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Why mortgage scores are always lower?

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Frequent Contributor

Why mortgage scores are always lower?

I've been tracking my scores regularly for about a year now, and one trend I've noticed is that my mortgage scores (Fico 5, 4, and 2) are always quite a bit lower than all the rest of my scores. I wish I knew why, because those happen to be the scores I care about the most right now.

 

I have had one past mortgage, from 2010-2014, and it had a perfect payment history, and was paid off in full in 2014, when I sold the house. So my mortgage scores definitely aren't being held down by that.

 

I realize nobody can really tell me exactly why this is the case for me, but I'm wondering if the Fico 5, 4, and 2 models are typically this much lower than the other scores for other people.

 

 

As you can see, my Fico 8 and Auto 8, for example, are decent enough to qualify for things, but my Mortgage scores are still too low to even qualify for a conventional mortgage, let alone at a good interest rate.

    Total CL: $20,600
Fico 8 Scores:
12/2018:
03/2019:
06/2019:
08/2019:
Goals:   550 by 12/2018 600 by 3/2019   650 by 6/2019   700 by 1/2020   750 by 1/2021 800+ by 1/2022
8 derog. (all settled 1/2019)     |     Inquiries: 10, 9, 6     |     AoOA: 10.0yr     |     AAoA: 5.2yr     |     AoYA: 0.3yr
Message 1 of 23
22 REPLIES 22
Regular Contributor

Re: Why mortgage scores are always lower?

If I understand your sig correctly, you have at least 2 open installment loans right? If so whats the aggregate/individual utils?

FICO 8
Eq - 673
Ex - 663
Tr - 685

Capital One Quicksilver - $1950 || Care Credit - $9600 || Costco Citi - $5500 || Redstone FCU Secured - $350 || Chase FU - $2800
Message 2 of 23
Frequent Contributor

Re: Why mortgage scores are always lower?


@ibebarrett wrote:

If I understand your sig correctly, you have at least 2 open installment loans right? If so whats the aggregate/individual utils?


I have 3 open installment loans (2 of which are the cars):

 

$6,473 / $23,188 (27.9%)

$13,930 / $16,114 (86.4%)

$29,377 / $31,940 (92.0%)

 

Total: $49,780 / $71,242 (69.9%)

    Total CL: $20,600
Fico 8 Scores:
12/2018:
03/2019:
06/2019:
08/2019:
Goals:   550 by 12/2018 600 by 3/2019   650 by 6/2019   700 by 1/2020   750 by 1/2021 800+ by 1/2022
8 derog. (all settled 1/2019)     |     Inquiries: 10, 9, 6     |     AoOA: 10.0yr     |     AAoA: 5.2yr     |     AoYA: 0.3yr
Message 3 of 23
Regular Contributor

Re: Why mortgage scores are always lower?


@coreysw12 wrote:

@ibebarrett wrote:

If I understand your sig correctly, you have at least 2 open installment loans right? If so whats the aggregate/individual utils?


I have 3 open installment loans (2 of which are the cars):

 

$6,473 / $23,188 (27.9%)

$13,930 / $16,114 (86.4%)

$29,377 / $31,940 (92.0%)

 

Total: $49,780 / $71,242 (69.9%)


I'm still figuring this all out, but I'm assuming the mortgage score is based heavily on open installment loans utilization. From what I've read installment loans don't really benefit score drastically until youre under 10% util. This is also purely speculation on my part, maybe someone else can verify? By the way, congrats on avoiding AA from Chase!

FICO 8
Eq - 673
Ex - 663
Tr - 685

Capital One Quicksilver - $1950 || Care Credit - $9600 || Costco Citi - $5500 || Redstone FCU Secured - $350 || Chase FU - $2800
Message 4 of 23
Frequent Contributor

Re: Why mortgage scores are always lower?

Thanks! And thanks also for the thoughts on this, you could very well be correct about the installment loan thing. 2 of them are new loans (9/2018 and 1/2019), which is why utilization is so high. To make matters worse, I'm planning to refi both of them soon, which will reset them back to 100% again.

 

The unfortunate thing about having installment loans under 10% is that most people only have a few months left, at that point, before the whole thing is paid off and gets closed. Very small window of opportunity for the loan to be beneficial to a score.

    Total CL: $20,600
Fico 8 Scores:
12/2018:
03/2019:
06/2019:
08/2019:
Goals:   550 by 12/2018 600 by 3/2019   650 by 6/2019   700 by 1/2020   750 by 1/2021 800+ by 1/2022
8 derog. (all settled 1/2019)     |     Inquiries: 10, 9, 6     |     AoOA: 10.0yr     |     AAoA: 5.2yr     |     AoYA: 0.3yr
Message 5 of 23
Established Contributor

Re: Why mortgage scores are always lower?

mortgage scores are inherently lower than other scoring models due to what they take into account for scoring purposes.

 

if your overall credit is doing well then your mortgage scores will as well.  one thing I've noticed from some other posts recently is that the # of CC's out of your total # of cards weighs heavily.  Also, retail cards seem to have some effect as well vs just bank cards.

 

 

500K+ TCL / 800+ FCOs
Message 6 of 23
Moderator Emeritus

Re: Why mortgage scores are always lower?

So a couple of things, though there's been a lot of posts on the subject.

 

1) Mortgage scores are just the classic versions, they don't weight installment loans like the AU enhanced do... specifically the mortgage industry options never caught on, like ever.  Actually they weight them less in my experience but that may be profile dependent.

 

2) Mortgage scores are not always lower, my TU FICO 4 is higher than my TU FICO 8, by like 20 points actually which is non-trivial.  I've also had my mortgage scores above my FICO 8's for a while (well except EQ FICO 5 which hates me) during my own mortgage process, but once I found that installment utilization matters on FICO 8, and started playing reindeer games, my FICO 8 scores popped up above them.

 

3) Accounts / revolvers with balances does factor more: if you're trying to optimize for a mortgage pull, AZEO every single time, even with 20 open accounts like I have.

 

4) The newer models (F8/9) appear to look at recent data as a better predictor, so if you have old lates or collections or anything else, the aging metrics are different and as such the newer scores may be higher if you have dirt.

 

There's some other idiosyncracies between the various scores but these are the highlights.




        
Message 7 of 23
Frequent Contributor

Re: Why mortgage scores are always lower?


@Revelate wrote:

 

4) The newer models (F8/9) appear to look at recent data as a better predictor, so if you have old lates or collections or anything else, the aging metrics are different and as such the newer scores may be higher if you have dirt.

 


^ I bet that's my reason right there.

 

Thanks!

    Total CL: $20,600
Fico 8 Scores:
12/2018:
03/2019:
06/2019:
08/2019:
Goals:   550 by 12/2018 600 by 3/2019   650 by 6/2019   700 by 1/2020   750 by 1/2021 800+ by 1/2022
8 derog. (all settled 1/2019)     |     Inquiries: 10, 9, 6     |     AoOA: 10.0yr     |     AAoA: 5.2yr     |     AoYA: 0.3yr
Message 8 of 23
Established Contributor

Re: Why mortgage scores are always lower?

also, the older models weigh heavier on lates / medical collections than the 8/9 models.  whereas the 8/9 models exclude smallerr collections the older models deduct for the full value of the exclusions.

500K+ TCL / 800+ FCOs
Message 9 of 23
Super Contributor

Re: Why mortgage scores are always lower?


@coreysw12 wrote:

I've been tracking my scores regularly for about a year now, and one trend I've noticed is that my mortgage scores (Fico 5, 4, and 2) are always quite a bit lower than all the rest of my scores. I wish I knew why, because those happen to be the scores I care about the most right now.

 

I have had one past mortgage, from 2010-2014, and it had a perfect payment history, and was paid off in full in 2014, when I sold the house. So my mortgage scores definitely aren't being held down by that.

 

I realize nobody can really tell me exactly why this is the case for me, but I'm wondering if the Fico 5, 4, and 2 models are typically this much lower than the other scores for other people.

 

 

As you can see, my Fico 8 and Auto 8, for example, are decent enough to qualify for things, but my Mortgage scores are still too low to even qualify for a conventional mortgage, let alone at a good interest rate.


IMHO the mortgage scores are more sensitive to age-related factors: i.e. inquiries, newest account, average age of accounts.

 

My mortgage scores are always much lower than my FICO 8's and 9's and I believe that's the distinguishing factor.


Total revolving limits 719k (592500 reporting) FICO 8 scores: EQ 735 TU 782 EX 746
Message 10 of 23
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