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Getting a mortgage, score changes

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Regular Contributor

Getting a mortgage, score changes

Wondering what fico scores do when you add a mortgage? Also, is this added into utilization?

No other loans on file since credit union changed coding on one of theirs that was reporting as a loan but now as revolving.
Message 1 of 10
9 REPLIES 9
Super Contributor

Re: Getting a mortgage, score changes

As far as the coding issue, I'd strongly consider pulling your reports from a number of sources to confirm that the loan you mention is really reporting as revolving.   That is really odd.  To start with I'd look at what the reports at Karma (EQ and TU) and creditscore.com (EX) say.  Those reports are free and you can get them many times a year.

 

If all of those confirm the loan has gone to revolving, I'd try pulling WalletHub (TU).  Again, free report many times a year.

 

Finally, I'd look at what annualCreditReport.com says, which is the gold standard for reports -- but you only get it once per year, so I'd wait until you have looked at the others.

 

If the loan is truly reporting as revolving, I'd reach out to the creditor and see if they have any idea what is going on.  A loan reporting as revolving is not ideal, since unlike a true credit card you have no ability to bring it to zero and still keep it open indefinitely.

 

Regarding your question about the mortgage.... are you asking this because you recently bought a home and are waiting for the mortgage to appear?

 

Finally, regarding "utilization" there are two kinds: revolving and installment.  If the word utilization is used alone, it means revolving and loans are not considered as part of it.  If someone is specically refering to installment utilization, it means they are looking at your open installment accounts (typically loans) and seeing how much of the original loan amount is paid off. 

 

Whether one is talking about installment or revolving utilization, the two calculations only look at that type of accounts.  No FICO scoring factor lumps revolving and installment accounts together.

Message 2 of 10
Regular Contributor

Re: Getting a mortgage, score changes

I asked the bank and they said they had been reporting it as a loan incorrectly for the last 11 years and that it was just updated because someone noticed to revolving, which is what it should have been all along. Poor timing, but I can't make them change it back, I tried.

Yes, I am taking over a mortgage and so far it looks good to go. No flags have come up so far and hopefully they won't. Being my only loan (edit: last loan played off about 6 years ago and still there but nothing since) and a biggie, I didn't know if it would drop my scores, improve my scores or what. I fought to get them up and they are reporting now around 760. I am not wanting (who does) a negative hit that will stick around for more than a few months and want to keep building up. Would like to try to get to 800 by the end of the year if I can :-D

So will a fresh mortgage drop my scores? By how much on average if so? Is it a few month rebound like with new credit cards?
Message 3 of 10
Super Contributor

Re: Getting a mortgage, score changes

When you talk about your scores, I am guessing you mean the FICO 8 Classic model.  Is that right?  Where do you get the scores you are using for measuring improvement?

 

The "credit mix" part of your score is probably already being met by the loan that was closed six years ago and I presume is still on your reports.  (Can you confirm?)

 

FICO 8 has an additional scoring factor in the Amounts Owed category, which measures your Installment Utilization.  Have no installment utilization (because you have no open loans) is bad for your score, but so is having a very high IU (and when your mortgage reports you will have an IU > 99%).

 

So the interesting question is: which of those two things is worse?  I don't think we have a lot of test data on that, though we should.  You'll certainly help us out if you can tell us what happens to your score.  In order for this to be a meaningful test, you'll need to make sure your other scoring factors stay stable.  For example, if your CC utilization was 15% before the mortgage appears, you want your CC util to be close to 15% after it appears.

 

We'll also need to know the age of your youngest account now -- i.e. before the mortgage appears.

Message 4 of 10
Regular Contributor

Re: Getting a mortgage, score changes

Sure, I can play tester as it goes through the process. Only thing that may change due to timing is youngest accounts will hit a year first of May, so will depend on when everything goes through and then reports.

I pull all three from credit check total, Amex, Citi and Discover score card. Sometimes I will pull everything including mortgage. Disappointed in Chase changing to vantage, but can't do much about that. My last boost came from paying my cc's back to 1% azeo. I am guessing having my only collection removed in January and now having only 30 day late almost two years old, I have been bumped from one bracketed set of scores to another. Oldest account is 12 years this month I believe. Average is 7 or 8 years. Newest will be a year in May. Have been building since Decembee 2017 when I found MyFico and how this credit game actually works.
Message 5 of 10
Regular Contributor

Re: Getting a mortgage, score changes

I will maintain 1% azeo from here forward and see what the scores do.
Message 6 of 10
Super Contributor

Re: Getting a mortgage, score changes

If your Age of Youngest Account goes from > 12 months (before mortgage appears) to 0-2 months (after), that will cause some scoring pain.  But that can always be solved by time (just garden for 11 months and then your AoYA will be > 12 months again).

 

You may be getting some scoring benefit from an AoYA in the region of 6-11 months, so expect some harm in that regard even if you go from AoYA = 11 months to 1 month.

Message 7 of 10
Regular Contributor

Re: Getting a mortgage, score changes

Well, I guess I better grab NFCU cloc after the mortgage goes but before it reports and whatever else I want (aiming for a travel card next just can't decide between chase and amex) so if I have to wait another year then I at least have everything I want going forward for quite a while.

That would ruin the test though..... :-/
Message 8 of 10
Super Contributor

Re: Getting a mortgage, score changes


@1984 wrote:

I pull all three from credit check total, Amex, Citi and Discover score card.

Just something to be aware of here is that the scores you get from CCT, Amex and Discover are all Classic 8 scores, where the one you get from Citi is an EQ BCE 8 score.  BCE 8 caps out at 900 verses the 850 of Classic 8, so it's not uncommon for your EQ BCE 8 score to be different, perhaps 20-30 points higher than the Classic EQ 8 score you see from CCT.

Message 9 of 10
Regular Contributor

Re: Getting a mortgage, score changes

That is interesting because it has always been in the same range. It will update as azeo on the 19th, so will see what it does this time.
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