 accounts have balances but two are very small so I could quickly get those to zero if that is a factor.

-My total revolving credit utilization started at 96% and I got it down to 91%

-I have one payoff that has not yet reported that should bring it down another 1/2% or so

-3 installment accounts

Any advice is much appreciated.  Remember, I'm not trying to hit a home run here.  I just need one point on my stinking Experian FICO 02.  I really expected the steps I've taken so far would have gotten me one point (619 to 620).  My Transunion FICO 08 score moved up 12 points.  Am i missing something simple?  Once I refinance I will be able to pay off nearly all of my debt never to return again.  

[Thomas_Thumb]

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@Anonymous wrote:

No problem....The vast majority of my issue is credit utilization.  I have one late payment which was almost 5 years ago (56 months).  I have...

-18 revolving accounts of which 15 are active

-13 accounts have balances but two are very small so I could quickly get those to zero if that is a factor.

-My total revolving credit utilization started at 96% and I got it down to 91%

-I have one payoff that has not yet reported that should bring it down another 1/2% or so

-3 installment accounts

Any advice is much appreciated.  Remember, I'm not trying to hit a home run here.  I just need one point on my stinking Experian FICO 02.  I really expected the steps I've taken so far would have gotten me one point (619 to 620).  My Transunion FICO 08 score moved up 12 points.  Am i missing something simple?  Once I refinance I will be able to pay off nearly all of my debt never to return again.  

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Fico mortgage scoring models (both EQ and TU are actually Fico 04 and EX is Fico 98) penalize quite heavily for high utilization. I would not necessarily expect 96% to 91 % aggregate to result in a score bump. A couple very important utilization milestones are under 90% (often considered a max out condition) and under 70% which is a flag for excessive utilization. You do need to bring down your aggregate utilization further to step change mortgage score. Same goes for individual credit cards.

See below from Experian which is the source of data for Fico score 2 (Fico 98 model)

.

[Anonymous]

So...do you think getting under 90% might get me a small bump?

[Thomas_Thumb]

Fico may round up so I'd say you need to really be under 89%. If you do that I think you may see a bump up. However, getting all cards under max out condition is really what you should try to achieve as a short term goal. My guess is accomplishing that would likely drop your aggregate utilization to under 80%.

Regardless of Fico score, lenders will look at your utilization in their decision process. Max out conditions are cause for concern and may lead to denial or less favorable terms than someone with the same score whose credit is not maxed out.