The first thing that comes to mind about credit or credit card is credit score. The credit score gives creditors information on how we make our payments. The credit score shows creditors how many times we have not paid on time and how long we have delayed our payments. So it gives information to our lenders about our responsibility to pay. The most preferred credit score is the credit score based on the FICO scoring system. Mortgage lenders use the FICO credit score calculated according to this credit scoring system. 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.
How can you find out the credit score mortgage lenders use?
There are many ways to find out your FICO-based credit score. Some of these methods are free. You can learn this credit score using free methods. However, some companies use the VartageScore scoring method to calculate credit points. You should pay attention to this. Because the FICO and VartageScore scoring systems are very similar, but they are different things, and generally the credit score is calculated higher with VartageScore. In addition, three leading credit reporting agencies calculate the credit score differently. Mortgage lenders use all 3 credit points together.
Which FICO score do mortgage lenders use?
FICO credit scores have different names and have different versions in the 3 leading credit reporting agencies; the Equifax credit reporting agency uses Beacon and version 5.0, the Experian credit reporting agent uses the Fair Isaac Risk Model and version 2, and the TransUnion credit reporting agency uses FICO Risk Score and version 04. The lower your FICO score calculated according to these systems, the higher your risk of default.
Mortgage lenders use the average of 3 credit points if the credit scores obtained from 3 credit reporting agencies are different. If two of the credit points obtained from 3 credit reporting institutions are the same, mortgage lenders use the same credit score, not another credit score that is different.
If there are more than one applicant, which credit score do mortgage lenders use?
If more than one person applies for a mortgage loan, mortgage lenders evaluate each application separately and mortgage lenders use the lowest of the resulting credit score.
In some cases there may be people who do not have a FICO credit score but wish to obtain credit. You don’t have to worry in such situations. Because mortgage lenders give mortgage loans based on different criteria and credit points. So, for some mortgage lenders, you can have the appropriate profile and get credit.
Do mortgage lenders use FICO points to determine interest rates?
FICO credit points not only allow you to receive a mortgage loan, but also mortgage lenders use their FICO credit score when determining interest rates. The higher your FICO credit score, the lower your mortgage interest rate.