What Credit Scores Mortgage Lenders Use and Why
When you're applying for a mortgage, your credit score plays a key role, but the score mortgage lenders use may be different from the one you typically check.
Mortgage-specific credit scores are designed to assess your ability to handle long-term loans, which means they look at different factors than the scores you're accustomed to seeing. Understanding how these scores work can help you better prepare for the home-buying process.
What Credit Score Do Mortgage Lenders Use?
Mortgage lenders don’t rely on the same credit scores that you might see from personal finance apps or when checking your credit report. Instead, they typically use scores from FICO or VantageScore, specifically versions designed for mortgage lending.
The most commonly used score is the FICO Score—particularly FICO Score 2, 4, or 5. These versions differ slightly from the general FICO Score you might be familiar with because they take into account factors that are more relevant to mortgage lenders, like your payment history on large loans or your existing debt.
Understanding which credit score lenders use can help you know what to expect and why the number you see on a personal credit report might be different from the score your lender pulls.
Which Credit Score Is Used for Mortgage Loans?
Lenders pull one of the mortgage-specific credit scores to determine your loan eligibility. These scores are based on the same principles as regular credit scores but are tailored to assess the risk of lending large sums of money for long periods.
FICO Score 2, 4, or 5 and VantageScore are commonly used to evaluate your mortgage application. While all credit scores use similar factors (such as payment history and credit utilization), mortgage-specific scores give more weight to things like your history with long-term loans and how much debt you currently carry relative to your income.
Knowing this can help you get a better sense of where you stand. A score that looks good to you on an app might be lower when it's calculated using the mortgage-specific model.
How Mortgage-Specific Scores Differ from Regular Credit Scores
So, why do mortgage lenders use specific credit scores instead of the regular ones you might see through personal credit checks?
The key difference lies in the way these scores weigh your credit history. Mortgage-specific scores tend to place more emphasis on your ability to manage large, long-term debts, such as previous mortgages, car loans, or other significant obligations. Since mortgages are long-term commitments, lenders want to make sure you’ve demonstrated the financial responsibility required to manage that type of loan.
Regular credit scores, on the other hand, might not give as much weight to this kind of history. As a result, a consumer-focused credit score could look better, but when a mortgage lender pulls your score, it may be lower due to the different weighting factors.
What Happens if You Don’t Meet the Credit Score Requirements?
If your mortgage-specific score isn’t where you’d like it to be, there are practical steps you can take to improve it before applying for a mortgage:
- Check Your Credit Report: Look for any errors that may be lowering your score. Dispute inaccuracies with the credit bureaus.
- Pay Down Debt: Reducing your overall debt—especially high-interest debt—can positively impact your credit score. Focus on paying down credit card balances and making timely payments.
- Avoid New Debt: Taking on new loans or opening new credit accounts in the months leading up to your mortgage application can hurt your score. It’s best to keep your credit use stable and avoid large purchases.
- Be Patient: It takes time to improve your credit score, so if you’re planning to buy a home, start working on your credit at least 6–12 months in advance.
The Bottom Line
Mortgage lenders use specific credit scores to determine the risk of lending a significant sum of money for a long-term loan. By understanding how mortgage-specific credit scores differ from regular scores, you can better prepare yourself for the home-buying process.
If your score isn’t where you’d like it to be, take action now to improve it, and you'll increase your chances of securing a mortgage on favorable terms. By focusing on the details and staying proactive, you can feel confident about your path to home ownership.
