When I got rejected from my mortgage refinance in early 2015 I was pissed. I was in the third month of waiting before I got the bad news. I had locked in an outstanding 2.25% 5/1 Jumbo ARM rate that could have saved me $400 a month for the next five years. Having an 800+ Experian FICO score and a multiple six figure income was not good enough because a large portion of my income came from freelancing. Traditional banks require two years of freelance income history before ANY of it counts.
In 2012, another mortgage refinance almost got derailed. TransUnion, one of the major credit agencies, unbeknownst to me, had my FICO score down to 680 because a former tenant forgot to pay an $8 utility bill after moving out. PG&E, the utility company, didn’t bother to shoot me an e-mail, give me a ring, or send me a letter for the outstanding invoice. Instead, PG&E sent my name to a collections agency! Luckily, I got PG&E to write to my bank a “clear credit letter” and my refinance went through.
My 800+ Experian FICO score didn’t help me get a mortgage refinance, and my 680 TransUnion FICO score almost screwed me. Back then, it was clear to me that the FICO score was seriously flawed. Therefore, I was happy to hear SoFi, one of the leading online lenders who raised $1B in funding in 2015 from Softbank, decided to completely drop the FICO score from its loan qualification application for 2016 and beyond.