Author Topic: TU 796, Equifax 819, FICO 761 (me), FICO 825 (DH) - Enough for the best rates?  (Read 2976 times)

catccc

  • Handlebar Stache
  • *****
  • Posts: 1684
  • Location: SE PA
I read at bankrate.com that your credit score generally needs to be 740 or better for the best mortgage rates.  Mine is 761.  I would be more comfortable if it was over 800, like DH's.  I have heard they don't do averages or anything when you apply for a mortgage together, just take the lower of the two. 

These are FICO scores which we access via our Discover Credit Card accounts.  Per creditkarma.com, TransUnion has me at 796 and Equifax at 819.  I'm not sure how to get Experian's number...

I'm really hoping we are still in a place where we our scores are good enough for the best rates.  We'll also be putting 20-30% down, probably, if that helps our case at all.  Does anyone have any experience with obtaining a mortgage with scores like these?

(Edited to add that we have no other debt.)

iamlindoro

  • Handlebar Stache
  • *****
  • Posts: 1520
    • The Earth Awaits
Though the scores you are getting through free services are usually FAKO scores rather than FICO (they're estimates based on a guess at the scoring model, so they're approximate), it's likely that you'll either get the best rates or you're very close to it.  In my experience, 720 is really the threshold to get the best rates for many lenders.

One important thing to remember is that lenders use the FICO Mortgage scoring model, which is different from the FICO Consumer scoring model.  You may want to pay for a company to provide you with a report and all of your scores based on all the models, or at least the Mortgage model, before you continue.  It shouldn't cost you more than 20-30 bucks.

At a bare minimum, you're not going to have any trouble at all getting a mortgage based on credit score.  Just remember that Debt-to-Income is also a significant factor, so you'll only be approved up to what the lender considers a safe DTI.

catccc

  • Handlebar Stache
  • *****
  • Posts: 1684
  • Location: SE PA
Thanks for the input!  I bet the Discover card FICO (they actually call it FICO) is the consumer scoring model.  I think we are good on DTI, and if not, we can throw more cash at the down payment.

IDK if is worth shelling out the 20-30 dollars before we continue, though.  I guess because if we want this property, we'll make an offer and there really won't be any time to change anything about what scores they end up using.  (So why am I bothering asking?  I guess just to ease my concerns)

Anyway, it sounds like we are in decent shape, thanks for sharing your experience that even slightly lower will still yield the best rates.  DTI we can manipulate a bit if needed.

Drifterrider

  • Handlebar Stache
  • *****
  • Posts: 1118
If you are planning to buy a house I would recommend you start mortgage shopping to determine who offers you the best deal.  Work on the premise you have excellent credit.

By adding your three scores and dividing by 3 I get 792.  I've seen web-sites that say 760 and above is excellent and those that say 740 and above is excellent.  I'd say you fall into the "excellent" range. 

"Preapproved" doesn't really mean anything other than, without verifying your financial information, lenders are usually willing to tell you what terms they can offer and how much based on the information you provided.  Most realtors want you to at least be "preapproved" so you don't waste their time (though the professionals will never say this). 

Start mortgage shopping when you start house shopping.

Good luck.

catccc

  • Handlebar Stache
  • *****
  • Posts: 1684
  • Location: SE PA
I hesitate to start mortgage shopping now, because we started house shopping in 2008 and still haven't bought anything.  If we were constantly mortgage shopping, I'm afraid the inquiries would stack up and make things worse.  I know they don't have a huge impact, but I would hate it if they did when I was near some sort of cut off for the best rates.

I am hoping if they ask if we are preapproved, our answer ("no, we aren't preapproved.  But we have excellent credit, no other debt, plenty of reserves, and a sizeable down payment, so I think we'll find acceptable financing just fine.") will suffice.  FIngers crossed.

In 8 years of looking, I've never been more hopeful.  IDK why, but I think it might happen this time...

iamlindoro

  • Handlebar Stache
  • *****
  • Posts: 1520
    • The Earth Awaits
I hesitate to start mortgage shopping now, because we started house shopping in 2008 and still haven't bought anything.  If we were constantly mortgage shopping, I'm afraid the inquiries would stack up and make things worse.  I know they don't have a huge impact, but I would hate it if they did when I was near some sort of cut off for the best rates.

This is part of why there's a FICO Mortgage model-- it allows it to have separate rules.  The mortgage model ignores inquires for the 30 days before the report/scoring (so that the inquiry itself doesn't affect your rate).  Also, all mortgage inquiries will be considered a single inquiry within a 15 (old model) or 45 day (new model) window, so that your mortgage shopping will only have the net effect of a single "hit" on your consumer score.  So basically, the queries involved in your hunt for your mortgage will not affect your rate at all in most cases.

catccc

  • Handlebar Stache
  • *****
  • Posts: 1684
  • Location: SE PA
I hesitate to start mortgage shopping now, because we started house shopping in 2008 and still haven't bought anything.  If we were constantly mortgage shopping, I'm afraid the inquiries would stack up and make things worse.  I know they don't have a huge impact, but I would hate it if they did when I was near some sort of cut off for the best rates.

This is part of why there's a FICO Mortgage model-- it allows it to have separate rules.  The mortgage model ignores inquires for the 30 days before the report/scoring (so that the inquiry itself doesn't affect your rate).  Also, all mortgage inquiries will be considered a single inquiry within a 15 (old model) or 45 day (new model) window, so that your mortgage shopping will only have the net effect of a single "hit" on your consumer score.  So basically, the queries involved in your hunt for your mortgage will not affect your rate at all in most cases.

Thanks, I know that they group inquiries.  I didn't know it was now a 45 day window, though!  (15 days always seemed a bit on the short side) but the problem in my situation is that there were many 30 day periods that would have passed in 8 years, after which the inquiries would have had an effect.  (However little, yes...)