Your credit score is one of the most important factors when it comes to being approved by a lender for a mortgage. If it’s too low, you’ll be flat-out rejected, but if it’s not high enough you won’t have access to the lowest rates and best terms.
But there are multiple types of credit scores: which one are lenders looking at when looking at your mortgage loan application? Your scores will be pulled from all three credit bureaus, Equifax, Experian, and TransUnion, each of which uses a different version of the traditional FICO® scoring method.
The good news is, you can check your scores via each of the bureaus’ websites before you apply for a mortgage, but it won’t be free. While you are entitled to a free credit report from each bureau each year, you’ll need to pay to access your actual scores.
Keep in mind that because scoring models used by each bureau are different, and because some lenders may only report to a specific bureau, your score may look different at each one. When this happens, lenders will typically look at the middle number of the three.
The bulk of mortgages issued are conventional loans, in which most lenders are going to expect a score of at least 620 for approval. But that’s the minimum credit score needed, so you won’t get access to the lowest rates; for that, you’ll need a score of 740 or higher.
But there are also FHA loans which are designed to have an easier qualification process for home buyers. With an FHA loan, you’ll need a credit score of at least 500 to qualify for a loan with a 10% down payment, whereas a score of 580 or higher can get you access to a down payment of only 3.5%.
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