What Is My Credit Score And How Does It Affect My Mortgage?

Summary

Your credit score is listed on your credit report.

It is a critical factor in whether your mortgage is approved and what your interest rate is.

Basics

Your credit report usually has three different credit scores.

Each score is from one of the three credit bureaus.

A mortgage lender usually uses the middle of the three credit scores. This is known as a "mid score".

Your credit scores from different bureaus are usually within a similar range. For example, your credit scores may be:

• 720
• 706
• 691

Sometimes there is a substantial difference between these scores.

Ratings

A credit score over 720 usually gets a borrower the best possible interest rates.

As your credit score declines the interest rates offered by lenders increase.

Mortgage lenders typically offer many different loans.

Each of these loans has a different set of criterion for approval. One loan may require a minimum credit score of 680, while another loan may require a credit score of at least 580.

Lenders may also make exceptions to their guidelines if there are extenuating circumstances.

There are loans for all types of borrowers, even borrowers with credit scores below 500.

Often times a borrower with a lower credit score may be approved for a loan type but is capped in the amount of money they can get on a loan.

For example:

• a borrower with a 720 credit score may be able to cash out 100% of their property value
• a borrower with a 600 credit score may be approved for the same loan but only cash out up to 90% of their property value