Understanding Your Mortgage Credit Score

Understanding Your Mortgage Credit Score

It’s always good to have an idea of where your credit score is before making any large purchase that requires a loan. You may notice that the score you see on credit monitoring platforms, such as Credit Karma or SavvyMoney, do not match up with the score your lender pulled during your pre-approval process. The most common questions we get during the credit section of your mortgage application is, “Why is my score lower than what I see?” and “What credit scores do you use for a mortgage?” To answer this, you first have to understand the differences between your mortgage credit score and your consumer credit score.

“Why is my score lower than what I see?”

Consumer Credit Score
When you, as an individual, go to check your credit score you will usually start with a free online service. Most of these services will only pull from one of the three major credit reporting bureaus (Equifax, TransUnion, Experian). This score is known as a VantageScore, or what we call an educational score. With this, you are getting more generalized information because it is free and typically only one bureau at a time. Since it is only one bureau, your results may be distorted as not every creditor reports to all 3 bureaus. These are great sources to monitor your credit activity and accounts.

Mortgage Credit Score
A mortgage lender will pull a FICO score, also known as a Mortgage Credit Score. This type of report is very detailed and includes credit history from all three bureaus together.
Your FICO credit score comes from a paid monitoring source and includes all three bureaus. Fannie Mae requires the following verions of the classic FICO score:

  • Equifax Beacon® 5.0
  • Experian®/Fair Isaac Risk Model V2SM
  • TransUnion FICO® Risk Score, Classic 04


“What credit scores do you use for a mortgage?”

Credit Scores When a mortgage lender pulls your mortgage credit score, we are pulling multiple variations of your score. At GCEFCU we pull what is called a “Tri-Merge.” This report pulls your credit history from all three major bureaus and merges them into a single report. This will allow us to make sure we get a full and accurate view of your credit history.
Mortgage lenders use a tougher credit scoring model to ensure our borrowers can pay back a large debt, such as a mortgage, comfortably. This type of report will give us a score from each bureau. How do we know which of those three score we use? We follow the standards set by Fannie Mae to make this determination.

  • If all three scores are different, we will use the middle score.
  • If two of the scores are the same, we will use that score even if the third score is higher or lower.
  • If there are two borrowers who are applying for a mortgage, we will follow the same two rules above for each borrower and then use the lower of those two middle scores.


Improving Your Mortgage Credit Score

Your credit score can affect more than the interest rate on your loan. It can also determine what type of loan program you may qualify for and the amount you will need for a down payment. If your mortgage score is not where you need it to be we can work with you and help you determine the best way to improve your score. Here are a few steps you can start taking now to improve your score, just remember credit repair can take some time. Once you begin the process, you may see a hit to your score before you begin to see the positive effects.

  • Pay down your debt. There are a few strategies out there that will help you pay off debt in the most efficient ways. Some of those methods include the Debt Avalanche or the Debt Snowball Methods. Paying off high interest cards while leaving them open can increase your score.
  • Make your payments on time. Your payment history plays a huge role in your credit score and in your eligibility for a loan. Keep current on your payments. Previous late payments will have less of an impact on your score as time passes.
  • Do not take on any new debt. Every time you open a new line of credit or take out a new loan, your score is going to take a hit. If buying a home is a priority, try to hold off on buying a new car, opening credit cards, or taking out any personal loans.
  • Pay your charge offs. Paying off charged off accounts can make a big impact on your credit. Even if you are mad at AT&T and don’t want to give them the satisfaction, you are only hurting yourself.


We are here to help!

Your credit report is an important part of your financial life. It determines your ability to obtain credit, the rate you’ll pay, and how much you will pay over the term of your obligation/loan. In addition to the free credit monitoring services, once per year you can also obtain a free copy of your credit report from each of the three bureaus at AnnualCreditReport.com. Understanding your credit profile can help you better plan out your next steps to meet your financial goals. If you have questions, your loan officer will be happy to review your credit with you.
Bre RifePost Author:
Bre Rife
Real Estate Loan Officer
NMLS# 1149285

The opinions expressed on this page are for informational purposes only and is not intended to provide legal or financial advice. The views expressed are those of the author of the article and may not reflect the views of the credit union.