According to Darrin Q. English, a senior community development loan officer at Quontic Bank, mortgage lenders pull your FICO score from all three bureaus, but they only use one when making their final decision. It’s always the mortgage scores (4/5/2). All plans offer access to 28 versions of your FICO score, including scores for credit cards, mortgages and auto loans. Most mortgage companies will use all three of your FICO scores when evaluating your home loan application. FICO® scores. FICO 8 is a credit-scoring system released in 2009. Here's what, and here's what you can do about it. Your score is the major deciding factor in whether you qualify for a credit card or loan, and what your interest rate will look like. FICO develops a variety of credit scores including these semi-customized scores referred to as Industry Option scores. What gives is that most auto lenders that use FICO credit scores use a different variety of FICO score called the “FICO Auto Industry Option” score. In this case, the lender would use the 615 credit score rather than the 675 credit score. Mortgage lenders will go by the lower of the two borrower’s middle credit scores. The vast majority of lenders still rely on FICO 2, 4 and 5 scores, which are all part of a larger report mortgage lenders can obtain called the residential mortgage credit report (RMCR). "It's called a tri-merge.". While the FICO ® 8 model is the most widely used scoring model for general lending decisions, banks use the following FICO scores when you apply for a mortgage: FICO ® Score 2 (Experian) And, in a process that only exists in mortgage lending, the lender bases its decision not on your highest credit score, not on your lowest score, but rather on the middle numeric score. FICO 8 is a credit-scoring system released in 2009. It might even be different than what comes up when you monitor your credit, or even when you apply for a car loan. *Identity Theft Insurance underwritten by insurance company subsidiaries or affiliates of American International Group, Inc. (AIG). Lenders started using FICO® scores, created by Fair Isaac Corporation, in 1989, and the scoring models have been updated several times since. Most lenders use the residential mortgage credit report (RMCR). While mortgage interest rates are currently at an all-time low, they drop even lower when your credit score is above 760. If your three FICO scores were 700, 709, and 730, the lender would use the 709 as the basis for its decision. This means 43% of your income can be used to cover your non-mortgage debts as well as your mortgage. … Which score do lenders use for mortgages? You're still evaluated on the same core factors (payment history, credit use, credit mix and age of your accounts), but the categories are weighed a little bit differently. You have three FICO® scores, one for each of the three credit bureaus – Experian, TransUnion and Equifax. When you're ready to buy a house you'll want to know what credit score do mortgage lenders use and if yours is on the up and up. Information about FICO® Basic, Advanced and Premier plans have been collected independently by CNBC and has not been reviewed or provided by the company prior to publication. Lenders have identified a strong correlation between Mortgage performance and FICO Bureau scores (FICO score). Collectors regularly report your credit activity, such as payments -- or lack thereof -- credit use, and new or closed accounts to the bureaus. Each score is based on information the credit bureau keeps on file about you. As you can see, a VantageScore will almost always be higher than a FICO score. For other types of credit, such as personal loans, student loans and retail credit, you'll likely want to know your FICO ® Score 8, the score most widely used by lenders. You may need to download version 2.0 now from the Chrome Web Store. Please enable Cookies and reload the page. You can now focus on those mortgage-related versions in your FICO Score explanation report with confidence knowing they are the same versions your mortgage lender will likely access in the mortgage … Which Credit Score is Used for a Mortgage? Lenders must follow the FHA's minimum score standards, but often place additional restrictions, to help minimize their risk. FICO and VantageScores, the two most familiar brands in the credit-scoring world, use different algorithms to arrive at your score. Mortgage lenders understand that credit bureau information is not as consistent or identical as it should be. It makes sense: Borrowing and paying off a mortgage arguably requires a different mindset than keeping track of credit card balances and using a credit card responsibly. FICO ® Scores are used in over 90% of U.S. lending decisions 1.There are lots of "credit scores" offered to consumers, so it's important to understand which score you're getting and how much it is used, or not used, by lenders — and it's more important than ever to make sure you know your FICO ® Scores. If you were to apply for the loan on your own, the middle score would be the qualifying score for any loan programs. Credit scores started to become an important factor for consumer lending in the 1970s. The description herein is a summary and intended for informational purposes only and does not include all terms, conditions and exclusions of the policies described. Unlike the grades you were given in school — A through F — base FICO® scores generally range from 300 to 850. Getting a mortgage: Base FICO® Score versions previous to FICO® Score 8, as these are the scores used in the majority of mortgage-related credit evaluations. Understand which credit scores lenders use most, and the difference between a FICO score and credit report. As this information changes, your FICO® score tends to change as well. The 3 most known credit reporting agencies (Equifax, Experian and TransUnion) calculate your credit score according to the FICO scoring system, and these credit reporting agencies decide whether you are eligible for a credit card or credit through this type of score. Since then, only a few lenders have adopted it. Like FICO, VantageScore is often used by landlords, banks, and mortgage lenders to calculate the risk involved in lending someone credit or money. The short answer is FICO scores, which are the industry standard and relied upon by just about everyone. Another way to prevent getting this page in the future is to use Privacy Pass. What gives is that most auto lenders that use FICO credit scores use a different variety of FICO score called the “FICO Auto Industry Option” score. Lenders must follow the FHA's minimum score standards, but often place additional restrictions, to help minimize their risk. Your FICO Score is calculated by the data analytics company Fair Isaac Corporation, and it's based on data from your credit reports. Like figure skating judges at the Olympics, they "throw out" the high and low scores, and use the middle score as the most representative reflection of your credit standing. How do lenders calculate your mortgage score? In general, both FICO scores and VantageScores can be used for the same purposes. Buying a home with a co-borrower means the interest rate of the joint mortgage loan is based on the borrower with the lowest score, but both incomes are considered. The logic is sound; the credit bureau data, often, is not. They can obtain your credit report from three bureaus – Experian, TransUnion and Equifax. Plus, you’ll regularly receive updates to your FICO Score. Please refer to the actual policies for terms, conditions, and exclusions of coverage. Mortgage lenders primarily use FICO scores when reviewing loan applications, but you have more than one FICO score, and lenders' policies often differ regarding which version they use. But they can all generate a FICO score. It is used by creditors to assess the risk of lending money to a potential borrower. The best credit monitoring services offer triple-bureau protection, looking at your information across all three credit bureaus. When they say they use the “collective results,” it doesn’t mean they take the average credit score of the applicants. Lenders may see a different credit score than the one you see when you check your own score. If you can meet this requirement, it is worth applying without your spouse. FICO 8/9 are used for lines of credit. Since then, only a few lenders have adopted it. You know lenders look at your credit score to determine whether you qualify for a mortgage, but which credit score do they use? "We'll use that median score as the qualifying credit score," says English. And the higher, the better. I’ll save you the suspense. Instead, they use their “lower mid score.” Each applicant has three scores—one from each major credit bureau—and the lender looks at the middle score … Mortgage lenders use the FICO credit score calculated according to this credit scoring system. Petal® 2 "Cash Back, No Fees" Visa® Credit Card, IdentityForce® UltraSecure+Credit and UltraSecure, Should you pay for Experian credit monitoring? Lenders are frequently unwilling to take on the risk of approving borrowers who lack strong FICO scores, which require the regular use of credit and a track record of on-time payments. 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