Impact of multiple mortgages on FICO score (real estate investing)

[KittySaysMeow]

This forum was instrumental in helping me rebuild my credit after bankruptcy. This will likely be of interest to almost nobody, but I feel compelled to contribute what little I can to this community.

In my post-bankruptcy life, I became a small-time real estate investor. I purchase 1 or 2 rental homes per year, all with traditional bank financing. One of my concerns over the past few years has been what long-term impact this will all have on my FICO scores.

So far, my highest score ever has been 826 on FICO 8 from Experian (using their free monitoring service). That was right before purchasing a rental property that I closed on in September 2019. After that new mortgage started reporting, that same score immediately dropped to 785. That's the single biggest score drop I've seen so far in my adventures of acquiring multiple mortgages.

I then went on a credit card churn spree in December 2019, adding six inquiries and four accounts, dropping me to 776.

I purchased another home in February 2020, and in March, that FICO 8 dropped to 780. I recovered to 783 over the summer, and then I refinanced three of my properties all at the same time, with the same lender. All three loans fell off in October, and only two of the new, refinanced loans appeared. I ended October at 783.

Today, the third of the refinanced loans finally reported, and it dropped me to 776.

I now have 10 open credit cards, 7 open mortgages, and 19 hard inquiries reporting. Again, this is all FICO 8 from Experian's free monitoring service, for consistency.

I just thought I'd share for purposes of helping to understand score impact, and perhaps provide reassurance to any prospective real estate investors that are scared of what will happen to their scores. I was never really able to find much information about the impact of multiple active mortgages in previous searches, so I hope this contribution helps others that may be searching for such information in the future.

[Anonymous]

@KittySaysMeow What are your negative Reason Scores please? Do you have the one for too many loan accounts? And how many total opened and closed loans do you have on record? And what’s the total number of credit cards opened and closed, please.

[KittySaysMeow]

@Anonymous 

Reason codes from the credit pulls for my three simultaneous refis:

• Too many inquiries last 12 months
• Length of time accounts established
• Too many accounts with balances
• Time since most recent account opening is too short
• Too many accounts recently opened
• Length of time revolving accounts established
• Inquiries impacted the credit score

There is NOT one indicated for the "too many loan accounts".

Open revolvers: 10

Closed revolvers: 11

Open mortgages: 7

Closed mortgages: 9 

Other: 5 closed personal installment loans, 2 closed student loans.

That's my entire current file. I practice AZEO.

I hope this helps your data aggregation efforts.

[Anonymous]

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@KittySaysMeow wrote:

@Anonymous 

Reason codes from the credit pulls for my three simultaneous refis:

• Too many inquiries last 12 months
• Length of time accounts established
• Too many accounts with balances
• Time since most recent account opening is too short
• Too many accounts recently opened
• Length of time revolving accounts established
• Inquiries impacted the credit score

There is NOT one indicated for the "too many loan accounts".

Open revolvers: 10

Closed revolvers: 11

Open mortgages: 7

Closed mortgages: 9 

Other: 5 closed personal installment loans, 2 closed student loans.

That's my entire current file. I practice AZEO.

I hope this helps your data aggregation efforts.

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@KittySaysMeow yes it's very helpful and I'm very grateful. Do you have the reason codes after the refi's reported? I'm assuming these came from the pulls for the refi as you said.

If so, or if you pull and see them anytime, it would be great and its EQ8 where you'd see the too many loans code #84. I'll check and see if it would show up on the mortgage codes. 

Thank you again. Im thinking it may only look at open loans for the ratio based on what your data. But it's only through the collection of this data that we can try to determine that. 

[Anonymous]

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@Anonymous wrote:

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@KittySaysMeow wrote:

@Anonymous 

Reason codes from the credit pulls for my three simultaneous refis:

• Too many inquiries last 12 months
• Length of time accounts established
• Too many accounts with balances
• Time since most recent account opening is too short
• Too many accounts recently opened
• Length of time revolving accounts established
• Inquiries impacted the credit score

There is NOT one indicated for the "too many loan accounts".

Open revolvers: 10

Closed revolvers: 11

Open mortgages: 7

Closed mortgages: 9 

Other: 5 closed personal installment loans, 2 closed student loans.

That's my entire current file. I practice AZEO.

I hope this helps your data aggregation efforts.

---

If so, or if you pull and see them anytime, it would be great and its EQ8 where you'd see the too many loans code #84. I'll check and see if it would show up on the mortgage codes. 

Thank you again. Im thinking it may only look at open loans for the ratio based on what your data. But it's only through the collection of this data that we can try to determine that. 

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@Anonymous: There are also these 2 at EX/TU 8 (Not on EQ 8):

96	Too many mortgage loans with balances	Your score was impacted by having too many mortgage loans with balances.
71	Too many recently opened installment accounts	FICO® Scores evaluate the frequency and recency of new installment account openings shown on a person’s credit report. Your score was impacted by having too many recently opened installment accounts on your credit report.

The impact from 96 might be lower than the usual set of top 4 that we see, so it may never appear.

Thank you, @KittySaysMeow !

[Anonymous]

Very true it could be those as well, but I agree they are probably suppressed, in all but a very clean optimized file.

[KittySaysMeow]

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Do you have the reason codes after the refi's reported? I'm assuming these came from the pulls for the refi as you said.

I did not see numeric codes on the refi credit pull notice, which is where those descriptors were from. I also do not know how to obtain post-refi reason codes without doing a credit application, which I have no need for right now. I don't see such explanations on the services I currently use for tracking scores (I now only use freebies from existing creditors). 

When I do apply for my next mortgage, which is probably 6 months away, I'll try to remember to update this thread with new codes.

[KittySaysMeow]

@Anonymous @Anonymous  Just for giggles, I allowed my Discover card balance to report on this current cycle before paying it off. Experian FICO 8 dropped a full 10 points, to 768. Overall utilization is 2%, but this one card is reporting at 68%. I bought a bunch of furniture from Amazon to furnish an entire house at one time all on this card, since Amazon is a 5% cash back category this month on Discover.

Fascinating (to me) that one card of my ten could have such an impact, despite overall utilization being so low.

I'm happy to do other such experiments if it would contribute to the cause. I'm weird like that.

[Anonymous]

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@KittySaysMeow wrote:

@Anonymous @Anonymous  Just for giggles, I allowed my Discover card balance to report on this current cycle before paying it off. Experian FICO 8 dropped a full 10 points, to 768. Overall utilization is 2%, but this one card is reporting at 68%. I bought a bunch of furniture from Amazon to furnish an entire house at one time all on this card, since Amazon is a 5% cash back category this month on Discover.

That's not too bad for 68% individual utilization. The actual dollar balance is also a factor in that, but not as much as percentage.

Furnishing an entire house is a fun way to abuse utilization. lol

Fascinating (to me) that one card of my ten could have such an impact, despite overall utilization being so low.

I'm happy to do other such experiments if it would contribute to the cause. I'm weird like that.

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Furnish the whole house with new appliances and let that report?

[Anonymous]

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@KittySaysMeow wrote:

@Anonymous @Anonymous  Just for giggles, I allowed my Discover card balance to report on this current cycle before paying it off. Experian FICO 8 dropped a full 10 points, to 768. Overall utilization is 2%, but this one card is reporting at 68%. I bought a bunch of furniture from Amazon to furnish an entire house at one time all on this card, since Amazon is a 5% cash back category this month on Discover.

Fascinating (to me) that one card of my ten could have such an impact, despite overall utilization being so low.

I'm happy to do other such experiments if it would contribute to the cause. I'm weird like that.

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@KittySaysMeow Yeah that sounds about right for crossing the 30% and 50% individual thresholds. Would have been a few more points if you had hit 69.5%. 

yes we're open to all data points from all tests. Would be interesting to go from 1 to 10 cards with a balance, maintaining low overall aggregate and individual utilization to see the changes for number of accounts with a balance.