The FICO score is one of the most widely used credit scores in the United States. There are actually multiple versions of the FICO score, each tailored for different types of lending. FICO Score 2 is specifically designed for mortgage lending. As you go through the home buying process, it’s important to understand how this important score is calculated and updated.
What is FICO Score 2?
FICO Score 2 is one of the “classic” FICO scores used primarily for mortgage lending. The score range is 300-850, with higher scores indicating lower credit risk
FICO Score 2 is calculated based on information in your credit report at Experian, one of the three major credit bureaus This version was designed to help mortgage lenders evaluate loan applicants
The other classic FICO scores used for mortgages are:
- FICO Score 4 (TransUnion)
- FICO Score 5 (Equifax)
Lenders may review one or all three when you apply for a home loan.
How is the FICO Score Calculated?
All FICO scores are calculated based on five categories of information in your credit report:
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Payment history (35%) – Records of on-time payments and any late payments, collections, or defaults. This is the most important factor.
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Amounts owed (30%) – Amounts owed on all accounts and proportion of available credit being used. Keeping balances low is positive.
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The length of your credit history (15%) shows how long your accounts have been open. Longer histories are better.
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10% of new credit comes from the number of new accounts and recent credit inquiries. Too many new accounts can lower scores.
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Ten percent of credit mix comes from having different types of accounts, like credit cards, installment loans, and mortgages. A mix is ideal.
Payment history has the greatest impact at 35%. Amounts owed is next most important at 30%. The other factors have less influence.
How Often is FICO Score 2 Updated?
Your FICO Score 2 won’t change daily. It’s recalculated only when your Experian credit report is updated. This happens:
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When you request your score – Requesting your mortgage FICO scores triggers an update based on your current Experian report.
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Monthly – If you subscribe to Experian’s credit monitoring service, your FICO Score 2 will be updated about monthly.
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Quarterly – If you receive your Experian report only every 3 months, your FICO Score 2 will be refreshed then.
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When negative information is added – Significant negative info like a late payment will prompt a new score calculation.
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When your data changes – Experian updates your credit file periodically when new account or inquiry data comes in. This can trigger a new FICO Score 2.
So while your actions influence your score every day, the score itself is not computed daily. It’s recalculated only when your Experian credit data file is refreshed. Monitoring services like myFICO can give you access to your latest FICO Score 2.
How to Improve Your FICO Score 2
Because payment history has such a big impact, the best ways to improve your FICO Score 2 revolve around managing your accounts responsibly:
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Make payments on time – Set up automatic payments or calendar reminders to avoid late payments.
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Keep credit card balances low – High balances hurt even if you pay in full. Aim for less than 30% of the limit.
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Avoid too many credit inquiries – Each application triggers an inquiry. Limit applications to when you need new credit.
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Have long credit histories – Keep your oldest accounts open and active if possible. The longer your history, the better.
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Maintain a credit mix – Have a variety of installment loan and credit card accounts. Don’t close old accounts unless necessary.
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Dispute errors – Incorrect negative information on your Experian report can lower your FICO Score 2. Dispute errors with the credit bureau.
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Become an authorized user – Being added as an authorized user on a long-standing account can add positive history.
It takes time, but responsible credit behaviors will help your FICO Score 2 gradually improve. Monitor your score monthly to see your progress.
Credit scores are a key piece of your financial history. If you want to track your progress, here’s how long you’ll need to wait for your credit score to update.Updated Thu, Oct 31 2024
If you’re looking to buy a new home or take out an auto loan, you may be checking your credit score every day leading up to your application to see where it stands. But just because you check it often doesn’t mean there will be an update.
Credit scores refresh at different times throughout the month and there may be times where it takes a few days or weeks before your score updates. And even if you check it today and go to apply for a loan or credit card tomorrow, your score may change.
Here’s when you can expect your credit score to update and where to check your credit score for free.
How often your credit score updates
Credit scores continually go up and down as information on your credit report gets updated. New balance amounts, bill payments and account openings are only a few factors that appear on your credit report and influence your credit score.
You can generally expect your credit score to update at least once a month, but it can be more frequently if you have multiple financial products. Each time any one of your creditors sends information to any of the three main credit bureaus — Experian, Equifax and TransUnion — your score may refresh.
That means your creditor may send updated information to Experian today, then Equifax next week, and TransUnion the following, which creates variations in your credit score.
Taking a look at my recent credit score updates through *Experian Boost®, my score changed four times in October. The fluctuations were due to a new auto loan being reported on my credit report, as well as changes in my credit card balances.
Your credit score may also fluctuate when you check different credit score services that work with different credit bureaus. As stated above, the credit bureaus may receive information at varying times throughout the month, so if you check your scores with Experian and TransUnion today, they may differ if one has info the other doesnt.
FICO Score / Algorithm Used By Mortgage Lenders
FAQ
How often does your FICO 2 score update?
Every 30 to 45 days, lenders report new information, so it’s possible that you’ll get a new credit score every month. But every lender has its own reporting schedule and policies.
What day of the month does FICO update?
Lenders that choose to report, typically do so monthly. For example, credit card companies usually report by the billing cycle or statement date, which is a date that is used over and over again. But the exact day of the month may be different for each provider. In short, there’s no set day that all lenders deliver information to the CRAs.
Do lenders still use FICO 2?
The credit score used for mortgage applications: The FICO® 8 model is the most common for lending decisions, but when you apply for a mortgage, banks use the FICO® scores 2 (Experian) and 5 (Equifax).
What’s a good FICO 2 score?
The base FICO® Scores range from 300 to 850, and the good credit score range is 670 to 739.