Applying for a mortgage is a big decision! It can also be a nerve-racking experience, especially if you aren’t sure what criteria the lenders will use when considering your request and deciding on your rates. And while you’re probably aware that your credit score is important, you might not know the type of credit score your lenders look at.
Do mortgage lenders use your FICO credit score?
The most common credit score used in general lending decisions is the FICO 8. This score ranges from 300 to 850, where 300 is the worst score, and 850 is the best. This number is based on several factors, including the amount of available credit available to the candidate and their bill-paying history, among others.
But do mortgage lenders use a FICO 8 score? Mortgage lenders use your FICO credit score but do not use that specific model. Instead, they pull three different FICO scores:
- FICO 2 (Experian)
- FICO 5 (Equifax)
- FICO 4 (TransUnion)
Once the lender pulls all three of the above credit reports, they do something called a “tri-merge.” This essentially combines all three of the above reports, allowing them to understand a bit more about your creditworthiness than any one of the reports alone.
If you are requesting a mortgage, in other words, it is essential to work on your credit score to raise it as much as possible. With that said, lenders examine the tri-merge of your reports a bit differently than other lenders might.
Resolving your loan quickly isn’t really the point of a mortgage. Instead, paying consistently over a long period of time is more important. That means that lenders will place slightly more emphasis on payment history than the amount of available credit you have accessible.
Are you interested in learning more about how your credit score impacts your mortgage rates and what you can do about it? Reach out to our experienced team today!