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What Credit Score Do Mortgage Lenders Use? FICO Score Options

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Aug. 2 2021, Published 2:53 p.m. ET

If you’re wondering what credit score mortgage lenders use, you might be surprised to learn that lenders can use multiple credit scores, and those scores can make a big difference in your monthly mortgage payment.

“The difference between a FICO score of 620 and 760 can often be tens of thousands of dollars over the life of your loan,” the Fair Isaac Corporation (FICO) points out on its myFICO website. “A low score can cost you money each month or even cause the home you want to be unaffordable.”

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For example, the company says that if your FICO score is between 760 and 850, then your interest rate on a 30-year, fixed-rate mortgage of $216,000 could be 2.51 percent and your monthly payment could be $854. But if your score is between 620 and 639, then your interest rate on the same loan could be 4.09 percent and your monthly payment could be $1,043, or $2,268 more per year.

Here’s more information about what mortgage lenders consider in their decisions.

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Mortgage lenders often get FICO scores from all three bureaus.

In a recent explainer, Experian said that mortgage lenders “will generally request all three of your credit reports”—one from Experian, one from Equifax, and one from TransUnion—as well as a FICO score based on each report. Mortgage lenders often get a single report with the scores and reports from all three credit bureaus and then base their decision on the middle of the three scores. (If you’re applying for a mortgage with a partner, then lenders will often go with the lower middle score.)

The FICO scores that mortgage lenders commonly use, according to Experian, are:

  • FICO Score 2, or Experian/Fair Isaac Risk Model v2
  • FICO Score 5, or Equifax Beacon 5
  • FICO Score 4, or TransUnion FICO Risk Score 04

Unfortunately, it’s difficult to know which of these scores a given mortgage lender will use. “Unlike any other lending environment, mortgage lenders are required to use a specific brand and generation of credit score,” FICO and Equifax alum John Ulzheimer told NextAdvisor.

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Lenders also look at income, debt, employment history, and other information.

In addition to FICO scores, mortgage lenders also consider income, the debt-to-income ratio, savings, employment history, and down payments, as Quicken Loans explains.

  • For income, they want to see that you can afford the payments on the mortgage.
  • For the debt-to-income ratio, they want to see that the mortgage payments wouldn’t push your monthly debts to more than 43 percent of your monthly income.
  • For savings, they often want to see that you could cover two monthly mortgage payments if need be.
  • For employment history, mortgage lenders often want to see that you’ve worked in the same job or industry for at least two years.
  • For the down payment, the more money you can pay right off the bat, the lower the interest rate will be, “because lenders think you are less likely to stop making your payments if you’ve already invested a significant amount of your money into your loan,” Quicken Loans reports.
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