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I'm in the process of securing a mortgage. My mortgage lender pulled my credit score approximately a month ago and it came back at 695 which was lower than it has been in the past. We assumed it was low because of a late payment reported by my bank. I explained the situation to my bank and they agreed to remove the late payment. My mortgage lender then pulls my score again yesterday (giving the bureaus 3 weeks to adjust) and it comes back showing the late payment removed but the score is now 693.

How can removing a late payment still result in a lower score? Is there anything I can do about it?

Edit: I haven't received the report from my lender yet, but according to the soft inquiry via Credit Karma my score is 731 with no late payments, no derogatory marks, 4.25 years of credit, 13 open accounts all in good standings, 5 hard inquiries in the past 2 years (only 1 being recent)

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    Removing that late payment was probably not the only change between the first and second pull. – quid May 11 '17 at 17:50
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    First off, what the lenders pull or any reliable entity is using FICO and those scores are computed differently than the FAKO scores generated by all consumer facing companies which use Vantage which is for all intents and purposes useless and they always come in higher than FICO (generally) but are calculated in a very different way and so they are like comparing apples and oranges. Removing a late payment doesn't reduce your score but your credit is fluid, it doesn't sit still for you to trim the bad stuff off, other factors change constantly like your utilization, age of account and so on. – GµårÐïåñ May 11 '17 at 19:16
  • So your saying I'm SOL – stackoverfloweth May 11 '17 at 19:30
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    Your score is lowered every time there is a hard pull of your credit. So it was likely lowered when it was pulled the second time. – Michael May 11 '17 at 20:46
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    @GµårÐïåñ Please post your answer as an answer. It will get an up vote from me. – Ben Miller - Reinstate Monica May 11 '17 at 23:59
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You need to compare all of the changes to your credit report in order to do a good comparison. If you have the full credit reports for both scores you should be able to spot them. The only thing I can say for certain based on the information provided in your question is the mortgage hard pull on your credit will appear on the second report, but not the first. But I would estimate that the removal of the late payment would raise your score by more than the inquiry would lower it. So there must be something else different too. Take a close look at all of your account balances- that's usually a big factor.

As for what you can do about it, paying off as much debt as possible should help. I did this recently: I applied for a mortgage and got my score, then paid off some debt, waited for the accounts to report to the bureaus (less than 30 days), then asked my lender to re-pull my credit. My score had shot up over 30 points which put me into the best interest rate category. It saved me 0.25% on my mortgage rate. More details about this and how credit inquiries affect your score can be found here.

  • Take a look at my edit, I'm curious to know if that changes anything – stackoverfloweth May 11 '17 at 18:17
  • Also, thanks for the advice I will look into that! Would that be a good idea for me if I close on the house in 2 weeks? And it would required another hard inquiry? – stackoverfloweth May 11 '17 at 18:17
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    I don't know what algorithm Credit Karma uses, or which scoring model they are simulating. I don't like giving out product recommendations, but, if you're willing to fork over $30 you could go to myfico and get all of the actual scores for different models. (It's actually $30/month so don't forget to cancel when you're done unless you want to keep it.) It's possible that your normal score (FICO 8) is 730 but your mortgage score model is 695. As for the double inquiry, if it's within 45 days it shouldn't matter. I've added a link to the answer which goes into more detail about that. – TTT May 11 '17 at 18:29

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