Concerned about score dropping 26 points after inquiry

[Tryin2GetItRight]

I am asking for my son. We live in California.

 

He applied for a mortgage on May 10 and they did an inquiry. The lender wasn't a fit and he went to another one and they did an inquiry last week. His score didn't go down with Equifax or Transunion, but it dropped 26 points with Experian.  He's upset and doesn't understand why his score dropped like that. I told him I'd ask the question in hopes to figure things out.

 

 

 

 

[MP80]

36 minutes ago, Tryin2GetItRight said:

I am asking for my son. We live in California.

 

He applied for a mortgage on May 10 and they did an inquiry. The lender wasn't a fit and he went to another one and they did an inquiry last week. His score didn't go down with Equifax or Transunion, but it dropped 26 points with Experian.  He's upset and doesn't understand why his score dropped like that. I told him I'd ask the question in hopes to figure things out.

 

 

 

 

Auto dealers may have used several financial institutions and banks that only pulled out of Experian. Imagine there are tons of queries about his Experian report.

[Tryin2GetItRight]

36 minutes ago, MP80 said:

Auto dealers may have used several financial institutions and banks that only pulled out of Experian. Imagine there are tons of queries about his Experian report.

I am a little lost - why would an auto dealer pull his credit? He's shopping for a mortgage. Did you mean mortgage?

[MP80]

1 hour ago, Tryin2GetItRight said:

I am a little lost - why would an auto dealer pull his credit? He's shopping for a mortgage. Did you mean mortgage?

Yes! Hahaha!  Sorry, but my mind wanders when strategizing about buying a car. Anyway, what changed his report was the combination of mortgage queries. 

Other than that, nothing else but what you described in his report.

[Tryin2GetItRight]

1 hour ago, MP80 said:

Yes! Hahaha!  Sorry, but my mind wanders when strategizing about buying a car. Anyway, what changed his report was the combination of mortgage queries. 

Other than that, nothing else but what you described in his report.

Thank you for clearing that. 😅 Now his score didn't drop like that the first time and wondering why it did it the 2nd time. If I understand you correctly, it went down because the second time he had an inquiry, that one knocked it down the 26 points?

 

I thought that when someone does an initial inquiry, any others that follow prior to 30 days will not impact your credit score? I may be incorrect but thought I saw that/heard that somewhere.

 

Thank you

[hdporter]

Until the specific score version is detailed, no one can provide real insight. 

 

Further, when it comes to a mortgage rate, only the FICO mortgage scores will come into play (FICO 2/4/5 -- EX/TU/EQ).  What happens with other scores as a consequence of report changes may or may not reflect the response of these scores.

 

Most scoring system reduce the impact of multiple mortgage inquiries within a short time span.  There are differences between FICO and Vantage in how this is implemented. 

 

It's not typical that a mortgage inquiry would depress a score by 20+ points.  This suggests that something else changed within the two scoring dates.  It's important to retain report details anytime you pull credit scores so that you can carefully review report contents.  One possibility that might result in such a change in a single bureau score is the removal of a positive account that's been inactive/closed for 10 years.  But it could be due to most anything (such as a large revolving account repayment, not yet reported to the other CRA's).

[MP80]

4 hours ago, Tryin2GetItRight said:

Thank you for clearing that. 😅 Now his score didn't drop like that the first time and wondering why it did it the 2nd time. If I understand you correctly, it went down because the second time he had an inquiry, that one knocked it down the 26 points?

 

I thought that when someone does an initial inquiry, any others that follow prior to 30 days will not impact your credit score? I may be incorrect but thought I saw that/heard that somewhere.

 

Thank you

My credit card application was approved recently, and my EX FICO is 795. I pulled my EX report today, and the same FICO is 795.

 

The fact that FICO is the same as before leads me to believe it depends on how strong and thick your credit profile is. 

 

Do you have a significant credit history? Late payments lately? Do you have a lot of debt? Derogatory or not, these questions enter the FICO algorithmic system to measure to combine into a scoring factor. Another scenario is FICO may score heavily on some elements aspects of the credit report and weigh less on other components depending on a thin and thick file.

[Tryin2GetItRight]

Thank you everyone for your input. I need to go back to my son and get some more information. I’ll come back after Work. 

[hegemony]

13 hours ago, Tryin2GetItRight said:

I am asking for my son. We live in California.

 

He applied for a mortgage on May 10 and they did an inquiry. The lender wasn't a fit and he went to another one and they did an inquiry last week. His score didn't go down with Equifax or Transunion, but it dropped 26 points with Experian.  He's upset and doesn't understand why his score dropped like that. I told him I'd ask the question in hopes to figure things out.

 

 

 

 

26 points from what to what? from 826 to 800 => yawn from 605 to 579 => yikes

 

what do you mean the lender wasn;t a fit?

[centex]

As noted, one needs to know the specific flavor of Fair Isaac modeling that a score has been computed with...BankCard8 does no practical good if one is seeking a mortgage and could be even less of a variable if shopping for a car loan.  And, there are some models which are 900 or more at the top end, so an 800 could be questionable while 800 does not even get an eye bat on the models which top out at 850. 

 

And if it was NOT a Fair Isaac model, just go get something out of the refrigerator to drink.  It will have the same impact on lending options as a Vantage or other FAKO. 

[Tryin2GetItRight]

3 hours ago, hegemony said:

26 points from what to what? from 826 to 800 => yawn from 605 to 579 => yikes

 

what do you mean the lender wasn;t a fit?

It was 652 now 623. He didn’t care for the lender.

Edited May 23, 2022 by Tryin2GetItRight

[Tryin2GetItRight]

10 hours ago, hdporter said:

Until the specific score version is detailed, no one can provide real insight. 

 

Further, when it comes to a mortgage rate, only the FICO mortgage scores will come into play (FICO 2/4/5 -- EX/TU/EQ).  What happens with other scores as a consequence of report changes may or may not reflect the response of these scores.

 

Most scoring system reduce the impact of multiple mortgage inquiries within a short time span.  There are differences between FICO and Vantage in how this is implemented. 

 

It's not typical that a mortgage inquiry would depress a score by 20+ points.  This suggests that something else changed within the two scoring dates.  It's important to retain report details anytime you pull credit scores so that you can carefully review report contents.  One possibility that might result in such a change in a single bureau score is the removal of a positive account that's been inactive/closed for 10 years.  But it could be due to most anything (such as a large revolving account repayment, not yet reported to the other CRA's).

He said it’s Score 8.

[centex]

19 minutes ago, Tryin2GetItRight said:

He said it’s Score 8.

Not a score typically deemed relevant to the mortgage process and thus, not worth losing sleep over...and that sets aside that it does not specify whether it was FICO8 or FICO Bankcard8.

[centex]

23 minutes ago, Tryin2GetItRight said:

It was 652. He didn’t care for the lender.

If the lender has decent terms, then he isn't in a position to be picky...

[hegemony]

35 minutes ago, centex said:

If the lender has decent terms, then he isn't in a position to be picky...

exactly. Why are his scores so low? Is there anything he can do to work on rebuilding to get a prime rate? (e.g., utilization)

[Tryin2GetItRight]

50 minutes ago, centex said:

Not a score typically deemed relevant to the mortgage process and thus, not worth losing sleep over...and that sets aside that it does not specify whether it was FICO8 or FICO Bankcard8.

He’s new and maybe didn’t understand what I was asking for. Will ask again.

[Tryin2GetItRight]

41 minutes ago, hegemony said:

exactly. Why are his scores so low? Is there anything he can do to work on rebuilding to get a prime rate? (e.g., utilization)

Because he doesn’t have that much of a credit history established and yes at one  point he had a charge off. 

[hegemony]

27 minutes ago, Tryin2GetItRight said:

Because he doesn’t have that much of a credit history established and yes at one  point he had a charge off. 

is the charge off still reporting? can you add him as AU to an old, low utilization card not named amex?

[hegemony]

33 minutes ago, Tryin2GetItRight said:

He’s new and maybe didn’t understand what I was asking for. Will ask again.

also, seeing the drop in a single score may not be so bad since it is the middle score that will matter.

[hdporter]

2 hours ago, hegemony said:

also, seeing the drop in a single score may not be so bad since it is the middle score that will matter.

 

That's correct ... but, then again, that's the basis on which mortgage scores (FICO 2/4/5) are assessed for mortgage pricing.  So long as we're talking any other score, "they" really don't "matter" <period>.

 

So, re @Tryin2GetItRight's son:  First step when preparing to mortgage shop is to determine where his credit is right now.  For that purpose, the best course is to pay up $59.85 to purchase a 3-bureau one-time report at:

https://www.myfico.com/products/fico-score-credit-reports

 

This will provide a thorough opportunity to review current mortgage scores and credit report detail for each CRA, making particularly notes of adverse information that may be suppressing scores, as well as differences in details from one CRA to another.

 

As @hegemony suggests, ultimately a mortgage lender will price a loan against the middle score.  (In the case of joint applicants, is the applicant with the lower middle score that determines pricing.)  While efforts to boost scores likely will influence all 3 scores, it's the middle score that is of specific interest. 

 

Revolving credit utilization typically represents the "lowest hanging fruit" to pluck.  Any credit line that's over 30% in use should immediately be paid down.  If possible, it's desirable to cap individual credit lines to 20% utilization at the max; it's better if you can adhere to a 10% cap. 

 

Biggest utilization bang comes when all revolving lines are paid off except one, with the sole remaining balance kept as low as possible, but not less than $2.  (Targeting this may require a fine management of reporting balances, including paying accounts in full just before a statement cuts.)   This target is mentioned only as as option at hand; in many cases it's possible to reach the necessary score threshold for best mortgage rates just by keeping reported balances models (within 10% of CL's).

 

Higher fruit on the tree involves past adverse credit report history.  Suggestions on what efforts (if any) might yield score improvements are typically specific to each entry and best sought by providing specifics.

 

In advance of an anticipated mortgage application, it's best to suspend any other credit applications/inquiries until an offer is accepted.

 

 

 

[Tryin2GetItRight]

4 hours ago, hegemony said:

also, seeing the drop in a single score may not be so bad since it is the middle score that will matter.

 

 

The charge off is still there with 1 year to go. I can add him to one of my cards. It appears it was FICO8.

[centex]

16 hours ago, Tryin2GetItRight said:

 

 

The charge off is still there with 1 year to go. I can add him to one of my cards. It appears it was FICO8.

He needs to get the myFICO bundle, especially if he is trying to get a mortgage in California.  FICO8 has no real good correlation to the mortgage scores...and many are surprised or caught off-guard to discover that they are lower than the FICO scores offered by some sites and cards...

[Audimac1978]

I am a Mortgage Lender by profession in California and will tell you that often when a Client has had many mortgage inquiries within a roughly 30 day period, they can be viewed as one for mortgage lending purposes.  We, in home lending, run a Residential Mortgage Credit Report (RMCR) that for example, excludes medical collections (up to $2000).  I would suggest he review his report for credit usage against his original loan limit.  High usage of revolving accounts, although paid on time can drop scores rapidly.  Secondly, stay away from retail department store inquiries and applications for any new credit.  DO NOT close any existing accounts, but pay them down and if used while doing the home search, keep the balances as low as possible.  He is being scored mainly on age and usage of his existing accounts.  He will be fine as long as there is no new derogatory information (30 day lates, etc) on his credit.  Experian tends to be the most accessed credit repository in CA.  His mid score of the three bureaus will be the one used for credit decision.