Who Uses Equifax For Mortgages

Where To Check Your Fico Score Before Applying For A Mortgage

Many free credit services dont use the FICO scoring model, which is the one your mortgage lender will be looking at.

To be sure the score you check is comparable to what a mortgage lender will see, you should use one of these sites:

• AnnualCreditReport.com This is the only official source for your free credit report. Youre typically entitled to one free credit report per year, but the site is offering free reports each week during the coronavirus pandemic
• MyFico.com

Whether its free, or you pay a nominal fee, the end result will be worthwhile.

You can save time and energy by knowing the scores you see should be in line with what your lender will see.

As long as you continue to make your payments on time, keep your credit utilization relatively low, and you dont go shopping for new credit you dont need, over time your score is going to be pretty high for every credit scoring model.

What Else Do Mortgage Lenders Look At To Determine Mortgage Terms

Your credit scores can be an important factor in getting approved for a mortgage and the rates you’re offered. However, mortgage lenders also go beyond your credit scores when evaluating a potential borrower’s application.

They’ll also take a close look at the information within your credit reportsnot just your scores. For example, even if you have a good credit score, the lender might deny your application if you recently filed for bankruptcy or had a home foreclosed on. Or if you owe too much money to collection agencies.

Mortgage lenders may also request various financial records, including recent bank statements, investment account statements, tax returns and pay stubs. They can use these to determine your income, debts and debt-to-income ratio, which can be an important factor.

Other factors, such as the loan amount, the home’s location, your down payment and loan type can all play into whether you’ll be approved and your mortgage’s terms. Lenders may also have unique assessments, which is one reason shopping for a mortgage can be important.

Get On The Electoral Roll

The easiest way to improve your credit score is to register to vote as this data is recorded on the public register which the credit bureaus check and include in your credit file. This is the first way to prove your identity and by far the easiest.

In the future when you apply for credit or a credit check is done, this will be the basis of their verification method for you and helps make you seem more creditworthy. You should check with your local council here if you are already on the electoral roll and if not you can register to vote here.

If you are not eligible to vote in the UK you will not be able to get on the electoral roll. In this case you can get a similar benefit by submitting a document to either Experian, Equifax or callcredit proving your identity and address. You can then ask them in writing to confirm that they have verified your identity on your credit file

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How Do You Choose Which Credit Score To Use

During pre-approval, we typically use the Experian FICO-II credit score from Experian. This is a soft credit check and won’t affect your credit score. If you apply with a co-borrower, we use the lower of your two scores.

When you want to continue with your loan application, with your authorization we pull your credit scores from all three major credit bureaus and use the median of the three scores received.

Related questions

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What Are Mortgage Fico Scores Need To Apply For A Mortgage Loan

The credit score used to determine if you qualify for a mortgage loan is called your qualifying credit score which is simply the middle of your three FICO® scores. For example if you have the following credit scores:

• TransUnion 663
• Experian 710
• Equifax 661

The lender will use your middle score of 663 from TransUnion as your qualifying score. The minimum qualifying score for a mortgage loan is determine by the loan type minimum score and if the lender has any overlays. Below are example minimum qualifying scores by loan type

FHA Loan 580 minimum for 3.5% down and 500 minimum with 10% down

Also Check: Can You Get A Second Mortgage With Bad Credit

What’s The Difference Between An Adjustable And A Fixed

A fixed-rate mortgage is based on a fixed interest rate. This is the rate used to calculate the monthly payments that will remain fixed over the loan term. The benefit is certainty about the level of your monthly payment over the life of the loan.

With an adjustable-rate mortgage , the interest rate can adjust periodically. Typically the interest rate is fixed for an initial period and then adjusts periodically. Sometimes there is a cap on the amount of the adjustment. Often whether the rate changes and by how much is based upon some sort of benchmark such as the rate on 1-year Treasury Bills. An ARM might start off with a lower rate than a fixed-rate mortgage, but if interest rates rise, the interest rate could skyrocket drastically, increasing your monthly payment.

Which Credit Scores Do Mortgage Lenders Use

• Check Your Credit

When you apply for a mortgage, lenders will generally request all three of your credit reports and a FICO® Score based on each report. However, the type of FICO® Scores they request are often older versions, due to guidelines set by government-backed mortgage companies Fannie Mae or Freddie Mac. It can be important to know about these different FICO® Score versions when you’re planning to buy a home.

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Fico 8 Vs Fico : What Are The Differences

FICO 9 is similar to FICO 8 but differs when it comes to collections and rent payments. FICO 9 counts medical collections less harshly than other accounts in collections, so a surgery bill in collections will have less of an impact on your than a credit card bill in collections.

Additionally, FICO 9 ignores accounts in collections that have a zero dollar balance. If you had a credit card account go to collections but later paid it off, FICO 9 will no longer use said collections account against your score. This is different than FICO 8, which factors all collections amounts of $100 or more into your FICO scoreeven if theyre completely paid off.

Just because collections with a zero balance are ignored by FICO 9 does not mean that lenders will ignore them. Credit bureaus will still show these collections on your full credit report, and lenders will see them when they reviews your full credit history.

Finally, FICO 9 factors rental history into your credit score. This makes it easier for people with no credit to build a high credit score with their monthly on-time rent payments. Unfortunately, this is dependent on your landlord actually reporting rent payments to credit bureaussomething not yet seen on a large scale.

List Of Lenders That Pull Equifax Transunion Or Both

ilove wrote: Alright, would you fellow RFDers find it might be useful to compile a list of lenders that pull either Equifax, Transunion, or both when inquiring your credit file?Maybe a master thread would be helpful for this purpose. Here we go:Amex Bank of Canada: but only reports on Capital One: BMO: Canadian Tire: Feel free to add your own info into this thread and I will try to update the OP as diligently as possible.

BMO reports to TD reports to CIBC reports to Future Shop/Chase reports to RBC from what I know reports to AMEX reports to Nyd

May 16th, 2012 6:45 pm

148 upvotes

May 16th, 2012 9:27 pm

ilove wrote: Alright, would you fellow RFDers find it might be useful to compile a list of lenders that pull either Equifax, Transunion, or both when inquiring your credit file?Maybe a master thread would be helpful for this purpose. Here we go:Amex Bank of Canada: but only reports on Capital One: BMO: Canadian Tire: Feel free to add your own info into this thread and I will try to update the OP as diligently as possible.

Licensed Credit Bureau member, S1, FI Automotive, CCP13

+1

Paulfistinyourface wrote: And lastly, can someone please tell me what creditor does NOT report to both bureaus?

mikeymike1 wrote: Is the OP looking for data on bureau pulls or bureau reporting? I think its ‘pulls’ as its stated in his/her first sentence.

National BankLaurentian BankVancityScotiabankBMOAlly

+1

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Which Credit Score Do Lenders Actually Use

Consumer Financial Protection Bureau Director Richard Cordray speaks during a a hearing in Denver… where he discussed his agency’s proposal on arbitration, in Denver, Colo., on Oct. 7, 2015.

There was some big news in the world of credit scores this week. The Consumer Financial Protection Bureau ordered TransUnion and Equifax to pay more than $23 million in fines and restitutions “for deceiving consumers about the usefulness and actual cost of credit scores they sold to consumers.” I’ve used these and the other credit scoring services described below extensively, and these services are advertisers on my personal finance blog, so I was particularly interested in the CFPB’s orders.

The orders explained that the credit score models most often used by lenders are those developed by Fair Isaac Corporation. You may know these scores by their common name, FICO scores. In contrast, the scores offered by TransUnion and Equifax used proprietary scoring models, sometimes referred to as “educational credit scores.” The name comes from the idea that these scores help educate consumers about their credit scores generally.

The problem, according to the CFPB, was that TransUnion and Equifax misled consumers by suggesting that the educational credit scores they offered were the same scores lenders used to make credit decisions. According to the CFPB, however, these scores were “rarely used by lenders to make credit decisions.”

Many Credit Scores

• Equifax Beacon 5.0

How To Improve Your Credit Score

Your FICO credit scores are broadly based on these five factors:

• Payment history This is the biggest factor and accounts for 35% of your credit score.
• Amounts owed How much debt you have makes up 30% of your credit score. This includes factors such as, your , the number of accounts with balances, and what you owe on different types of accounts.
• Age of accounts A longer credit history results in a better credit score. The duration of your accounts is 15% of your credit score.
• When you open new accounts or lines of credit, your score will take a small and temporary dip. These hard credit inquiries can stay on your account for up to two years, but only account for 10% of your overall credit score.
• The types of credit you have make up 10% of your credit score. So having different types of loans, a credit card, and a personal line of credit can help your credit score.

The nitty gritty of how certain aspects of your credit score are calculated varies depending on the credit scoring model. You have hundreds of scores. There are three credit bureaus, there are multiple generations of scoring software made by different companies, Ulzheimer says. But you dont need to fully understand or worry about every single type of credit score to start improving your credit score. The good news is that every single credit score is all based on the same thing one of your three credit reports, Ulzheimer says.

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What Credit Score Do You Need To Buy A House In 2021

Credit scores can be a confusing topic for even the most financially savvy consumers. Most people understand that a good credit score boosts your chances of qualifying for a mortgage because it shows the lender youre likely to repay your loan on time.

But do you know the minimum credit score you need to qualify for a mortgage and buy a house? And did you know that this minimum will vary depending on what type of mortgage you are seeking?

The Importance Of FICO®: One of the most common scores used by mortgage lenders to determine credit worthiness is the FICO® Score . FICO® Scores help lenders calculate the interest rates and fees youll pay to get your mortgage.

While your FICO® Score plays a big role in the mortgage process, lenders do look at several factors, including your income, property type, assets and debt levels, to determine whether to approve you for a loan. Because of this, there isnt an exact credit score you need to qualify.

However, the following guidelines can help determine if youre on the right track.

Whats A Typical Bad Credit Mortgage Term Length

Bad credit mortgages are only meant to be used as a temporary stopgap measure while you get your finances in order. You wouldnt want to stay with a bad credit mortgage lender for long either. Thats why youll usually see bad credit mortgages with term lengths from 6 months to 2 years. Youll need to have an exit plan when applying for a bad credit mortgage so that you can transition back to aB lenderor A lender.

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Whats The Difference Between A Fico And A Credit Score

Its important to differentiate FICO® Scores from other credit scores because FICO® Scores are created by the Fair Isaac Corporation and are evaluated by over 90% of top lenders when issuing loans.

Though there are other types of credit scores, FICO® is used as an industry standard for determining creditworthiness. Some credit scores are calculated differently from FICO® and are not as accurate.

Bottom line, FICO® is the most commonly used credit score, and therefore the most credible and comparable.

What Matters Most For Vantagescores

VantageScore prefers not to use percentages to describe how much weight it gives various , as FICO does, but instead describes them in terms of influence.

Payment history is extremely influential, while age and type of credit and the percentage of credit used are highly influential.

Total balances and debt are moderately influential, and recent credit behavior and debt are less influential.

However, VantageScore has also broken down its contributing factors this way in the past:

• Payment history: 40%

• Recent credit applications: 5%

• Available credit: 3%

Still, the factors that matter most in FICO scores are also the most heavily weighted for VantageScores. For both, the single most important thing consumers can do to help their scores is to pay on time.

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Have A Good Credit Mix

Mix things up a little by having a varying degree of accounts on your credit file. Like your partner, credit bureaus like to see you mix things up a little bit. By this, we mean that a proportion of your credit score is ranked by how diverse the different types of credit you have been utilizing is.

Examples include:

Revolving accounts

Installment accounts

Open accounts

Increase your variety and your credit score will increase.

How Can My Fico Scores Affect My Mortgage Interest Rate

When a loan officer gets your mortgage application, they may use a pricing grid to figure out how your credit scores affect your interest rate, says Yves-Marc Courtines, a chartered financial analyst with Boundless Advice. Generally, higher scores can mean a lower interest rate, and vice versa.

From there, a mortgage loan officer will likely look at the rest of your loan application to decide whether your base interest rate needs any adjustments. For example, if youre making a smaller down payment, you may be given a higher interest rate, says Courtines.

A banks pricing grid may change on a daily basis depending on market conditions. However, heres an example of what you might expect your base interest rate to be, based on your credit score, on a $216,000, 30-year, fixed-rate mortgage.

Source: myFICO, November 2020.

Read Also: How To Figure Out Mortgage Rates

What Does My Credit Score Need To Be For A Mortgage

The minimum credit score required to get a mortgage varies by loan type:

*With a credit score between 500-579 you may still qualify for an FHA loan if you can put at least 10% down.

If youre a first-time home buyer, you may be surprised you could get approved for a mortgage loan with a credit score below 600.

But the score you see in a credit monitoring app, or in your credit card statement, wont be the score your lender sees when it pulls your credit.

The score your lender sees will likely be lower. So if your credit is borderline, youll want to understand how lenders evaluate your credit score and credit history before moving forward with a loan application.