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#4443229 - 06/27/17 09:46 PM Mortgage Lender and the almighty FICO score
SVTCobra Offline


Registered: 12/11/09
Posts: 701
Loc: Battle Creek, MI
So I have been in the process of getting a loan to purchase a home. 20% down, 15 yr mortgage, not at the edge of what I can afford. Lender (very local credit union) called today to say that I don't have a credit score and therefore needs to go up from 3.375% to 4.375% interest rate because they can't sell the loan to Fannie Mae, whom require a minimum score of 640. So what they are going to do is do a portfolio loan, albeit at a higher interest rate because it is "riskier."

Don't get it how a bank can put so much faith in a credit score when I own a home already, well above in savings compared to most anyone my age, don't owe any money to anyone, earn a very good salary, been employed at the same company for almost 9 years, and have never been late on any payments in the past on anything. Yet since FICO crystal ball didn't spit out a number they like it is now "risky". Should have been living my life all these years leasing a vehicle and live in an apartment and have 3-4 credit cards, but not own a [censored] thing of any value so I can get a better interest rate on a mortgage. Talk about a bunch of lazy bums too lazy to actually have to manually underwrite a mortgage loan.

Rant over. If you are wondering why I don't have a credit score I pay for everything with debit, cash or check. If I don't have the money I can't afford it with the lone exception being a house. When I get rich one of these days even the house won't be the exception.
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#4443236 - 06/27/17 09:51 PM Re: Mortgage Lender and the almighty FICO score [Re: SVTCobra]
dareo Offline


Registered: 10/17/07
Posts: 1448
Loc: utah
Wow, zero credit at all? At least get a gas card for credit history sake. I have never paid credit card interest but i sure use them a lot for the various rewards.

Shop around for a lender with better overlays. If you can prove all those other facts im sure you can beat that rate


Edited by dareo (06/27/17 09:53 PM)
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#4443240 - 06/27/17 09:53 PM Re: Mortgage Lender and the almighty FICO score [Re: SVTCobra]
E150GT Offline


Registered: 03/11/12
Posts: 1106
Loc: San Antonio, TX
Its pretty ridiculous. I bet you could go through a dave ramsey approved lender and they'd hook you up with a better rate.
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#4443248 - 06/27/17 10:02 PM Re: Mortgage Lender and the almighty FICO score [Re: SVTCobra]
Rolla07 Offline


Registered: 11/05/11
Posts: 4737
Loc: MTL, CANADA
You seem to make it sound like you are perfect but your fico is low? Something doesnt add up...why is your fico low then? If you dont know, id start by looking into it. You likely want to get your rate up prior. Are you selling the house you already own or do you still owe money on it? Or are you buying a 2nd house?
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#4443251 - 06/27/17 10:07 PM Re: Mortgage Lender and the almighty FICO score [Re: Rolla07]
E150GT Offline


Registered: 03/11/12
Posts: 1106
Loc: San Antonio, TX
Originally Posted By: Rolla07
You seem to make it sound like you are perfect but your fico is low? Something doesnt add up...why is your fico low then? If you dont know, id start by looking into it. You likely want to get your rate up prior. Are you selling the house you already own or do you still owe money on it? Or are you buying a 2nd house?


If you don't borrow money in the form of car payments or credit cards then you can't be scored on your willingness to pay back debt. Not a bad problem to have but you can't go the normal route for a home loan.
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#4443253 - 06/27/17 10:12 PM Re: Mortgage Lender and the almighty FICO score [Re: SVTCobra]
dareo Offline


Registered: 10/17/07
Posts: 1448
Loc: utah
I believe he has no credit score at all. Hard to do since so many things can report to a credit agency. OP needs to time travel about 3 or 4 months back and get a credit card.

Since time travel is difficult perhaps delaying the house until you get a few months credit. Or if you are in love with the house you would want to pay no points, ask for higher rate with credits, then refi the loan down the road a bit.
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#4443257 - 06/27/17 10:17 PM Re: Mortgage Lender and the almighty FICO score [Re: E150GT]
69GTX Offline


Registered: 09/23/15
Posts: 3815
Loc: Connecticut
So get a credit card and pay it off every month. It's always there as an alt form of cash when you need to buy something with more cash than you have on you. That's all you need to do to raise your FICO TO 820 assuming your up to date on all other payments. The alternative is to have cash ready to go to buy your next home.
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#4443262 - 06/27/17 10:24 PM Re: Mortgage Lender and the almighty FICO score [Re: SVTCobra]
dareo Offline


Registered: 10/17/07
Posts: 1448
Loc: utah
820 wont happen for like 10 years. Age of credit lines is a big part of fico. I would believe a 675 score in a few months maybe mid 700 after a year.

If you can wait to buy the 2nd house, consider getting a small mortgage on the home you have. Credit unions often do no cost small LTV loans at good rates. Hang onto the cash till you have a fico score. Place extra down on the house, rate goes down due to a better ltv and your newly birthed credit score.
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#4443269 - 06/27/17 10:35 PM Re: Mortgage Lender and the almighty FICO score [Re: SVTCobra]
Wolf359 Online   content


Registered: 04/27/12
Posts: 4757
Loc: MA
Yeah. OP doesn't understand credit which is why his rant makes no sense. Credit is the ability to borrow money and pay it back in a timely fashion. No credit cards and no borrowing of money mean that you have no history of paying money back. The key point here is the ability to borrow money and pay it back. You'd probably get a mid 600s or higher score in 6 months. Just open a couple of credit cards. All you have to do is charge something on the card and pay it off every month. I've had credit cards for decades and I never pay anything in interest, I just pay it off in full every month. If you've ever read a credit report, it doesn't matter if you carry a balance or not. Just shows the credit line, the max you've borrowed, current balance, how long you've had it and the minimum monthly payment and whether you're on time or not.

The banks have faith in the score because they have a large history of people's actions and what happens. Without that history, you're just riskier. Not untrustworthy, just riskier so a higher interest rate. It's the penalty of not knowing how the system works.

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#4443276 - 06/27/17 10:45 PM Re: Mortgage Lender and the almighty FICO score [Re: SVTCobra]
SVTCobra Offline


Registered: 12/11/09
Posts: 701
Loc: Battle Creek, MI
I don't do credit cards. I figured those comments would come up, the rant is about lazy bankers. I'm sure back in the day before credit cards were such a big part of most people's financial life, mortgage lenders had to figure out your ability to pay the loan through how much wealth you had and were earning. Nowadays credit score is the biggest factor because it's the easiest thing for the banks to use.

No time to delay buying the house - my better half lives in an apartment and her lease is up right around when I close. Her rent is $1000 per month, the extra 1% in interest is $22k over the life of the loan. Wouldn't make sense not to move when we can pay that extra interest in two years of rent money.
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#4443282 - 06/27/17 10:49 PM Re: Mortgage Lender and the almighty FICO score [Re: dareo]
SVTCobra Offline


Registered: 12/11/09
Posts: 701
Loc: Battle Creek, MI
Originally Posted By: dareo

Since time travel is difficult perhaps delaying the house until you get a few months credit. Or if you are in love with the house you would want to pay no points, ask for higher rate with credits, then refi the loan down the road a bit.


My dad suggested something similar - since the bank is going to report my loan to the credit bureaus, build credit through mortgage payments and then refinance if the rates are still low. Only would cost $2-3k and the difference at that point in time would still be $15k in interest.
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#4443287 - 06/27/17 10:53 PM Re: Mortgage Lender and the almighty FICO score [Re: SVTCobra]
Coprolite Offline


Registered: 07/03/11
Posts: 1224
Loc: Houston, TX
You could be in a better position if you had a rewards card or cards since finishing school and treated it like cash. Being fiscally wise means playing by the rules. Maximize rewards, minimize interest and fees. Don't pay for anything with a debit card unless you like the risk of losing all the money in the linked accounts.

To be clear, you own a house now with a clean title? How did you acquire it?

There are no rules saying that you have to use credit cards, just having them. When you can get at least 2% cash back by using them, you do leave $ on the table. It just takes discipline to do it and stay on budget. It seems you have all that.


If you haven't yet, get yourself a free credit report or join Creditkarma
https://www.consumer.ftc.gov/articles/0155-free-credit-reports

https://www.creditkarma.com/free-credit-report

Credit Karma has simulated scores and credit modeling. It is freemium. They make money on referrals and adds.

None of what you stated is diametrically opposed to having a good credit score. It is actually a basis for having a great credit score. There are less conservative ways to maximize net worth, but that is a different conversation altogether.

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#4443292 - 06/27/17 10:57 PM Re: Mortgage Lender and the almighty FICO score [Re: Wolf359]
SVTCobra Offline


Registered: 12/11/09
Posts: 701
Loc: Battle Creek, MI
Originally Posted By: Wolf359
Yeah. OP doesn't understand credit which is why his rant makes no sense. Credit is the ability to borrow money and pay it back in a timely fashion. No credit cards and no borrowing of money mean that you have no history of paying money back. The key point here is the ability to borrow money and pay it back. You'd probably get a mid 600s or higher score in 6 months. Just open a couple of credit cards. All you have to do is charge something on the card and pay it off every month. I've had credit cards for decades and I never pay anything in interest, I just pay it off in full every month. If you've ever read a credit report, it doesn't matter if you carry a balance or not. Just shows the credit line, the max you've borrowed, current balance, how long you've had it and the minimum monthly payment and whether you're on time or not.

The banks have faith in the score because they have a large history of people's actions and what happens. Without that history, you're just riskier. Not untrustworthy, just riskier so a higher interest rate. It's the penalty of not knowing how the system works.

I fully understand credit. I just don't use it because my goal in life is not have the perfect FICO score. One of my goals is to have enough money to not rely on anyone for anything and I don't need credit to accomplish that. The rant is about laziness of bankers who are incapable of determining credit worthiness because I don't fit the normal model of applicants.

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#4443298 - 06/27/17 11:09 PM Re: Mortgage Lender and the almighty FICO score [Re: Coprolite]
SVTCobra Offline


Registered: 12/11/09
Posts: 701
Loc: Battle Creek, MI
Originally Posted By: Coprolite

To be clear, you own a house now with a clean title? How did you acquire it?

Lock, stock, and barrel. 100%. Ironically through a mortgage with the same bank. How did I get that loan? I borrowed money from the same bank years earlier for a pickup. How did I get that loan? I borrowed money in 07 at a bank back home to buy a car. How did I get that loan? No money down and my dad co-signed and cross collateralized that note with another note that had equipment on it worth more than the value of the loan.

So I have borrowed in the past, don't anyone (except mortgages), have had credit scores above 750 (770 as recently as December getting the pre-approval done), all done without credit cards.
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#4443300 - 06/27/17 11:11 PM Re: Mortgage Lender and the almighty FICO score [Re: SVTCobra]
dishdude Offline


Registered: 11/14/08
Posts: 8754
Loc: Phoenix
Originally Posted By: SVTCobra
Originally Posted By: Coprolite

To be clear, you own a house now with a clean title? How did you acquire it?

Ironically through a mortgage with the same bank. How did I get that loan? I borrowed money from the same bank years earlier for a pickup. How did I get that loan? I borrowed money in 07 at a bank back home to buy a car. How did I get that loan? No money down and my dad co-signed and cross collateralized that note with another note that had equipment on it worth more than the value of the loan.

So I have borrowed in the past, don't anyone (except mortgages), have had credit scores above 750 (770 as recently as December getting the pre-approval done), all done without credit cards.


Something is pulling down your score. Have you reviewed your credit report for any inaccuracies? Someone with a similar name may have a late account on your report, or someone might have opened an account in your name that you're not aware of.
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