Real Estate
January 23, 2018
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Is your credit score correct for a mortgage?

By: Scott Sheldon
January 12, 2018

Consumers thinking about getting a mortgage should know where they stand. Here is what you might not know about your credit score when it comes to applying for a mortgage.

The truth is not all credit reports are created equal. Many of the consumer credit reporting services that are available in the market place today such as Credit Karma do not give you the same type of data that a mortgage credit report does. The granddaddy credit report bar none is a financial services credit report. A financial services credit report is the most accurate type of credit report because it provides a credit score from each bureau.

Most of the consumer credit reports available in the market place only provide one score or no scores or a combination of multiple reports with inconsistent information as it pertains to accurateness.

For example, if your credit score is 700 from Credit Karma then when you go apply for a mortgage, your credit score is 650. This disparity might be because the credit report that the mortgage provider obtains is all three credit scores and they use the middle of the score. 

The other misconception in the marketplace is that applying for a mortgage makes your score tank. That is just not true. The federal government encourages you to shop for a mortgage and does not penalize you from a credit reporting standpoint if you’re having mortgage lenders pull your credit report. 

Consumers can get into trouble when they are applying for a mortgage and diverse types of credit entities at the same time e.g. a mortgage inquiry, a cell phone inquiry and a cable inquiry. 

Another reason that there could be a disparity in your credit score versus the credit score that the lender obtains is that each creditor you have reports to the different bureaus at separate times of the month and there is not an accurate way to pin point in time when the optimal time to pull a copy of your credit report is.

A credit report is an accurate reporting of your credit 30 days ago. Put another way, you might see some debts on your credit report that are already paid off based on when your creditor reports your activity to the bureaus. If you need to get your credit score up most mortgage companies can do what’s called a rapid rescore to show that you’ve paid down a credit card for example to get your credit score up a couple of notches to change your mortgage loan program or your down payment or get you into a more affordable mortgage loan. Let the mortgage company help with your financial situation including your credit.

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Scott Sheldon is a local mortgage lender, with a decade of experience helping consumers purchase and refinance primary homes second homes and investment properties. Learn more at www.sonomacountymortgages.com.