Removed late payment, score went down
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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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.
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