Your Mortgage credit score is one of the most important factors when applying for a loan.
Your Credit scores are what lenders take in to consideration when determining your approval terms. There are two main score models used when applying for any type of credit. These Are FICO Scores and Vantage Scores. Mortgage lenders will use your FICO score and typically check all three credit reports (Equifax Transunion and Experian)
What FICO Scores are used for Mortgages?
FICO 8 model is the basic FICO and the most widely used scoring model. It also has industry specific versions such as FICO 8 Auto which is used for auto loans and also FICO 8 Bankcard for credit cards. These score models are designed and tailored to predict credit worthiness depending on the industry as well as the bureau in which it reports. Mortgage lenders will using the following score models:
FICO Score 2 (Experian)
FICO Score 5 (Equifax)
FICO Score 4 (Transunion)
Each credit bureau has its own score model for mortgage lending but will typically calculate similar score ranges depending on what is reported. Mortgage FICO will weigh late payment history and also length of credit history a little bit differently than most score models. This is because mortgage lenders prefer payment history as an indicator of good mortgage candidates.
Which Credit Report Score will Mortgage lenders use?
Depending on the lender some mortgage companies will use the median score or in some cases your average score. When 2 of the 3 scores are the same most lenders choose the 2 matching scores regardless of the score being the highest or lowest. If you are applying for a mortgage with another person, such as your spouse or partner, each applicant’s FICO 2, 4 and 5 scores are pulled. The bank identifies the median score for both parties, then uses the lowest of the final two.
MORTGAGE SCORE TIP: Pay your credit card balances under 30% of the limit BEFORE applying for mortgage. This is a quick method to give you a credit score boost if you have high credit card balances.
What else do Lenders look for on your credit report?
When determining your approval lenders view the items reporting on your credit file. Some items will cause an automatic denial. These would include bankruptcies, rental properties owed, and even recent late payments on accounts. Always check your scores and view your credit report. Ask the lenders questions about items reporting on your credit report before applying.
Have Questions About your credit score? Schedule A FREE CONSULTATION with one of our credit consultants.
Knowing your credit score is very important. Your Credit rating can determine your employment and quality of living. Negative items reporting will cause denials and low score ratings for consumers. At Valiant Credit Services we specialize in credit disputes to help clients remove negative items through our credit repair services and also improve our clients scores as part of the credit education process. Contact us today to get clarity on your credit report and credit score. You can Schedule a FREE consultation with a Senior Credit Consultant today. CLICK BOOK NOW OR CALL 866-373-1377.