@seeking850 wrote:Revolving util around 20% aggregate as well as on each card. also- as far as the 3 charge offs- they are still reporting as open accounts- how is this possible? if they charge off isnt that considered closed?
No, until they are paid, they can, and usually do, report.
Revolving credit utilization is a big scoring factor in the mortgage scores, both aggregate and on individual cards.
Each charged off credit card that reports a balance is factored as a revolving account with 100% utilization, on top of it being a derogatory item, even just one is a score killer.
This is what I was going to ask.
At the end of August I was at 591, 602, and 570 mortgage scores. I had 1 collection.
I paid down my debt by 50% of the balances and requested CLI's on all of my cards and paid off the collection of 4 years, and this past Sunday had my loan officer repull.
I'm now at 638, 634, and 613 in about 4 months.
I really think it's utilization and aging of accounts that worked in my favor.
Now I'm working to keep increasing the scores so that I can get better insurance rates :/
Starting Score: 633
@jjohnson wrote:
Now I'm working to keep increasing the scores so that I can get better insurance rates :/
For those of us that live in states where credit is a factor in insurance pricing, it is shocking how much cheaper insurance gets as credit scores increase.
Also, insurance credit scores also look at the average limit of your credit cards, with an average >$9000 putting you in the top bracket of the category. Credit inquiries and new accounts also ding you for the full 24 months.
My home insurance went down by >30% when I crossed over from the mid 600s to mid 700s. It was nearly 3x more expensive than it is now, for less coverage, when my scores were below 500 for a few months in 2016. Adjusting for inflation, it was even worse.
I should be getting even better rates when I reshop again later this month.
@seeking850 wrote:Hello, everyone, I need some help. My current FICO 8 scores are 610, 647, 653, however, my mortgage scores are 566, 571, 541. What am I doing wrong? what are the significant factors in the differences? I have all current payments on my 10 credit cards, a collection that is 6 years old (unpaid- waiting for it to drop off). I also have 3 small old charge offs that are about 4 years old. I understand that these things will hurt the report, but such a large difference in the scores? what can anyone recommend? thanks in advance.
It appears that none have mentioned the elephant in the closet. What is it? It appears all your revolving accounts have balances. Fico mortgage algorithms severly penalize for "too many accounts with balances" - regardless of utilization. Fico 8 and Fico 9 put minimal weight on that metric by comparison.
So, if you have 10 cards, pay 5 down to $0 to help your Mortgage scores. The score penalty gets steeper for each card with a balance over 50% - particularly on EQ and TU. Not so much with EX. Remaining cards having balances should all report under 49% UT and more preferrably under 29%. Have a couple cards in the 29% to 49% range short term, if necessary, to achieve 50% or less with balances. Then focus on all cards under 29% and aggregate UT under 9%. Avoid utilization levels above 49% on cards and 29% in aggregate.
Again, # of accounts with balances is critical with mortgage Ficos - more so than low utilization particularly on dirty scorecards. The graph below is based on actual data [Fico mortgage scores: EQ Classic 04 = EQ score 5, TU Classic 04 = TU score 4, EX Classic 98 = EX score 2]. EX Classic 04 = EX score 3. With all data points below, aggregate utilization was held between 2% - 5%. Tested 6 of 6 with "small" balances 3 times to validate the big EQ drop. Scores dropped to 765, 765 and 764 from 809.
P.S. with 90+ day lates, collections and charge offs, the 5 year age point often coincides with a step change drop in negative impact.