Why Credit Scores Are Different

Yes, there are MANY different credit scores out there.  There are credit scores consumers can pull themselves through credit monitoring, mortgage scores, auto scores, and many more.

There are actually over 16 different credit "scorecards" that exist today. Each of these scorecards will reflect different credit scores. These scorecards are designed to help particular industries better gauge credit risk.

The mortgage industry for example is more concerned with a consumers past mortgage history than anything else. So they weight home loan history heavier into the total score calculation than other accounts.

So a consumer’s credit monitoring score might be 660. But then when they apply for a mortgage, their score might be much lower due to some past negative mortgage accounts on the report.  Their mortgage score might even be higher than their consumer score, if they have past positive mortgage accounts.

A credit score that a consumer pulls themselves will not be the same as their mortgage score.  Their mortgage score won’t be the same as their auto score that car dealers pull either, because the auto score weighs past auto history heavier into the score makeup versus consumer scores. 

These different credit scorecards are designed to help specific industries better determine risk.  Due to there being so many industries that offer credit, there are also just as many credit scores available. 

Plus, different scores are offered by different companies creating even more credit scores. FICO is the biggest provider of consumer credit scores. But now even the credit bureaus themselves are in the credit scoring game, providing their Vantage score.

A Vantage score has scores as high as 990, while a FICO score can only be as high as 850.  So even though a 700 FICO score reflects good consumer credit, a 700 Vantage score reflects below average personal credit.

One thing is for sure; credit scores WILL be different based on who pulls the score and where the score is pulled through.

Still good credit is good credit. And fundamentally any consumer who pays their bills on time and has a good long-standing credit history, including a lot of different accounts, will have a good credit score.

Please feel free to contact Precision Credit Restoration at 877-292-0656 for a free consultation and to answer any questions you may have concerning your credit status.  We are here to guide you to a brighter financial future. 

"Make Precision Your Decision"

Late Payments On Mortgages = A Recipe For Credit Destruction

When purchasing a property or looking to refinance an existing mortgage individuals may not realize how destructive one new mortgage late payment can be to achieving their current financial and personal goals. Even if the individual has a 720 plus Fico score it does not mean instant mortgage approval. Most lenders do not want to see late payments on an existing mortgage for 12 months prior to loan application. If recent late payments occur, individuals can find themselves in a frustrating position with nothing but a dead end or exorbitant interest rates in sight. 

For example:

Richard, a high powered executive earning a great income is looking to purchase a second home at the beach for his family. He has always had excellent credit and scores as well as a great history with his current mortgage. Recently his loan changed service providers and when he received a letter in the mail that looked like promotional junk, he shredded it before even opening it. Three weeks passed and as usual the payment was made to what he thought was his mortgage servicer and he assumed all was well. Of course the payment went out to the old service provider and by the time he learned of his mistake he already had a late payment updated on his credit profile, dropping his Fico score from an 840 to a 720.  Although his credit score was good the recent late payment caused a rejection for loan approval. His banker advised him that he would either have to wait for the late payment to age 12 months or call us for credit restoration.

Of course Richard, being the highly intelligent and responsible person that he is, immediately called the service provider to complain and demand they remove the late payment from his credit.  After hours of fighting and no resolution in sight he gave up and reached out to us for help. Conversing with the creditor for hours, as Richard did, could make our job much more difficult since we do not know what words and information was exchanged to the service provider. Just like any legal  

battle whatever is said can be used against you! It is always better to contact us prior to the client reaching out to the creditor. 

Another example:

Janet, a school teacher earning a nice salary, decided it was time to buy a condo of her own. She was working with a realtor friend looking for a property in a city close to Manhattan.  Finally she found her dream place after a few months and connected with a banker to start the process for loan approval. Her friend had asked her to buy her Fico scores at the MyFico site prior to searching for a property just to make sure she was in the best position for getting loan approval.  Her score came in at a 780 so both were confident of a graceful loan approval once the right property was found.  She contacted a banker who pulled her credit scores to find they were a 650.  After deeper evaluation it was revealed that Janet had co-signed a mortgage to help her brother 7 years ago.  He had a landscaping business and did not show a majority of his income.  Since he could not be approved for the loan on his own she decided it would only be right to help him out. However, unbeknownst to her, her brother had been having problems paying his mortgage and decided to try to short sale his property. He was told by a friend that if he was late on his mortgage he would have a better chance of getting the bank to approve the sale. He had been late for the past three months.  After this information was revealed Janet learned not only would she be rejected for the loan and purchase of the Condo due to a drop in credit score and a recent 90 day late on a mortgage, but her income would no longer qualify for loan approval. Since the bank viewed the co-signed loan as her debt it diminished her ability to qualify for the amount of mortgage she would need to buy the condo she wanted. Her income was not enough for the lender to justify her ability to pay both mortgages.

There are many situations where consumers wind up with mortgage late payments including, tax increases (when taxes are paid by a bank and included in monthly mortgage payment), divorce issues, payer out of the country or in the hospital, wrong checking account number updated in auto pay, and more. 

Here are Fico disclosed score reduction predictions for mortgage lates:    
     

After a 30 day late payment:  

720 Fico score could drop to a 630-650

780 Fico score could drop to a 670-690

After a 90 day late payment:  

720 Fico score would drop to a 610-630

780 Fico score would drop to a 650-670

When comparing 90 day lates on a mortgage with what happens to scores after a foreclosure the 720 drops to a 570-590 and a 780 score drops to a 620-640.  

The difference between the damage a 90 day late on a mortgage payment and a foreclosure deliver to a 780 Fico score is minimal!  This just reflects how damaging a 90 day late payment on a mortgage is to credit scores.

Call us with any questions  at 877-292-0656 or feedback on credit challenged clients or credit in general!