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Why mortgage scores are always lower?

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Frequent Contributor

Re: Why mortgage scores are always lower?

I agree with many of the post.  Different factors play heavier on one model than the other.  I've been monitoring all of my scores since 2015.  My profile indicates:

New Accounts/Inquiries

Age of accounts

# of accounts reporting a balance

Lates: how severe and age

Loan UTL

CC UTL

 

I didn't list those in any specific order but my credit report does.  All impact my MTG scores more harshly than F8 & F9.  My only derog is a single 30d > 6+ yrs on EQ & EX. Below is my most recent quarterly MyFico report (4/2019).  I have 2 loans so I will have 2 accounts reporting with a balance for a while.  The one time I reported all $0 on my CC my MTG rocketed while my 8 took a hit (all zero penalty) With the addition of 1 CC reporting my MTG scores are better than when I have 2 or 3 CC reporting, let alone more. My F* is usually unchanged.  (I have a total of 9 CC's.).  I also have an EX subscription so I get daily scores on my F8 and MTG and can test a lot with EX, which is where most of my data comes from.

 

To the OP, I agree little room for the benefit of below 9% for installments if a MTG is involved, but my 6 yr auto loan from late 2016 has been paid in advance and currently I'm not due for a payment until 6/2021.  If your auto loan allows that or a different type of installment loan (SSL), you can let it sit at a low balance for as long as you need to optimize your score.  My interest is minimal due to the remaining balance and the interest rate.  

 

I think (could be wrong) the sequence of the reason codes can give some insight as to what each score puts the most weight on. 

MTG Scores.PNGF8.PNG



FICO 8 as of 08/02/19
FICO 9 as of 08/02/19
AoOA - 23Y5M | AoYA - 1Y | AAoA - 12Y
1 30 day late on EX (12/2012)
Open: 8 CC | 1 RC | 1 PLOC | 1 MTG loan | 1 Auto loan
Closed: 1 MTG loan | 1 Auto loan | 2 RC
Message 11 of 23
Moderator Emeritus

Re: Why mortgage scores are always lower?

That’s interesting Trudy re: AZ being higher than AZEO for you, but given the score maybe.

How many installment loans do you have open currently?

You are correct that reason code order does matter, but unfortunately the reason codes for FICO 8 Classic here at myFICO are absolute garbage... total fluff which, frankly, shame on you FICO Consumer.




        
Message 12 of 23
Frequent Contributor

Re: Why mortgage scores are always lower?

I was a bit surprised by that impact too considering all the data and other test on my profile with the exception of the accidental AZ (CC).  I use to think # of accounts reporting was for CC only and I did at that time.  So what I "think" I know now is that installment loans are included which means....?.  

 

2 open installment loans: MTG refi - 92% UTL  |  Auto 19% UTL.

 

 

 



FICO 8 as of 08/02/19
FICO 9 as of 08/02/19
AoOA - 23Y5M | AoYA - 1Y | AAoA - 12Y
1 30 day late on EX (12/2012)
Open: 8 CC | 1 RC | 1 PLOC | 1 MTG loan | 1 Auto loan
Closed: 1 MTG loan | 1 Auto loan | 2 RC
Message 13 of 23
Valued Contributor

Re: Why mortgage scores are always lower?


@Revelate wrote:

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.


Yeah, #3 impacts me a lot. I have 10 CCs and 7 of them are reporting because I'm just using all my cards and letting them report naturally at the moment. My mortgage scores are 70 to 80 points below my FICO 8 scores.


Starting Score: EQ 653 6/21/12
Current Score: EQ 817 7/10/19 - EX 802 7/13/19 - TU 815 6/03/19
Message 14 of 23
Moderator Emeritus

Re: Why mortgage scores are always lower?

Great Mortgage Score thread. My Mortgage Scores have always run lower than everything else. Now, after reading this thread I believe it is tied to the amount outstanding on my Auto Loan and the outstanding balance on my present Mortgage. Seems I used one of those Score Simulators and they flagged me for having to much owned on the Installment Loan. Blew it off but now, maybe I am understanding better. No, I will not go out and pay down the mortgage or auto loan to gain scores. As to regular credit card debt I am using the small amount reporting to keep my best scores!
Starting Score: 000
Current Score: 850
Goal Score: 850


Take the myFICO Fitness Challenge
Message 15 of 23
Super Contributor

Re: Why mortgage scores are always lower?


@Dinosaur wrote:
I used one of those Score Simulators and they flagged me for having to much owned on the Installment Loan. Blew it off but now, maybe I am understanding better.

Simulators are garbage.  Even when talking Fico reason statements, one that pertains to balances too high on installment loan only means that the loan is at greater than 8.9% utilization, because if aggregate loan utilization is over that threshold regardless of profile one would be incurring a penalty even if it's only a few points.  I don't think most people realize that this negative reason code can still be present even if someone were to pay their brand new 100% utilization loan down to (say) 10%. 

Message 16 of 23
Moderator Emeritus

Re: Why mortgage scores are always lower?


@BrutalBodyShots wrote:

@Dinosaur wrote:
I used one of those Score Simulators and they flagged me for having to much owned on the Installment Loan. Blew it off but now, maybe I am understanding better.

Simulators are garbage.  Even when talking Fico reason statements, one that pertains to balances too high on installment loan only means that the loan is at greater than 8.9% utilization, because if aggregate loan utilization is over that threshold regardless of profile one would be incurring a penalty even if it's only a few points.  I don't think most people realize that this negative reason code can still be present even if someone were to pay their brand new 100% utilization loan down to (say) 10%. 


This, and also the fact the reason code doesn't even exist on some algorithms, certainly on some profiles.

 

I can state with absolute authority there's no installment utilization factor on TU FICO 4 at least in the bottom 4 scorecards.  EQ FICO 5 that's the case too.

 

What I don't entirely know is how it is on a clean scorecard and unfortunately we don't have a lot of data on those two scores for clean folks when it comes to installment utilization.  Matters on all FICO 8 clean / dirty doesn't matter, definitely matters on EX FICO 2 too when dirty.

 

@Trudy thanks!  Actually I missed that in your thread, but looking at Birdman's data at least on EQ FICO 5 there's two separate scoring factors: revolvers with balances and accounts with balances at least for clean profiles.  FICO 8 AFAIK is all revolvers with balances on my testing at least, never mattered how many installment loans I had but I haven't re-looked at that data on my now different scorecards.  I never have seen the revolvers with balances bit but like you found accounts with balances is a bigger deal and therefore takes precedence on the reason codes... I need to get prettier to really be there, maybe once my inquiries hit a year and the CFA falls off and the 30D late is no longer recent on EQ, just too many things wrong on my file to see that one hah.

 

Basically if I'm reading it right:

2/11 accounts was better than 3/11 accounts, and both Birdman and I are seeing a line just higher than 20% somewhere (I'm still OK on TU FICO 4 on 4/20 explicitly, no reason code yet trying to get the 5/20 datapoint but myFICO is misbehaving) so your own data fits neatly with that, 25% might be the actual one.  

 

And the movement for 2/11 was more than the AZ penalty on the revolvers which we know matters.  Good find!

 

ETA: oh boy, TU FICO 4 also fine at 5/20 accounts with balance, still hanging at 767 and 3 reason codes.




        
Message 17 of 23
Super Contributor

Re: Why mortgage scores are always lower?


@Revelate wrote:

@BrutalBodyShots wrote:

@Dinosaur wrote:
I used one of those Score Simulators and they flagged me for having to much owned on the Installment Loan. Blew it off but now, maybe I am understanding better.

Simulators are garbage.  Even when talking Fico reason statements, one that pertains to balances too high on installment loan only means that the loan is at greater than 8.9% utilization, because if aggregate loan utilization is over that threshold regardless of profile one would be incurring a penalty even if it's only a few points.  I don't think most people realize that this negative reason code can still be present even if someone were to pay their brand new 100% utilization loan down to (say) 10%. 


This, and also the fact the reason code doesn't even exist on some algorithms, certainly on some profiles.

 

I can state with absolute authority there's no installment utilization factor on TU FICO 4 at least in the bottom 4 scorecards.  EQ FICO 5 that's the case too.

 

What I don't entirely know is how it is on a clean scorecard and unfortunately we don't have a lot of data on those two scores for clean folks when it comes to installment utilization.  Matters on all FICO 8 clean / dirty doesn't matter, definitely matters on EX FICO 2 too when dirty.

 

@Trudy thanks!  Actually I missed that in your thread, but looking at Birdman's data at least on EQ FICO 5 there's two separate scoring factors: revolvers with balances and accounts with balances at least for clean profiles.  FICO 8 AFAIK is all revolvers with balances on my testing at least, never mattered how many installment loans I had but I haven't re-looked at that data on my now different scorecards.  I never have seen the revolvers with balances bit but like you found accounts with balances is a bigger deal and therefore takes precedence on the reason codes... I need to get prettier to really be there, maybe once my inquiries hit a year and the CFA falls off and the 30D late is no longer recent on EQ, just too many things wrong on my file to see that one hah.

 

Basically if I'm reading it right:

2/11 accounts was better than 3/11 accounts, and both Birdman and I are seeing a line just higher than 20% somewhere (I'm still OK on TU FICO 4 on 4/20 explicitly, no reason code yet trying to get the 5/20 datapoint but myFICO is misbehaving) so your own data fits neatly with that, 25% might be the actual one.  

 

And the movement for 2/11 was more than the AZ penalty on the revolvers which we know matters.  Good find!

 

ETA: oh boy, TU FICO 4 also fine at 5/20 accounts with balance, still hanging at 767 and 3 reason codes.


My experience has been that the major installment utilization percentage score moves which I experienced in FICO 8, were in fact followed -- but with much less forcefulness -- by TU FICO 4. E.g., if I experienced a 25 point gain in FICO 8 I would experience an approximate gain of 5 points in TU FICO 4.

 

Neither EQ FICO 5 nor EX FICO 2 moved at all.


7/31 FICO 8: EQ 751 TU 781 EX 748 Total revolving limits 713500 (592500 reporting)
Message 18 of 23
Frequent Contributor

Re: Why mortgage scores are always lower?


@Revelate wrote:

I can state with absolute authority there's no installment utilization factor on TU FICO 4 at least in the bottom 4 scorecards.  EQ FICO 5 that's the case too.

 

What I don't entirely know is how it is on a clean scorecard and unfortunately we don't have a lot of data on those two scores for clean folks when it comes to installment utilization.  Matters on all FICO 8 clean / dirty doesn't matter, definitely matters on EX FICO 2 too when dirty.

This is my TU 4 from a myFICO 3B report on 12/31/18 when my SSL was paid down to 8.47%:

(No credit cards, only that 1 account on file, which was opened 1 year prior with no credit history, no public records.)

 

myfico-tu4-123118.png

 

27 FICO Scores + 3 VS3. MTG (Mortgage), AUT (Auto), and BKC (Bankcard) are scores 5,4, and 2 from the top.
Message 19 of 23
Moderator Emeritus

Re: Why mortgage scores are always lower?


@CassieCard wrote:

@Revelate wrote:

I can state with absolute authority there's no installment utilization factor on TU FICO 4 at least in the bottom 4 scorecards.  EQ FICO 5 that's the case too.

 

What I don't entirely know is how it is on a clean scorecard and unfortunately we don't have a lot of data on those two scores for clean folks when it comes to installment utilization.  Matters on all FICO 8 clean / dirty doesn't matter, definitely matters on EX FICO 2 too when dirty.

This is my TU 4 from a myFICO 3B report on 12/31/18 when my SSL was paid down to 8.47%:

(No credit cards, only that 1 account on file, which was opened 1 year prior with no credit history, no public records.)

 

myfico-tu4-123118.png

 


Hah, love you @CassieCard 

 

So installment utilization is a thing for your profile (clean / not aged, maybe thin), but it's clearly not one for mine.  Also from myFICO but on a 1B TU FICO 4 derogatory scorecard:

 

Screen Shot 2019-06-16 at 2.14.54 PM.png

 

It just doesn't exist as a reason code in that scorecard cause I'm still at 74.8% utilization currently.  Question though, are you sure it was 8.4% (aggregate, I think you just had the one loan?) on that pull?  In my own experience that reason code has gone away at least for FICO 8 under 8.9%.  If TU FICO 4 is different that's interesting.




        
Message 20 of 23
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