Mortgage Score

[Anonymous]

Hi everyone,

I just wanted to get some thoughts on the FICO mortgage rate.

3 years ago I did some heavy debt settlement. Lots of lates, a couple collections and so on. Was coming off an injury and really struggled. I didn't want a BK on my record. Everything is settled, closed and paid as of Novemver 2016, exept for a couple newer credit cards and two older ones I kept in good standing. No bankrupties.

My FICO 8 scores based on my experien 3 credit report monitoring system are 670-655-667. I decided to try for an FHA refinance on my home now that values have increased. My mortgage scores are 608-609-619. I can get a much better rate and terms if i can rescore up to 620. My cards are BofA 2000 limit, 900 balance. WF. 2500 limit, 1300 balance. Merric 500 limit, 250 balance. First Savings 500 limit, 325 balance. I just paid my car off in October, so no car loans to help. My student loan has 1500 left, always on time.

The appraisal came back in with a value that works for the loan. Just wondering if it is worth a try to delay to get a resore and high score? I have some extra money that I could pay down my credit cards. Not to zero, but maybe cut the total balances by 50%. It is 12 points. But, my mortgage score on experien has only moved 2 points in that 10 months (607 to 609). Strangely, I have never missed a mortgage payment and have never been late on one in 10 years.

I have carefully reviewed my credit reports and everything is accurate, the good and the bad.

So, not really sure how to proceed. The mortgage score seems to weight a lot differently than the others. So, I am not sure paying the cards will have much of a difference. Any thoughts would be welcome.

Nick

[jamie123]

I'm not sure if your mortgage score would move as much as a FICO 8 score would but it is worth a shot.

The best case to raise scores in the FICO 8 model is the AZEO method. AZEO means ALL ZERO EXCEPT ONE. Now you said you had enough to pay 50% of your card balances off so you won't be able to quite get to AZEO but you will be close.

BoA $2000cl $900bal to $500

WF $2500cl $1300bal to $900

Merric $500cl $250bal to $0

First Savings $500cl $325bal to $0

And last but not least, you need to see if you can get a credit line increase on all your credit cards without a HARD PULL. It would really work to your advantage if you could get a CLI on these cards without a hard pull but it won't be easy. DO NOT ALLOW THEM TO GIVE YOU A HARD PULL BECAUSE IT WILL LOWER YOUR CREDIT SCORES! Just refuse the hard pull if they ask for your permission.

[Anonymous]

FICO is penalizing you for three things:

(1)  A high total utilization (50.4%)

(2)  Multiple cards with a somewhat high individual utilization (three cards at > 49.99%)

(3)  100% of your cards showing a positive balance

FICO 8 does not care too much about that third factor, but the older mortgage models certainly do.

If you think you could get the Wells Fargo paid down a small amount (to 47.5%) and then pay the three smaller balance cards to $0 that would likely give you a lot of help.

[Anonymous]

I believe that i can do at least that much. If I can get the mid score to 620, it would mean over $200 a month less in payment. 

[Anonymous]

Really?  You can get three of the four cards to $0 and the other to 47%?  That will be a huge help.  Getting 3 out of 4 reporting $0 may be a key move.

[arkane]

If my numbers add up, OP can definitely AZEO if an extra $90 can be squeezed. The EO card will be WF at its original balance, but the 3 other cards will be zeroed out. I'm almost certain it should net a 12 point gain to the middle score, since OP is going from 100% to 25% cards reporting balances, and total util drops from 50.4% to 23.6%.

[Anonymous]

I like Jamie's idea about CLIs -- at least in theory.  Bear in mind, however, that there is some risk in relying on a customer service rep for certain knowledge about whether an inquiry will be hard or soft.  These forums are littered with posts of people scandalized that they got a hard pull when a CSR told them it would be soft. 

The following DoC piece is a good resource for trying to assess whether a given issuer is likely to do a hard or soft pull:

https://www.doctorofcredit.com/credit-cards/which-credit-card-companies-do-a-hard-pull-for-a-credit-...

Note what he says about WF:

"Wells Fargo seems to be mostly soft pulls, with a few reports of hard pulls. Again, you’re best off calling their customer service department and asking if it’ll be a soft or hard pull, some representatives will be able to tell you – but be willing to cop a hard pull at the end of the day as they might give you incorrect information."

Since Jamie rightly advises you not to make a CLI request if there is any chance it could be hard (given your situation) my belief is that this boils down to not requesting any CLIs.

[Anonymous]

I think that I can pull this off.  I set aside some money from my tax return last spring and add a little as a can for an emergency fund. I decided that I wanted to build some cash on hand for car repairs and stuff like that. It isn't a ton of cash, but enough to execute this plan of action. I didn't even realize the differences in scoring models until my loan officer pulled the mortgage scores, or I would have been posting this question a couple months ago. At any rate, I don't see how it is much of a risk. Even though I will use my emergency funds for now, even if it doesn't work, I still have the cards for the unexpected disaster. Since it is a refi, I have a some time to work this out. My old mortgage is at 6.50%, so even if rates rise a little over the next month, I will still be in great shape overall.   

Thanks so much everyone. I will set the plan into action tomorrow morning. 

[Anonymous]

Any update? I'm trying to do the same thing and wanted to see if this worked for you