Mortgage scores and Fico8 increases

[Anonymous]

Mods, move this to the mortgage forum if applicable.

I've been rebuilding my credit from the low 500's to where I am at now, in my 660's. My question is, my mortgage scores are borderline for a cashout refi with a conventional mortgage. 617/627/662. My middle score would be 627.

I have a 3B pull coming up on Sunday that will reflect my most recent 2 credit cards - Disco and OpenSky. Will those drag my mortgage scores down, or will the recent gains of 10-11pts in my Fico8 help cancel out any drop in my mortgage scores because I likely will cut my AAoA down with the two new cards?

[FICOlearner123]

I would expect a small dip

[FireMedic1]

How many cards do you have now?

[Anonymous]

On the previous 3B pulls- just one revolving account, the Paypal account which is 9 months old.

Now, with this next pull, should be 2 more new accounts, the Disco and the Opensky, plus my wife's new Disco of which I am the AU on.

[SouthJamaica]

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@Anonymous wrote:

Mods, move this to the mortgage forum if applicable.

I've been rebuilding my credit from the low 500's to where I am at now, in my 660's. My question is, my mortgage scores are borderline for a cashout refi with a conventional mortgage. 617/627/662. My middle score would be 627.

I have a 3B pull coming up on Sunday that will reflect my most recent 2 credit cards - Disco and OpenSky. Will those drag my mortgage scores down, or will the recent gains of 10-11pts in my Fico8 help cancel out any drop in my mortgage scores because I likely will cut my AAoA down with the two new cards?

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If you want to increase your mortgage scores, applying for new accounts is the last thing you should be doing. I would expect that your mortgage scores will take a dip, as @FICOlearner123 predicts.

[Anonymous]

@Anonymous Gains in version 8 cannot offset scores that are different versions.

With that said you had a revolver under 12 months of age, so there will be no new account penalty. With that said, you were also receiving a penalty for too few bankcards. As a result, you may see a slight increase due to that penalty being removed.

I am also assuming, hopefully correctly, that your profile is clean and young and that you only have one one card on your credit report.

However as SJ points out, new accounts are typically horrible for the mortgage scores because they keep you in a new account scorecard with its resultant reduction in points. However since you’re already in a new account scorecard, you won’t lose points for being reassigned to one, but now you'll be in the scorecard longer. But you had to get rid of that too few bankcards penalty sooner or later anyway. 

You can however lose points for the reduction in AAOA, if it crosses a threshold. You will be in a new account scorecard for a little while, but when you are reassigned to a no new account scorecard, your scores will get a nice increase. This occurs at 12 months for version 8, but we’re not sure for prior versions such as the mortgage scores.

As time passes, your AAOA will increase as well. IMHO, whether you will have an increase or decrease depends on whether an AAOA threshold is crossed and how that may offset or interact with the gain for dropping the penalty for too few bankcards.

Additionally utilization must be considered. If the new cards reduce your utilization across thresholds, that could result in points as well.

[Anonymous]

How can I increase my mortgage scores. My Fico8 are way higher than the mortgage scores. I'm worried and I don't know if mortgage lenders will use my Fico8 or the Fico 5,4 and 2 mortgage scores. Can anyone give guidance.

[SouthJamaica]

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@Anonymous wrote:

Mods, move this to the mortgage forum if applicable.

I've been rebuilding my credit from the low 500's to where I am at now, in my 660's. My question is, my mortgage scores are borderline for a cashout refi with a conventional mortgage. 617/627/662. My middle score would be 627.

I have a 3B pull coming up on Sunday that will reflect my most recent 2 credit cards - Disco and OpenSky. Will those drag my mortgage scores down, or will the recent gains of 10-11pts in my Fico8 help cancel out any drop in my mortgage scores because I likely will cut my AAoA down with the two new cards?

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1. Yes they will probably cause some point loss in your mortgage scores. One should never apply for new accounts in the run up to a mortgage application.  You've added inquiries, reset your age of newest account, and lowered your average age of accounts.

2. Gains in your FICO 8 scores have no effect on your mortgage scores.

[Anonymous]

@SouthJamaica This wasn't OP, so we don't know if he even has a Discover or an AU. 

@Anonymous Welcome to the forum. Yes 5-4-2 will be used. The best thing you can do to increase your 5-4-2s is, as SJ alludes to, to practice AZEO (all revolvers reporting zero except for one with a small balance between $5 and $20 preferably) And no new accounts or hard inquiries. They bring your score down. 

[SouthJamaica]

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@Anonymous wrote:

@SouthJamaica This wasn't OP, so we don't know if he even has a Discover or an AU. ...

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Ooops. Sorry about that.