How Does Mortgage Credit Scoring Work?

If you are considering buying a Los Angeles home, Gene Mundt, an Illinois and Wisconsin mortgage originator provides an in-depth overview of how mortgage credit scoring works.

Myth-Busting Mortgage Credit Scoring

Over the years, Mortgage Credit Scoring has evolved.  It continues to do so at a fairly constant and rapid rate …  

As a result, a large supply and wide variety of updated articles and reports regarding the topic of Credit Scores (Fair Isaac Corporation (FICO) scores) can be found easily pretty much all the time.  The following link provides an example of one of the many articles that I found while doing a quick search today.  It focuses on a new change that may be coming to some consumers’ Credit Scores:

Credit scores may jump this month thanks to new scoring rules enacted after CFPB study

While there are many reliable helpful sources of information to be found, there are also many unreliable misleading “myths” to be found too.  Myths that can prove harmful to consumers or potential borrowers, should they be believed or put into practice.

Those myths are what I hope to confront and “bust”.

To do that, I provide factual references for those looking to improve their Credit Scores or borrow money, either to:

  • Facilitate a real estate transaction (buying)
  • Sell in order to buy another home step-up)
  • Buy a second or investment home
  • Refinance

It’s very important that home buyers/borrowers know and understand: 

   1.  Consumers are increasingly aware of the importance of credit scores.  As stated above, that is due to the amount of information and tools easily available to them via the internet, their Lender, and elsewhere.  This info, when correct and utilized properly, can prove to be of great benefit.

How is it beneficial?

 If a consumer has credit issues or poor Credit Scores:  Some landlords may not rent an apartment/home to you.  Or if they do rent, the security deposit required may be larger … or made non-refundable.  It’s even possible that a landlord because they feel increased financial risk, may charge you more monthly for your rental.

You may also have difficulty obtaining insurance.  Or if secured, the coverage may cost you more because of your lower Credit Scores.  Other services you need (such asutilities, cell service, etc.) may be more costly or even unattainable if you have poor credit.

It’s a fact:  Poor credit can cost you in a myriad of ways.  Awareness of your Credit Scores (resulting in the improvement of your credit and Credit Scores) can improve your life and save you money.

2.  Home buyers/borrowers should remember:  While some credit card companies may provide a free Credit Score to their credit cardholders, those scores differ from those used by Mortgage Lenders for their Pre-Approvals or formal Mortgage Approval purposes.  (Note: Credit Scores provided by Credit Card companies are typically higher than those used by Lenders.)

As a consumer, it’s best to not give too much weight to the scores received monthly via credit card companies.  For specifics on the Credit Scores that will be used for your mortgage financing, it’s best to talk to a Mortgage Lender.

And here’s why …

Credit Reports compiled for Mortgage purposes use a different credit scoring model (FICO) than those used for car dealers, credit card companies, etc.  Even those businesses that provide credit repair and credit improvement advice/services use a different credit scoring model than that used by Mortgage Lenders.

Although 3 Credit Scores are provided to Mortgage Lenders via the 3 Credit Bureaus …

 3.   For Single/One Borrowers:  The MIDDLE Credit Score is the determining score used by Mortgage Lenders for qualifying for Credit Approval.  It is also the MIDDLE Credit Score that is used for Interest Rate Determination.

4.  For Two or More Borrowers on a Loan:  The LOWER Middle Credit Score is the determining score for qualifying for Credit Approval and Interest Rate.

An example of this scenario is:  A husband and wife apply for a Mortgage.  The LOWER of their two Middle Scores is the determining Credit Score utilized by the Mortgage Lender.

5.  The 3 credit sources/Credit Bureaus used for Mortgage Application are: 

Experian, TransUnion, and Equifax.  The address and contact information for each Credit Bureau are as follows:


P.O. Box 4500
Allen, TX   75013
Phone:  888.397.3742

Model Used:

Fair Isaac (Version 2)

Credit Score Range:

Low:  320     High:  844


     P.O. Box 2000

Chester, PA   19016
Phone:  800.916.8800
Model Used:

FICO Classic (04)

Credit Score Range:

Low:  309     High:  839

P.O. Box 740241
Atlanta, GA   30374
Phone:  800.685.1111

Model Used:


Credit Score Range:
Low:  334     High:  818

 6.  A FREE Annual Credit Report is available at:

As you can see from the information provided above, Credit Scores … and how they are compiled … have many moving parts.  They are detailed and intricate in nature.

And there are many “models” and methods in which Credit Scores are compiled.  That those models and methods evolve with regularity, only makes it harder for consumers to understand them.

Adding to some consumers’ confusion is this:  Even if all 3 Credit Bureaus have the exact same consumer account information available to them for scoring, the Credit Scores each reaches will vary.  It’s important to also point out that each different scoring model and range of scores carry a different “weight” as to their credit scoring.

Clear as mud, right??

So, it’s easy to see why the topic of Credit Scores is so misunderstood.  Why so many myths and fallacies surround it.

It’s also easy to see why, when it comes time to start preparation for mortgage financing and home buying, it’s so very important to work with an experienced knowledgeable loan officer.  Your choice of loan officer matters greatly.


  • Please check your Credit Report for errors or credit fraud (at minimum) once each year at the site mentioned above …


  • Monitor your Credit Report more frequently, if you have concerns or if errors have appeared on a previous Report
  • Performing this annual check will NOT hurt your credit scores!

And Remember:  Loan Officers do more than loans.  A good deal of my time as a Loan Officer is spent on the dispensing of credit information.  You should never be afraid to reach out to me should you have questions.

Find and work with a Loan Officer that is well-versed in credit scoring.  But make sure you choose a Loan Officer that is also willing to devote the time to advise and assist you with credit improvement, should you need that assistance.

It’s far easier to address issues early in their existence … and to have ample time for credit improvements and repair.  It’s far less stressful too.

Myths Busted!


Need Help? Have questions? Fill out the CONTACT FORM or call Jane at 310-351-9208

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