Thrilled with new scores but still trying to understand

[Anonymous]

Just pulled my two FICO scores today and am elated to see that I am in the 700's for the first time in I'm guessing 15 years.  Boy, that feels good. 

And I'll definitely take the 701 from TU, but I'm trying to understand the dramatic difference in the "how the lender looks at you" reports between TU and EX.  Here are my specs today:

Total balance of revolving accounts (7):  $2461 (TU)  $774 (EX)  The EX number is the correct balance--one payoff hasn't registered on TU yet.

Total mortgages (1st and HELOC): $77,083 (TU)  $77,083 (EX)

Total installment loans (1): $3503 (TU)  $3503 (EX)

The total credit limit on the revolving accounts is $19,880, so I have about a 4% util on EX and 12% on TU.  Both reports list the same number of negs (2 accounts reporting lates). 

But when I compare the "how the lender views" reports, TU lists my debt amount as Not Good, and EX considers it Very Good.   That seems like an awfully big difference to me. 

So what is TU focusing on that drops the evaluation that far?  Is it the 12% util?

Just curious...

[fused]

Moved to Understanding FICO Scoring forum

[haulingthescoreup]

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@Anonymous wrote:

Just pulled my two FICO scores today and am elated to see that I am in the 700's for the first time in I'm guessing 15 years.  Boy, that feels good. 

And I'll definitely take the 701 from TU, but I'm trying to understand the dramatic difference in the "how the lender looks at you" reports between TU and EX.  Here are my specs today:

Total balance of revolving accounts (7):  $2461 (TU)  $774 (EX)  The EX number is the correct balance--one payoff hasn't registered on TU yet.

Total mortgages (1st and HELOC): $77,083 (TU)  $77,083 (EX)

Total installment loans (1): $3503 (TU)  $3503 (EX)

The total credit limit on the revolving accounts is $19,880, so I have about a 4% util on EX and 12% on TU.  Both reports list the same number of negs (2 accounts reporting lates). 

But when I compare the "how the lender views" reports, TU lists my debt amount as Not Good, and EX considers it Very Good.   That seems like an awfully big difference to me. 

So what is TU focusing on that drops the evaluation that far?  Is it the 12% util?

Just curious...

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The TU FICO version that we have here is an older one, unfortunately. Although it doesn't display HELOC debt in its calculation of util, it does include it in total revolving debt.

I just got this negative on my TU score, with $0 owed on CC's but a balance on my HELOC:

[Anonymous]

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haulingthescoreup wrote:

 The TU FICO version that we have here is an older one, unfortunately. Although it doesn't display HELOC debt in its calculation of util, it does include it in total revolving debt.

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Interesting.  Thank you, Hauling...

So the $16k HELOC is considered revolving, even though the bank shut down my ability to use the available credit 2 years ago (originally a $20k credit line). 

Does this mean that if I refinanced it to a straight installment loan, it would lose that impact on the old version?  And if a lender were pulling a newer version, would it have less negative impact?

[haulingthescoreup]

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@Anonymous wrote:

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@haulingthescoreup wrote:

 The TU FICO version that we have here is an older one, unfortunately. Although it doesn't display HELOC debt in its calculation of util, it does include it in total revolving debt.

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Interesting.  Thank you, Hauling...

So the $16k HELOC is considered revolving, even though the bank shut down my ability to use the available credit 2 years ago (originally a $20k credit line). 

Does this mean that if I refinanced it to a straight installment loan, it would lose that impact on the old version?  And if a lender were pulling a newer version, would it have less negative impact?

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If a lender pulls the newer TU FICO score (TU 04), which is most likely the case, it would just be treated as mortgage debt. I wouldn't be surprised if your TU04 score was a lot closer to your EQ score, assuming that the reports are basically the same. Many people have found that their TU04's are lower than their TU98's, but they don't have your situation with the HELOC, I'll bet.

Revolving credit includes CC's and lines of credit. HELOC's are revolving lines of credit, in that you can keep going back to the well and borrowing again after you've paid them down, unless the lender freezes them, as in your case. But since they are secured by a second mortgage, at some point the powers that be (whomever they are) decided that they should be treated as mortgage debt instead. TU 98 (as in 1998) was created before this, so it includes them in your total revolving debt, even though it's not included in your total revolving util. If yours is being treated like mine, you can go to the TU sim and look at your total revolving debt. Mine includes the HELOC balance, although it doesn't display as such elsewhere.

Yours also might be treated differently on Experian, because the total CL is only $20K. It appears that EX treats even HELOCs as pure revolving debt if the CL is in that range, whereas if they're higher, they're excluded. Mine has a CL of $50K, so it has always been excluded. But MidnightVoice has a HELOC that used to have a lower CL, and Experian used to kill him for high util. This was back when we could pull our EX FICO's, of course.

I sure wouldn't change the style of debt to satisfy an out-of-date scoring system. But if it made more sense for your personal finances to do so, that's different.

[Anonymous]

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haulingthescoreup wrote: 

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If a lender pulls the newer TU FICO score (TU 04), which is most likely the case, it would just be treated as mortgage debt. I wouldn't be surprised if your TU04 score was a lot closer to your EQ score, assuming that the reports are basically the same. Many people have found that their TU04's are lower than their TU98's, but they don't have your situation with the HELOC, I'll bet.

Revolving credit includes CC's and lines of credit. HELOC's are revolving lines of credit, in that you can keep going back to the well and borrowing again after you've paid them down, unless the lender freezes them, as in your case. But since they are secured by a second mortgage, at some point the powers that be (whomever they are) decided that they should be treated as mortgage debt instead. TU 98 (as in 1998) was created before this, so it includes them in your total revolving debt, even though it's not included in your total revolving util. If yours is being treated like mine, you can go to the TU sim and look at your total revolving debt. Mine includes the HELOC balance, although it doesn't display as such elsewhere.

I sure wouldn't change the style of debt to satisfy an out-of-date scoring system. But if it made more sense for your personal finances to do so, that's different.

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You're right, the TU sim is showing the HELOC in the total revolving. 

I wouldn't care too much, and would be happy to just pay it down over the next 24 months or so, except that I need to replace my 13-year-old car, and was hoping to go for an auto loan by December.  I know I could still get the loan, but really need to keep the interest rate at no more than 5-6% for comfortable payments. Other than the HELOC and the remaining $3k on the education loan, all my other accounts will be paid off monthly. 

I'm also still waiting to hear from 2 creditors on removing some lates.  If those come through, that will help a bit, too.  But if I'm going to end up being strangled by TU or EX for that HELOC, I'm not sure what to do other than recharacterize the debt or bite the bullet and take a higher interest rate on the auto loan.

I think I'm going to call my credit union and see if they would be willing to do an account review just to tell me what my chances are.

[haulingthescoreup]

Sounds like a plan. Ask your CU which report they pull. Many CU's (certainly not all) pull Equifax, and if so, you're good.

The EQ FICO score that you get here is called a Beacon 5.0 by the industry. If you have a current one, you can even print it out and let them take a look, although they will have to pull a new one (= hard inq) if you actually apply.

If you know which report will be pulled, and it's EQ, you can work around the weirdness on the other two. Even if they do pull one of the other two, CU loan officers often actually listen to informed requests to take another look, so you might be able to have them see the odd effect of the HELOC.

They might want to see some repayment going on with the HELOC, though.