Rebucketing for last CO

[Anonymous]

Hello all, I have a quick question, I have already applied for a Mortgage with a middle score of 690 from my EQ report. The report in question is my Experian Fico (lender pull) of 697. It has one last baddie CO from City National Bank from an overdraft charge dated 02/2006. I have GW for a delete and the board is meeting to decide at the end of March. My question is should I just drop the request. My house is a new construction and won't be completed until May. Which means they will most likely pull another credit report as the last one was pulled last week in Feb. The AAoA is Nine years and the length of credit is 12 yrs. So my scores from lender EQ 690....EX...697 and my Fico had my TU at 680 but my lender pulled TU 04 and I forgot to ask her what the 04 score was. I would just hate this last baddie CO to rebucket me and risk me losing my middle score of 690. Btw this was a 30 yr VA Mortgage I received at a rate of 3.75. And to add, my most recent credit has been m two credit cards, one is from 12/01/2007 and the other 06/01/2008 if that helps. I also has a very old paid consumer finance loan. I know those sometimes come into play. The lender used A company called Kroll Factual to pull the reports.

[Cdnewmanpac]

If I understand what you are saying, you are worried that dropping the last CO on EX will put you in a higher bucket and drop your high score below 690, thus making 690 your new high score and your middle score lower. However, you are getting a VA loan and they tend to have only a few, wide bracket interest rates (at least they did a year ago when I got mine). Do you know how far your score would have to fall to change the interest rate? When I did my rate lock, I was told that as long as my score didn't fall below that lender's minimum standard (620 in my case), the lock would stick.

Also, it would be essential to this decision to know your TU score. If the TU score is 689, then obviously the most your middle score could drop would be a point and it would totally be worth deleting the CO. If the Tu were lower than the next breakpoint for interest rates, it might be worth more consideration.

Finally, I would consider a rate lock. Interest rates are rising and may be higher by May, making this whole discussion moot.

[Anonymous]

My credit was pulled on Feb 27 and the house won't be completed until middle of May, I thought you had to lock the rate within 30 days of close? Also, I'm going through a local lender but I shopped around and was told by every lender that rates change multiple times of day but have pretty much been stagnant.

[Anonymous]

I just checked my GFE and it said rate lock has to be within 30 days from settlement. I guess it's different amongs lenders?

[Anonymous]

Based on my past experience I would expect your score to increase after your lone CO drops from your CR.  I had a paid medical collection that finally fell off my EX CR last year.  My PSECU supplied EX FICO went from 705 to 808 in one month.  The only thing that happened during that one month period was the collection dropping off.  I was very happy to see that 103 point increase.

I had similar things happen to my TU and EQ scores also (86 and 74 points respectively).  I believe that the bucket I was in, because of having a collection on my CR, kept me from having high scores.  It seems that there may be enough similarities between our reports that your score will probably increase when your CO falls off.

I also have a AAoA of 9 years.

[RobertEG]

My take....

I see no way that removal of the CO, and thus having a "clean" payment history, wont improve scoring of that category.  Being the highest weighted category, if you were "rebucketed," in order to result in an overall score drop, the increased bucket emphasis on some other scoring category would have to be more than the improvement achieved in payment history.

A nine year AAOA with an oldest account of 12 years is a solid lenght of history category, so I dont see much if any negative impact resulting from an increase in weighting of that category.  Even it it did, its average weighting is only 15%, so I dont see any increased scrutiny on Lenght of Credit resulting in much, if any, negative impact.

Certainly no where near the postivie impact of becoming clean in Payment History.

The only category that would appear to have significant rebucketing impact would be Utilization.  Unless your overall % util is high, or one or two individ accounts have a high % util, then I again dont see much offset.  While Util is also a highly-weighted category, with an average value of around 30%, unless your util is fairly high, I dont see a shift in its emphasis resulting in a negative impact that would exceed the postivie impact of the Payment History gain.  It might offset a part of it, but dont see any eclipse.

What in your credit file, other than the CO, is most harming your score at this point?  My view would be that if that factor is farily poor and rebucketing would cause that to be the factor that increased in scoring scrutiny, they might come close to being an offset.

Wth the significance of Payment History as a scoring category, and the high negative impact of a CO within that category, my guess that a good FICO gain would occur.

Just my opinion, based on how I see the issue.  No one knows for sure how the FICO algorithm shifts emphasis as scoring categorizations shift.