Question regarding a magically dropping credit score (or: ugh, financing!)

Shadowfire

My wife and I are shopping for a house. This is great, we even found a house we want! We've been watching our credit scores through credit sesame, and we were both sitting pretty. I was above 690, and she is in the 670s. We started some mortgage shopping last month, applied with one bank, and got turned down. We wanted to keep it with a local company, but they are extremely strict on who they loan to. So we're getting ready to meet with a mortgage broker in our area. However, when I checked tonight, my score dropped to 617. There is nothing that has changed regarding my credit aside from the mortgage application.

Now, we're not sure what to do. Is it "hur hur credit sesame" maybe being a little crazy? I have no idea how accurate their scoring is, so who knows. Obviously a drop in score that drastic could (will) cause issues with our getting a mortgage, and if the number is accurate, we would not be approved (minimum 620 for a rural development mortgage). Should we apply with her as the primary?

Sorry if this comes across as desperate... it was a bit of a shock.

EclecticGroove

Actually checking your credit score frequently can actually lower your score. But aside from that, yes applying for loans can impact your score as well.

http://www.myfico.com/crediteducation/creditinquiries.aspx

SkyCaptain

Try using http://www.creditkarma.com and see what it says there.

illig

You know that there are actually three credit scores, not one, right? You get a slightly different one from each credit bureau. Is it possible you looked at different scores these two times? I wouldn't rely on averages or other combination techniques bc different loan companies use scores differently. Some do average, some do middle score and those that want to screw you use the lowest score.

At this point I would also pull a complete report and check for inaccuracies.

Chanus

EclecticGroove wrote:

Actually checking your credit score frequently can actually lower your score. But aside from that, yes applying for loans can impact your score as well.

http://www.myfico.com/crediteducation/creditinquiries.aspx

As far as I've ever known, checking your own score doesn't count against you.

It's when you go around town applying for credit and loans and get a bunch of different companies checking your score that you have a problem.

a5ehren

All hard inquiries in a certain period (I think it's ~2 weeks) get lumped together when your credit file is pulled. This is done so that you aren't heavily penalized for shopping around for credit.

The problem OP has now is that there is a rejected loan application on your credit report, which makes other creditors nervous.

kennysgoddess

I don't normally post, but the OP is my husband...we both use credit karma to keep track, and the loan application was in both of our names, and my credit score went up, while his dropped like 70 points. Nothing else had changed, at all. The loan we applied for was our own ineptitude regarding mortgages (we are first time home buyers), thinking we could apply for a mobile home mortgage the same as a home, which apparently you cannot. I, as is Shadowfire, am just confused how his score could drop SO much, when mine went up when nothing changed for each of us but the loan application.

TychoCelchuuu

Credit Karma's just approximate, right? I don't know about Credit Sesame, but if you're using Credit Karma that might explain it.

JHunz

Creditkarma, like all of the free credit score sites run by one of the credit bureaus, is an approximation using a different formula that is not the FICO formula they use to calculate the credit score that lenders actually care about. So a drop in your creditkarma score means that your real credit score probably dropped too, but it's entirely possible that the magnitude of the drop is greatly exaggerated by the alternate formula. This is because they want people to pay for the privilege of finding out their real score, and because they have the ethics of rabid weasels.

Dunadan019

kennysgoddess wrote:

I don't normally post, but the OP is my husband...we both use credit karma to keep track, and the loan application was in both of our names, and my credit score went up, while his dropped like 70 points. Nothing else had changed, at all. The loan we applied for was our own ineptitude regarding mortgages (we are first time home buyers), thinking we could apply for a mobile home mortgage the same as a home, which apparently you cannot. I, as is Shadowfire, am just confused how his score could drop SO much, when mine went up when nothing changed for each of us but the loan application.

checking your credit does not effect your score so don't worry about that.

credit karma updates monthly by doing 'soft hits' which also do not affect your score.

applying for a mortgage can affect your score especially if you have too many applications in a certain period of time. for instance, if your husband has within the last year filled out a seperate mortgage application, gotten a credit card, taken out a personal loan, bought a car, etc... then being on the mortgage application will dive his score.

However, as has been said, credit karma is not actually your credit score. your credit score can be purchased from one or all of the 3 major credit agencies and they will be different. usually with a mortgage they will throw out the high and low score and use the middle one however I don't know how they do it with 2 people cosigned on an application.

The other thing is that since you put in an application, the mortgage company is required by law to send you the results of the credit inquiry they just made which should give you your exact scores for all 3 agencies. it may take a month or two. your mortgage broker should also be able to get the score for you if you have a broker.

to look at your credit report for free (no score), go to https://www.annualcreditreport.com/cra/index.jsp and you can download all 3 free once per year. you probably should take a look at it just so you know whats actually on there instead of what credit karma tells you.

Shadowfire

There were a couple of surprises on there, but most surprisingly of all the credit sesame score was absolutely accurate (617 was the score on TU). The other two were a bit higher, and he said that us shopping for a mortgage could lower it some, but the decrease should be nowhere near that much (closer to 5-10 points, even with a denial). He's working with us, thankfully, but we still won't know anything for sure until tomorrow (or Thursday possibly).

Thanks for the ideas so far, folks. Appreciate it.

SilverEternity

Shadowfire wrote:

There were a couple of surprises on there, but most surprisingly of all the credit sesame score was absolutely accurate (617 was the score on TU). The other two were a bit higher, and he said that us shopping for a mortgage could lower it some, but the decrease should be nowhere near that much (closer to 5-10 points, even with a denial). He's working with us, thankfully, but we still won't know anything for sure until tomorrow (or Thursday possibly).

Thanks for the ideas so far, folks. Appreciate it.

My credit score dropped about 20-30 points during the house-buying process simply because there were so many inquiries on it (we requested good faith estimates from 3 or 4 mortgage companies).

Dr. Frenchenstein

Dunadan019 wrote:

to look at your credit report for free (no score), go to https://www.annualcreditreport.com/cra/index.jsp and you can download all 3 free once per year. you probably should take a look at it just so you know whats actually on there instead of what credit karma tells you.

You can't actually get your "score" from that site, unless you pay extra. You can only look at your report, and see if all the info is correct that your score is based on.