• Have you seen the advertising by one of the big credit bureau’s on how you can boost your credit score. Sounds great, but it appears it isn’t going to help anyone get a mortgage loan as much as you might think.

    Experian recently create an offer where you can self-report tradelines, such as utilized, cell phone, etc, to “boost” your credit score. As a mortgage lender, we are now seeing these reports come through, so we wanted to share with you how Fannie Mae and Freddie Mac deal with theses self reported trade lines, and how lenders will handle them.

    On your credit report, lenders will see that the tradeline indicates as “self-reported”, and under remarks, it confirms it is a utility, or cell phone.

    Mortgage lenders look at all three credit reports. We throw out your high credit score, we throw out the low scores, and use the middle credit score for all underwriting decisions. As these boosted scores are only on one credit bureau report, you could assume it may help you.

    Boosting Your Credit Wont Help For Mortgages As Much As You May Think

    There are multiple types of credit scores. They are all real, and they are all scores. The mortgage industry looks at your MORTGAGE credit score, which is different than the score you see at Credit Karma, or on your credit card statement.

    While you may see an improvement on other credit score models (like Credit Karma), these self-reported, they are NOT affecting the calculation of the MORTGAGE credit score.

    Lenders will also not have to include these self-reported payments into a borrowers qualifying income, but I can see that becoming an issue as when lenders pull in your credit report to our software, it automatically pulls in all your debt. Eagle eyed Loan Officers and Underwriters will see and remove these self-reported liabilities from your debt ratio, but these can easily mess up many automated systems.

    Boosted Credit Score FAQ

    Q. Do self-reported tradelines impact the score?
    A. These tradelines do NOT impact the FICO score model used for mortgage and lending. The self-reported tradelines currently only impact Experian’s FICO Score 8 model, which is not an approved mortgage-scoring model.

    Q. Do self-reported tradelines impact debt-to-income (DTI)?
    A. No, self-reported utility and/or telecommunication accounts are not to be included in the debt calculation.

    Q. Does negative information need to be considered?
    A. YES, Any  derogatory self-reported information will be considered into the borrower(s) overall credit profile.

    The bottom line is while credit boost may work for some other creditors and situations, it will NOT help anyone get a home loan.

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