First, thanks for reading. I'm trying to be thorough so I apologize if this is long.
These are my current scores. First is the Fico 8 and then the Mortgage Fico (Which I don't understand why there are 2 different numbers)
EQ: 628/587 TU: 594/558 EX: 630/632
First, what would cause such drastic differences for Equifax and Trans Union when it comes to the regular and the mortgage numbers?
Second, we are trying to get a mortgage within the next 4 months. We were looking last year but couldn't get approved or approved for the terms we wanted. So, we decided to wait and pay everything that was late and try to aquire additional "good" credit history.
As of now, it has been 14 months since my last late payment which were all of my student loans. I consolidated them all into one small (146.00) payment per month. I do have a very small (32.00) collections on transunion that appeared in January of this year for a medical bill that was never billed. That is in the process of being due to a legit billing error on the doctors office end. I have 2 old credit cards that were charged off that have both been paid. One is showing as a paid collections with a 0 balance.
I have had 3 credit cards. One for over a year thru Capital One with a limit of 500. I aquired another Capital One that started with a 2000 limit which was increased to 2500 and a Discover Card that has a 1600 limit. Both of those were aquired in July or August. Needless to say I have never been late on these accounts. They do have high balances right now due to a Vacation that we had in October and Christmas. My last update had the total balances at 4000. That was updated around the 20th of January. I have since paid them down to about 2500 total and by the end of March should have them paid down to no more than 500 total. The only other debt I have are the above mentioned student loans and a car payment (balance 5100, monthly payment 320).
I was feeling confident that by now I'd have a nice bump in my score. I cancelled myfico in August and was just using Credit Karma to get a general idea of where I was at. I reenrolled today and those numbers are horrible to me. Especially the Mortgage fico's. I can't see a drastic change in the next few months when we start applying for a mortgage again.
Anyone have any ideas as to what I can do to bump those scores up higher? When it comes to the money needed for moving/loan type we are trying for USDA or FHA and have about 10,000 saved for costs. In addition, we have a gift of about 10,000 to put towards the house/closing fees. Dealing with credit is really getting frustrating, especially when I've been trying for the last year to improve things. I read on message boards how people in my situation seem to get huge bumps in a couple months and I can't seem to do the same.
Thanks for reading and ANY advice or experiences are very much appreciated.
A big reason that you have horrible credit scores right now is your CC debt debt. In fact, your last reported CC balances show all of your credit cards being almost completely maxxed out ($4000 debt on a combined credit limit of $4600 = 87% utilization).
It sounds like you plan to pay all your CC debt down to $500. That will help your score a great deal, especially if you make sure that two of the three cards are reporting at $0. (I.e. you want all your CC debt one one card.) You will get an even better score boost if you can lower you CC debt to $400, which will be < 8.9%.
The biggest problem you have is not your CC debt. It's your lack of understanding about credit and how to prepare for a loan. You have a major loan that is crucial to your future -- you feel that strongly about it -- and you choose to max out all your cards on a vacation in the months beforehand. You actually have had an extremely close shave -- you might well have had your cards cancelled or at the credit limits drastically lowered by maxxing your cards out like that. The sentence that struck me most in your post was this:
I was feeling confident that by now I'd have a nice bump in my score.
You maxxed out your cards and were confident that you would have a nice bump in your score. This betrays such a deep misunderstanding about how credit scoring works that it's hard to describe it. I am not giving you a hard time, but am trying as clearly as I can reveal the extent to which you need to educate yourself about how the FICO scoring system works. My advice:
(1) Spend the next few weeks learning about how credit scoring works. Read everything you can lay your hands on. Start with the Learn About Scores button at the top of this screen. Find two or three good books and read them too. Learn also how credit cards work, when your three cards report to the three bureaus, and what numbers they report and why.
(2) Continue to pay your CC debt down. Your goal should be to get it under $400, only on one card, and that card should NOT be the one with the low credit limit. You want two of your three cards to be reporting a $0 balance.
(3) Make a complete list of your negative records (charegeoffs, lates, collections, etc.) and head over to the rebuilding forum. They may be able to help you with getting some of them removed. You would have more leverage to get the creditor to remove them if you had not paid them. You'd be able to say: I will pay them IF you agree to delete them. You lack that leverage now, so you might not be able to do anything, but the folks in the rebuilding forum will know.
(4) Continue to make all your payments and on time of course. Be sure not to pay off the car loan before you have completely closed on the house and own it.
Very best wishes and good luck.
Yup, just what Opinionated said. Mortgage lenders are (in practice) bound by Fannie and Freddie to use very old FICO models (one of them is from 1998!). The models evaluate risk differently and probably less well than the models that FICO released much later. That is likely to change in the next year or two, but in your time frame you should expect that the lenders will be using the "mortgage" scores you see.
The newer models (FICO 8 and now FICO 9) are typically more forgiving of people who had many negative records but resolved to pay off collections and who exhibited a few years of managing accounts with perfect payment history. The old models are less flexible that way -- they see a lot of negative records and hit you without cutting you much less slack for trying to be a good scout moving forward.
You should ignore any feelings you might have of that seeming unfair, because that will be time and energy you are wasting on something you cannot change (the fact that they will use the older punitive models). You should focus on the thing that is under your control, which are the things I mentioned: learning a lot about credit scoring, paying your CC debt down to under $400, etc.
Mortgage scores, particularly EQ Score 5 (Fico 04 model), are significantly more sensitive to # cards reporting a balance and individual card utilization than is Fico 08.
Best you can do is optimize what you can control. Negatives aside, reducing individual card utilization, reducing aggregate utilization and reducing # cards reporting should likely help mortgage scores more than Fico 08 scores. For illustrative purposes say:
1) EQ Fico 08 was 650 => reduce UT% and # cards reporting => EQ Fico 08 now 665 (15 point gain)
2) EQ Fico 04 was 610 => reduce UT% and # cards reporting => EQ Fico 04 now 645 (35 point gain)