Credit Scores Mortgage Lenders Use

When applying for a mortgage, lenders typically consider your creditworthiness by assessing your credit scores from three major credit bureaus: Equifax, Experian, and TransUnion. The credit scores most commonly used in the mortgage industry are the FICO scores. FICO stands for the Fair Isaac Corporation. FICO created a method for calculating credit scores based on information collected by credit reporting agencies.

Experian uses FICO Score 2 (or Experian/Fair Isaac Risk Model v2) , Equifax uses FICO Score 5 (or Equifax Beacon 5), and Transunion uses FICO Score 4 (or TransUnion FICO® Risk Score 04). FICO scores are calculated based on various factors in your credit report, such as payment history, credit utilization, length of credit history, types of credit, and new credit applications. There are several versions of FICO scores available.

FICO scores range from 300-850. Usually a higher score makes it easier to qualify for a loan and may result in a better interest rate. Like all credit scores, FICO scores can change over time according to your credit behavior. The fact is, a good FICO Score can save you thousands of dollars in interest and fees as lenders are more likely to extend lower rates if you present less of a risk for them.

It's also important to note that different lenders may have their own credit score requirements and criteria for mortgage approval. While FICO scores are widely used, some lenders may use other scoring models or have their own proprietary scoring systems. Additionally, mortgage lenders often consider other factors, such as your income, employment history, debt-to-income ratio, and down payment amount, when determining your eligibility for a mortgage. Credit scores are just one component of the overall assessment.

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LaShawn Freeman, Douglas Elliman Real Estate Agent

Unlocking new memories, one door at a time.

M: 917.254.3313 / E: lashawn.freeman@elliman.com