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I want to get a mortgage now in order to buy a property. As my credit was not good, I was taking steps to improve it also was also keeping a track of the credit scores. My credit score ranges between 695to 740. My middle score is 715. But, to my surprise, when the bank runs the credit check, they find the credit score to be 655. I don’t know how there is such a big difference. Can anyone help?

smithsussane · Posted: Fri Jun 24, 2011 12:34 am Post subject:

Hi Cecilia!

Welcome to forums!

It is quite surprising to note that there is such a huge difference between the credit scores that you're seeing and that you're lender is seeing. You can request your lender to show you the credit history part of the credit report. If you find any errors, then you should ask the lender to get a "rapid re-score."

Feel free to ask if you've further queries.

Sussane

jimgilly · Posted: Fri Jun 24, 2011 4:18 am Post subject:

There are a variety of credit scores available but the only way you are going to get the actual scores mortgage lenders use is to go through someone who originates loans be it a bank, credit union or direct lender.

So if the bank told you your credit score was 655 this is the score they are using and what you need to be concerned about. You need to find out why your score is not higher and take whatever steps are available to get your scores up. Almost everyone has 3 credit scores - one from TransUnion, one from Equifax and one from Experian. Lenders typically take the middle of the 3 scores when evaluating someone for a home loan. Better pricing will usually be at credit scores of 680, 700, 720 and 740 or sometimes higher.

If you are purchasing a home with less than 20% down and want to go conventional (ie not FHA, VA, RD) your credit score will also have an impact on whether or not you will qualify for private mortgage insurance and what the rates will be for that required addition to your regular monthly payment. Best to find a lender that can help you with your credit scores as 655 is no longer an ideal credit score for someone looking to get a mortgage.

chrisgummerson · Posted: Fri Jun 24, 2011 8:36 am Post subject:

Also, keep in mind, that each time your credit is pulled, even at the same time by different people, will get different results. If you had your credit pulled at the end of one month, then the start of the next month you pulled your credit again, but - your credit card reported at the second time, that you charged some debt on your account. There are many factors to the credit scoring system. Also if you pulled your credit from a personal site, and your lender uses a residential mortgage report, they will also vary. It depends on the reporting from your actual creditors. Good luck

it_guy08 · Joined: 22 Jun 2011 Posts: 7 2.05 Dollars($)

Your pulling your CREDIT SCORES not your FICO Scores - these are the scores businesses use when lending for Mortgages. I went through 1.5 years of cleaning off 8k or so worth of credit and finally got approved several months ago and I close on July 29th on my first home FHA 30yr Fixed with 4.62%. I had just finally hit over the required 620 before I was approved. I think my middle is 649 now. I had the same question you did and my Lender and Agent explained it to me. You can get the actual scores they will use by going to the FICO website. Also something else I've been able to confirm - Even though pulling your own scores will not effect your scores just be careful because to many inquires throw up red flags for lenders. Then you'll be hit with "Lucy, you got a lot of explaining to do"...lol

Hope this helps - from a fresh Buyer!

jimgilly · Posted: Fri Jun 24, 2011 9:21 am Post subject:

FYI a FICO score is a credit score, whereas all credit scores are not FICO scores. As I stated earlier, if you want the same credit scores mortgage lenders are going to use you need to go to the right sources to get these scores.

Too many people think the credit scores they can get on the internet and sometimes for free are the same scores used by mortgage lenders. This is never the case. They are basically what are called "educational" scores and are often higher than what will be used when you go to get a mortgage as the OP found out.

Posted: Fri Jun 24, 2011 9:53 am Post subject:

They can also be classified as a "soft" pull. They take a sneak peek at your credit, this is how you get those pre-approvals in the mail. When you pull your own credit through anyone other than a lender, you will not be hit for an inquiry or lower your score. If you pull your credit through lender, bank, credit union, car dealer, it will all place an inquiry. Inquiries, derogatory accounts, public records and high balances are the worst. You want to keep using your credit, dont pay off to 0 and not use. Best advise is keep all your balances under 40% of the credit limit. Use the cards, and pay on time. Unused credit is not improving scores. Credit reports are based on the ability to use, manage and pay debts. Its not to open accounts and then not use them and have 0 balances, or inactive.

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