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Question: how to specifically target Fico 5/4/2 increases

bluedog357
Valued Member

Question: how to specifically target Fico 5/4/2 increases

We have been working on our credit. Just dumped 4500 paying off a high utliatiztion credit card (utl was 100%) and my score jumped about 20 pts. Fico 8 scores are Eq696 TU690 and Ex703, however the mortgage 5/4/2 scores are Eq659 Tu 659 and Ex674 (Im not sure how much of a jump the 5/4/2 scores got from the credit card payoff)

We are also saving up for a mortgage downpayment. We need a middle score of 680, and Im pretty sure it'll need to be a 680 from the 5/4/2 score and not from the Fico 8 score. We still have a little ways to go as far as saving for the downpayment. How can I specifically target mh Fico 5/4/2 scores to raise them? I kinda feel like the 5/4/2 scores are a much slower incline then the Fico 8.

Message 1 of 10
9 REPLIES 9
chiefone4u
Established Contributor

Re: Question: how to specifically target Fico 5/4/2 increases


@bluedog357 wrote:

We have been working on our credit. Just dumped 4500 paying off a high utliatiztion credit card (utl was 100%) and my score jumped about 20 pts. Fico 8 scores are Eq696 TU690 and Ex703, however the mortgage 5/4/2 scores are Eq659 Tu 659 and Ex674 (Im not sure how much of a jump the 5/4/2 scores got from the credit card payoff)

We are also saving up for a mortgage downpayment. We need a middle score of 680, and Im pretty sure it'll need to be a 680 from the 5/4/2 score and not from the Fico 8 score. We still have a little ways to go as far as saving for the downpayment. How can I specifically target mh Fico 5/4/2 scores to raise them? I kinda feel like the 5/4/2 scores are a much slower incline then the Fico 8.


5/4/2 scores are impacted harder by any reported lates (if you have any, start a goodwill campaign to try and get them removed).

 

Mortgage scores also tend to be more sensitive to balances... Aggregate utilization needs to be under 8.9%, with no single card reporting more than 28.9%.

 

You'll also see a score change for having no more than 1/3 of cards reporting a balance.

 

An installment loan is also needed for maximum scores (don't open one just for score boost if buying in the next 12 month's, your score may not recover from the new account penalty in time).

 

So to sort of recap:

Three credit cards with only one reporting a small balance. (If you have more cards, you'll be fine as long as no more than 30% are reporting a balance) 

Installment loan (prefferably paid down to 8.9% balance remaining).

No lates or charge-offs.

 

Best of luck!

Goodwill Saturation Technique

Starting Score: EQ:608, EX:617, TU:625
Score 10/2018: EQ:669, EX:686, TU:668
Score 11/17/2018: EQ:682, EX:681, TU:683
Current Score 3/11/2020: EQ:695, EX:703, TU:720
12/24/2018 -- EQ Beacon 5.0: 678, EX Fico II: 690, TU Fico Classic 04: 716

Goal Score: 740+


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Message 2 of 10
SouthJamaica
Super Contributor

Re: Question: how to specifically target Fico 5/4/2 increases


@bluedog357 wrote:

We have been working on our credit. Just dumped 4500 paying off a high utliatiztion credit card (utl was 100%) and my score jumped about 20 pts. Fico 8 scores are Eq696 TU690 and Ex703, however the mortgage 5/4/2 scores are Eq659 Tu 659 and Ex674 (Im not sure how much of a jump the 5/4/2 scores got from the credit card payoff)

We are also saving up for a mortgage downpayment. We need a middle score of 680, and Im pretty sure it'll need to be a 680 from the 5/4/2 score and not from the Fico 8 score. We still have a little ways to go as far as saving for the downpayment. How can I specifically target mh Fico 5/4/2 scores to raise them? I kinda feel like the 5/4/2 scores are a much slower incline then the Fico 8.


The most important things you can do to target your mortgage scores are:

1. make no applications of any kind that could result in a hard pull

2. on your revolving accounts maintain as many zero balances as possible, ideally letting one bank card report a small balance while the others report zero balance and

3. reduce the number of high utilization accounts (e.g. if you have a card with > 50% utilization get it under 50%, if you have a card with > 30% utilization get it under 30%, etc)

 

I disagree with the advice you have been given about installment loans. Do NOT add any installment loans. In fact, do not add anything. Even paying down installment loans has little if any effect on the mortgage scores.


Total revolving limits 698000 (605000 reporting) FICO 8: EQ 721 TU 742 EX 715

Message 3 of 10
sueblue34
Frequent Contributor

Re: Question: how to specifically target Fico 5/4/2 increases


@chiefone4u  I am on the fence about this as my UTL  is currently at 54% and my loan officer told me not to pay off any cards to 0 because sometimes it has a negative affect on mortgage scores before it goes up.  She advised me to just pay them to under 30% since my DTI is okay. I hope she didn't give me wrong info.
@chiefone4u wrote:

@bluedog357 wrote:

We have been working on our credit. Just dumped 4500 paying off a high utliatiztion credit card (utl was 100%) and my score jumped about 20 pts. Fico 8 scores are Eq696 TU690 and Ex703, however the mortgage 5/4/2 scores are Eq659 Tu 659 and Ex674 (Im not sure how much of a jump the 5/4/2 scores got from the credit card payoff)

We are also saving up for a mortgage downpayment. We need a middle score of 680, and Im pretty sure it'll need to be a 680 from the 5/4/2 score and not from the Fico 8 score. We still have a little ways to go as far as saving for the downpayment. How can I specifically target mh Fico 5/4/2 scores to raise them? I kinda feel like the 5/4/2 scores are a much slower incline then the Fico 8.


5/4/2 scores are impacted harder by any reported lates (if you have any, start a goodwill campaign to try and get them removed).

 

Mortgage scores also tend to be more sensitive to balances... Aggregate utilization needs to be under 8.9%, with no single card reporting more than 28.9%.

 

You'll also see a score change for having no more than 1/3 of cards reporting a balance.

 

An installment loan is also needed for maximum scores (don't open one just for score boost if buying in the next 12 month's, your score may not recover from the new account penalty in time).

 

So to sort of recap:

Three credit cards with only one reporting a small balance. (If you have more cards, you'll be fine as long as no more than 30% are reporting a balance) 

Installment loan (prefferably paid down to 8.9% balance remaining).

No lates or charge-offs.

 

Best of luck!


Message 4 of 10
sueblue34
Frequent Contributor

Re: Question: how to specifically target Fico 5/4/2 increases

@bluedog357 just curious what the difference was in the UTL after the pay off?

Message 5 of 10
4sallypat
Established Contributor

Re: Question: how to specifically target Fico 5/4/2 increases

We have been thru your situation and can only say that a good mortgage broker goes a long way in helping you get a house.

 

2 years ago, we started looking and found a wonderful mortgage broker who was patient enough to tell us what we needed to do in order to bring our 5/4/2 mortgage scores up from mid 600s with 30+ % UT.

 

Now, 2 years later, after following all the steps he advised us to do - we are now at  mid 700s with less than 5 % UT.

We were able to consolidate credit cards into LOC installment and save for our downpayment.

 

We are closing on our first home in the crazy California market - after dozens of offers above asking, we got our home at 5% over asking (waived appraisal, waived inspection, waived termite, waived loan contingencies).

 

The icing on the cake was the upcoming change to conventional loan limits (from $548K to $625K) which helped us find a house that we can still qualify for under conventional rates instead of having to go to a jumbo loan which we can't cough up the 20% down.

 

The biggest benefit going thru a mortgage loan approval is that now our credit is stellar and will need it take out home project loans.

Home Depot, Lowes, Floor & Decor - will be opening new accounts after we get the loan funds and we get the keys.....

Message 6 of 10
NRB525
Super Contributor

Re: Question: how to specifically target Fico 5/4/2 increases


@bluedog357 wrote:

We have been working on our credit. Just dumped 4500 paying off a high utliatiztion credit card (utl was 100%) and my score jumped about 20 pts. Fico 8 scores are Eq696 TU690 and Ex703, however the mortgage 5/4/2 scores are Eq659 Tu 659 and Ex674 (Im not sure how much of a jump the 5/4/2 scores got from the credit card payoff)

We are also saving up for a mortgage downpayment. We need a middle score of 680, and Im pretty sure it'll need to be a 680 from the 5/4/2 score and not from the Fico 8 score. We still have a little ways to go as far as saving for the downpayment. How can I specifically target mh Fico 5/4/2 scores to raise them? I kinda feel like the 5/4/2 scores are a much slower incline then the Fico 8.


What is your utilization on each card, and in aggregate? 

Are there any lates on any accounts?

Do you have a specific bank in mind who will be handling the mortgage? They don't always go to what we see as FICO 5/4/2. When we got our mortgage from PenFed earlier this year, I have to say I was not able to decipher which mortgage source they used. 

So perhaps doing a first-round discussion would help clarify which credit model will be used.

High Bal Jan 2009 $116k on $146k limits 80% Util.
Oct 2014 $46k on $127k 36% util EQ 722 TU 727 EX 727
April 2018 $18k on $344k 5% util EQ 806 TU 810 EX 812
Jan 2019 $7.6k on $360k EQ 832 TU 839 EX 831
March 2021 $33k on $312k EQ 796 TU 798 EX 801
May 2021 Paid all Installments and Mortgages, one new Mortgage EQ 761 TY 774 EX 777
Message 7 of 10
bluedog357
Valued Member

Re: Question: how to specifically target Fico 5/4/2 increases

Now that card is a 5% utl, I have 2 others (0% utl and 78% utl). We are now working on the 78% card ( about $1100)

 

we are also working on my wifes 2 cards that have high utl (but small balances) these cards are not reflected on my credit report as they are separate)

 

The only other debt I have is a large student loan debt (on a public forgiveness loan program)

 

 

Message 8 of 10
bluedog357
Valued Member

Re: Question: how to specifically target Fico 5/4/2 increases

I do have lates. Some were my fault, others we partly my fault. My capital one credit card on auto pay that I wasnt checking and somehow the system took it off auto pay. Woke up to a phone call saying it was 120 days late(which means the previous payment was 90 days, etc) 

 

We worked with a credit guy last year and he was able to get some stuff removed but not the capital one lates.

 

I do have a bank in mind that does 5% downpaymeny and no PMI, and they dont sell the mortgage to another company after you sign. During a fact finding phone call the person I spoke to wasnt 100% sure which FICO variant they used, Im waiting to here back from them...but its a credit union and I think (but not postive) they use 5/4/2.

Message 9 of 10
sueblue34
Frequent Contributor

Re: Question: how to specifically target Fico 5/4/2 increases

Capital one is great with goodwills. You should email the CEO directly and you should get a call back from his exciting team. I was successful in getting 3 lates removed. That should give you a credit boost. Just google his name and email.

Message 10 of 10
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