Why Is My Credit Score Different From My Mortgage Lender?

By Andy Harris, President of Vantage Mortgage Brokers

Consumers today have access to more information than ever before. Financial education and access to credit profiles have helped consumers improve or maintain their credit ratings and scores, but not without confusion when applying for a mortgage.

However, some educational information can also differ, given all the credit scoring models available. Credit cards, banks, and other service providers might provide your FICO Score, but it may only be one credit bureau and a model not used by mortgage lenders.

It’s common for your credit score to differ from what you see on consumer credit monitoring apps and what your mortgage lender uses. Here’s why:

1. Different Scoring Models

• Consumer Credit Scores: Apps like Credit Karma or Experian often show scores based on the VantageScore or a general-purpose FICO Score model.
• Mortgage Lender Scores: Most mortgage lenders use specialized versions of the FICO Score, such as FICO Score 2, 4, or 5. These models focus on factors relevant to lending for large financial commitments like a home loan.

2. Data Update Timing

• Credit scores can vary based on when they’re calculated. The data lenders pull might reflect newer or slightly older credit activity compared to your consumer credit app.

3. Credit Bureau Differences

• Mortgage lenders typically pull reports from all three credit bureaus: Experian, Equifax, and TransUnion. The score they use might be the middle score or the one from a specific bureau. Apps may show scores from just one bureau.

4. Weighting of Factors

• The mortgage score models place more weight on long-term credit history, payment consistency, and other factors that predict risk over a long period. This focus can result in a different score than models designed for short-term or general creditworthiness.

5. Custom Adjustments

• Lenders sometimes have internal adjustments or thresholds for credit scores based on their underwriting criteria, which can further influence the credit score they consider.

What You Can Do

If your lender’s score surprises you, you can:

• • Ask which credit score model and bureau they used. Today, they generally use the older FICO models 2, 4, and 5 for traditional mortgage programs. A reasonable consumer site to use and monitor all scores, including mortgage scores, is www.myfico.com.

• • Review the credit report they pulled to ensure there are no errors.

• • Visit our Learning Center for more information on credit scoring models, ways to improve credit, etc.

• • Check your report annually for free at www.annualcreditreport.com

• • Work on improving factors that matter for all scoring models, like payment history, credit utilization, and length of credit history.