The White Whales - Perfect Credit Scores?

[Sunset]

This link is, to put it politely, misinformed, and there’s no explanation in the post to let members know what the point is.

Beginning May 1 the closing fees will change for loans guaranteed by Freddy Mac or Fanny Mae. Borrowers with high credit scores will pay a bit more, and first time borrowers with lower credit scores will pay a fair amount less. Low credit score borrowers will still pay a considerably higher fee. Here’s a link explaining the change https://www.usatoday.com/story/mone...ge-fee-structure-change-may-2023/11713841002/

From the article

Thanks..... .I was thinking I could trash my credit score by skipping on some payments, but now I don't have to.

 

[Ronstar]

Once I retired and had little need for debt, I reset my priorities. I now monitor my blood pressure, not my credit score.

Same here. Have never known my credit score, but hopefully it’s higher than my blood pressure

 

[ERD50]

This link is, to put it politely, misinformed, and there’s no explanation in the post to let members know what the point is.

Beginning May 1 the closing fees will change for loans guaranteed by Freddy Mac or Fanny Mae. Borrowers with high credit scores will pay a bit more, and first time borrowers with lower credit scores will pay a fair amount less. Low credit score borrowers will still pay a considerably higher fee. Here’s a link explaining the change https://www.usatoday.com/story/mone...ge-fee-structure-change-may-2023/11713841002/

From the article

Starting May 1, upfront fees for loans backed by Fannie Mae and Freddie Mac will be adjusted because of changes in the Loan Level Price Adjustments (LLPAs), the fees that vary from borrower to borrower based on their credit scores, down payments, types of home and more. The changes relate to credit scores and downpayment sizes.
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For example, if you have a score of 659 and are borrowing 75% of the home's value, you'll pay a fee equal to 1.5% of the loan balance. Before these changes, you would have paid a 2.75% fee. On a hypothetical $300,000 loan, that's a difference of $3,750 in closing costs.

On the other end, if you have a credit score of 740 or higher, you would have paid a 0.25% fee on a loan for 75% of your home value before May 1. After that date, you could pay as much as 0.375%.

Thanks, I had to put some more numbers to that to get a sense of what it means:

Examples for a $500K home, 75% Loan = 375K loan,...

<660 score:

Before: 2.75% fee _ $10,312.50
After_: 1.50% fee __ $5,625.00

$4,687.5 lower fee

>740 score:

Before: 0.250% fee __ $937.50
After_: 0.375% fee _ $1406.25

$468.75 higher fee.

But what this makes clearer, is the lower credit score is still paying *more* in fees than the higher credit score, but less of a delta now. and the change at the high end probably isn't enough for anyone to go out and intentionally lower their credit score.

I have no idea whether those fees (before or after) are in line with the added risk for a low credit score. I would think that the mortgage makers would have that data available to them.

-ERD50

 

[madatrub]

Thanks, I had to put some more numbers to that to get a sense of what it means:

Examples for a $500K home, 75% Loan = 375K loan,...

<660 score:

Before: 2.75% fee _ $10,312.50
After_: 1.50% fee __ $5,625.00

$4,687.5 lower fee

>740 score:

Before: 0.250% fee __ $937.50
After_: 0.375% fee _ $1406.25

$468.75 higher fee.

But what this makes clearer, is the lower credit score is still paying *more* in fees than the higher credit score, but less of a delta now. and the change at the high end probably isn't enough for anyone to go out and intentionally lower their credit score.

I have no idea whether those fees (before or after) are in line with the added risk for a low credit score. I would think that the mortgage makers would have that data available to them.

-ERD50

Above 780 CS, the only LTV where fees go up are for 80-85 LTV. The rest are the same or lower. Now, how many mortgage lenders will be savvy enough to instruct their clients to go below 80 or above 85?

 

[grayv]

if we added interest rate to the mix, we could estimate the value of credit score changes.

I have no idea whether those fees (before or after) are in line with the added risk for a low credit score. I would think that the mortgage makers would have that data available to them.

They would have that info. I would say the "before" fees reflected the risk. Now, the "after" fees do not.

 

[Koolau]

Never cared, but I just looked and we're 816. But I've been told those with no debt who pay everything off immediately can't have a perfect credit score? In addition we've had credit freezes in place for more than 10 years, so I'm not sure what data is used.

Yeah, yours is about where our is. I was told that we could be at 850 IF instead of waiting until the end of the month (and receiving a CC bill) we paid UP FRONT. IIOW, send the CC company enough to cover your monthly bill BEFORE you charge anything.

Short of missing payments, the "big" FICO score killer is using a significant amount of your available credit. It's not unusual for us to have $4K CC bill. So vs. $18K credit line, $4K is a "lot" and cuts our FICO score significantly.

We're not ready to "play their silly little game" just for the higher score, but that's pretty much how it w*rks. Pay you bills on time and limit your outstanding credit usage vs your available credit. That will get you a high score. For what it's worth and YMMV apply here.

 

[MarieIG]

Yeah, yours is about where our is. I was told that we could be at 850 IF instead of waiting until the end of the month (and receiving a CC bill) we paid UP FRONT. IIOW, send the CC company enough to cover your monthly bill BEFORE you charge anything.

Short of missing payments, the "big" FICO score killer is using a significant amount of your available credit. It's not unusual for us to have $4K CC bill. So vs. $18K credit line, $4K is a "lot" and cuts our FICO score significantly.

We're not ready to "play their silly little game" just for the higher score, but that's pretty much how it w*rks. Pay you bills on time and limit your outstanding credit usage vs your available credit. That will get you a high score. For what it's worth and YMMV apply here.

Ahhhh, I circle like a hawk and pay off charges as soon as they land, i.e. my monthly statements are usually zero. My credit card company does not except payments before, or in excess of, charges. I don't have an 850 credit score - I was told it was because I don't have an installment loan. (I paid off my mortgage years ago, and it seems to have fallen off my credit history.)

 

[jazz4cash]

I pay in full very near the due date. The free float is one of the main advantages of using a credit card. Giving it up just to raise a credit score is not a good tradeoff to me.

 

[Koolau]

We found out the hard way that a high FICO score (while necessary) is not sufficient to get a loan at a good rate. When we went for a mortgage, we needed the high FICO score, but all they really cared about was our monthly income (which wasn't much since we weren't even on SS yet.) SO, because we'd converted tIRAs to Roths (and paid the taxes), THAT counted as income. Ridiculous but it's their game and we had to play it to get a mortgage. YMMV

 

[jazz4cash]

We found out the hard way that a high FICO score (while necessary) is not sufficient to get a loan at a good rate. When we went for a mortgage, we needed the high FICO score, but all they really cared about was our monthly income (which wasn't much since we weren't even on SS yet.) SO, because we'd converted tIRAs to Roths (and paid the taxes), THAT counted as income. Ridiculous but it's their game and we had to play it to get a mortgage. YMMV

What do you consider high? I see >740 mentioned as optimal but high 500’s seems to be ok for some programs. I guess the mortgage rate is the key but many sites I visit just say >800.

 

[TheWizard]

My score always explains that it would be higher it I had some revolving credit. But I’m not about to get a car loan or buy some appliance on credit to increase my credit score further. Too much hassle!

Same here.
I'm basically rich now...

 

[tryan]

So I signed up for the free BOA score .... 830.

Then went to creditkarma for their free score ... 808

Seems like an imperfect science.

 

[Koolau]

What do you consider high? I see >740 mentioned as optimal but high 500’s seems to be ok for some programs. I guess the mortgage rate is the key but many sites I visit just say >800.

I guess "high" is a relative term. Anything over 800 would be "high" to me as it's in the top tier of scores and "near" a perfect score of 850. Mine runs around 815 to 820. Naturally, YMMV.

 

[Koolau]

Same here.
I'm basically rich now...

Well, I have "enough."

 

[jazz4cash]

So I signed up for the free BOA score .... 830.



Then went to creditkarma for their free score ... 808



Seems like an imperfect science.

Far from science, credit scores are just a means for the bureaus to monetize all the data they collect, IMO. I tracked a handful of free scores from various sources for awhile. They all trended similarly but the variation was ~30 pts with 1-3 months lag.

 

[Koolau]

Far from science, credit scores are just a means for the bureaus to monetize all the data they collect, IMO. I tracked a handful of free scores from various sources for awhile. They all trended similarly but the variation was ~30 pts with 1-3 months lag.

We used to get a score on our Discovery bill. Maybe we still do - DW handles the bills (bless her heart.) We saw variations as much as 15, depending on how much we had charged (on all our cards.) Replacing a roof and buying air tickets to the Islands lowered our score at least 15. Bounced back within a month or two IIRC.

 

[GenXguy]

We used to get a score on our Discovery bill. Maybe we still do - DW handles the bills (bless her heart.) We saw variations as much as 15, depending on how much we had charged (on all our cards.) Replacing a roof and buying air tickets to the Islands lowered our score at least 15. Bounced back within a month or two IIRC.

Yeah, my Discover bill includes "FICO Score 8 based on TransUnion data:" It's 831 on the recent bill I just looked at but varies a little over time.

 

[gauss]

I've been making payments multiple times .....

Have you achieved a perfect score? I have no real reason to do this, other than striving for the unobtainable goal!

Yes - I believe I did. Life didn't change much, however.

-gauss