One of the most common questions I hear from homebuyers is, “Why is the mortgage credit score my lender pulled different from the score I see online?”
The answer is simple: there is no single universal credit score. You can have many credit scores at the same time. Lenders, credit bureaus and consumer websites may use different scoring models or different versions of the same model.
An online score can help you monitor your credit. However, you should not assume it will match the mortgage credit score used to qualify you for a home loan.
Why Can Your Online Credit Score Be Different?
Experian, Equifax and TransUnion collect information about your credit history. Credit-scoring models use information from those reports to calculate a score.
Different models can produce different numbers from similar credit information. Some consumer websites provide FICO scores. Others provide VantageScore or another model.
Even two FICO scores may use different versions of the FICO model. In addition, the information available from each credit bureau may differ.
Mortgage Lenders Use Specific Credit Scores
Mortgage programs have specific requirements for the credit scores lenders use during underwriting. Therefore, your mortgage credit score may differ from a score provided by a bank, credit card company, credit-monitoring service or consumer website.
When a lender obtains information from more than one credit bureau, the lender receives scores from the applicable mortgage credit-scoring models. The lender then determines the qualifying score based on the requirements of the loan program.
For this reason, you should not assume that a score shown online will appear on your mortgage credit report.
Does That Mean Online Credit Scores Are Useless?
No. Consumer credit-monitoring services can still provide useful information.
They can help you track changes in your credit profile. They may also identify new accounts, inquiries or potential problems. In addition, they can show whether your credit is generally improving or declining.
Treat a monitoring score as an educational and tracking tool. It does not guarantee the mortgage credit score a lender will use.
Check Your Credit Reports for Accuracy
Credit-scoring models calculate scores from the information in your credit reports. Therefore, reviewing those reports is an important step when preparing to buy a home.
You can obtain free weekly credit reports from all three major credit bureaus through AnnualCreditReport.com. It is the federally authorized source for free credit reports.
Review each report carefully. Look for accounts that do not belong to you, incorrect balances, inaccurate late payments, duplicate accounts or other errors.
Be Careful About Making Credit Changes Before Applying
If you plan to purchase a home, be cautious about advice that promises a quick credit-score increase. A change that helps one person may not help another.
For example, closing credit cards, opening new accounts, paying off certain debts or moving balances can affect your credit in different ways. The impact depends on your individual credit history.
If you expect to apply for a mortgage soon, speak with an experienced loan officer before making significant credit changes.
What If Your Mortgage Credit Score Is Lower Than Expected?
A lower mortgage credit score does not automatically prevent you from qualifying. Mortgage programs have different credit requirements. Your income, assets, debts and overall financial profile also matter.
If your score prevents you from obtaining the financing you want, we can review the credit report with you. We can also identify factors that may be affecting your score. In some cases, specific steps may improve your position before you apply again.
The goal is not simply to chase a particular number. Instead, focus on putting your overall credit profile in the strongest reasonable position for the mortgage you want.
Know Your Mortgage Credit Before You Shop for a Home
If you are serious about buying a home, understand your mortgage qualification before making offers. Do not rely entirely on a score from an online service.
A mortgage pre-approval allows us to evaluate the credit information the loan program will consider. We also review your income, assets, debts and available financing options.
I have helped homebuyers throughout Maryland, Washington, D.C. and Virginia for more than 20 years. I can help you understand how your credit affects your mortgage options.
Have questions about your credit score or mortgage qualification? Contact me, and I’ll be happy to review your situation with you.
Ready to explore your options? Start your prequalification online.
Credit-scoring models and mortgage underwriting requirements vary by loan program and may change. Credit scores are only one component of mortgage qualification. This information is for general educational purposes and is not a commitment to lend.
