Real Estate
November 23, 2017
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The truth about how credit scores relate to mortgages

By: Scott Sheldon
September 1, 2017

Credit scores are incredibly important when securing a mortgage financing. They are however only one leg of a four-leg table. Here’s what to remember about credit scores and home loans.

*Credit scores for jumbo mortgages need to be at least 680 or more.

*Credit scores can be as low as 620 for a conforming loan which is $424,100 all the way to the county maximum loan limit. For example, in the County of Sonoma that is a max loan size of $595,700.

*If your credit score is 740 or higher and you’re looking at a conventional mortgage. Raising your score for the betterment of loan terms is a waste of your time. 740 score represent the best credit tier for mortgages.

*Your credit score will not change the need to have manageable debts and or equity. Put another way, if you have excellent credit, but you don’t have income you will not be getting a loan any time soon.

*Changing your credit score from 700 or higher with a high loan-to-value such as over 80 percent loan to value for example will benefit you.

*The most pragmatic way of getting your credit score increased is by paying down credit cards that contain high balances. That is the only sure fire way of getting a credit score increased. If you don’t have credit card balances, but your score is still not high enough the only other thing that would help your score is time.

*A mortgage loan in your name will increase your credit score approximately in the first few months. This is provided you have a healthy credit score to begin with and your credit score pre-mortgage is not sub 600.

*If your credit score is one point off from the needed credit score your lender may be able to still fund your loan on an exception.

*Credit scores are not transferable from lender to lender. You cannot have your credit pulled with one mortgage company and then use that same credit report and work with another mortgage company. Each mortgage company is required to pull their own credit report.

*Applying for a mortgage will not automatically tank your credit score.

If your credit score is anything different than what the mortgage company said, your credit score source may not be reliable. A financial services credit report the mortgage company uses is the most accurate form of credit report as it provides a tri-emerge from all bureaus with the complete history.

*Disputing credit accounts will stop your mortgage dead in its track. You must remove any accounts you have in dispute before your mortgage or pre-approval will be allowed to proceed.

*If your lender only has two credit scores for you there is a possibility they mistakenly included your Social Security number or physical address wrong. Make sure that they have that information 100 percent correct.

*Closing credit cards will take your credit score down and will make your chances of getting a mortgage harder. Don’t close credit cards-ever.

*Your mortgage company will probably pull a soft credit pol; prior to closing escrow to make sure you have not hired acquired any new debt. During the loan process do not apply for new credit.

If you are seeking a new mortgage, talk with a seasoned professional who can walk you through all aspects of your financial profile including your credit picture.

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