Which Credit Score Do Mortgage Lenders Look At?

Your credit score is central to a mortgage lender’s decision. This three-digit number indicates your likelihood of repaying borrowed funds. A strong credit profile can lead to more favorable loan terms and interest rates, directly impacting your mortgage’s overall cost.

Main Scoring Models Used by Mortgage Lenders

Mortgage lenders primarily rely on specific FICO score versions to evaluate credit risk. FICO scores are predominantly used in mortgage lending due to industry standards set by government-sponsored enterprises like Fannie Mae and Freddie Mac. These entities purchase most conventional mortgage loans and mandate particular FICO score versions.

Lenders typically pull FICO Score 2 from Experian, FICO Score 4 from TransUnion, and FICO Score 5 from Equifax. These are older, industry-specific FICO versions designed for mortgage lending. While newer FICO models and VantageScore exist, FICO scores remain the standard for mortgage underwriting.

Fannie Mae and Freddie Mac set guidelines for the loans they purchase, influencing broader mortgage market credit score requirements. They have approved FICO Score 10 T for future use, but FICO Score 2, 4, and 5 are currently prevalent. Lenders often obtain scores from all three major credit bureaus and typically use the middle score.

Understanding How Your Score Impacts Mortgage Eligibility

Your credit score significantly influences mortgage qualification and terms. Lenders use it to assess lending risk, directly affecting interest rates and loan amounts. A higher score signals lower risk, leading to more attractive loan conditions.

Minimum credit score requirements vary by loan type. Conventional loans generally require a FICO score around 620. Government-backed loans, like FHA loans, often have more flexible requirements. For FHA loans, a 580 score may qualify for a 3.5% down payment, though some lenders prefer 620.

VA loans, backed by the Department of Veterans Affairs, have no official minimum score from the VA. However, most private lenders require at least 620, though some accept 580. USDA loans for rural properties also lack a strict USDA minimum, but lenders generally seek 620, often 640 for automated approvals. A higher credit score, particularly above 740, can lead to the most competitive interest rates and better overall loan terms.

Key Elements of Your Mortgage Credit Score

FICO scores, including those used for mortgages, are calculated based on five main categories of information from your credit report. Each category contributes a specific percentage to your overall score. Payment history holds the largest weight, accounting for approximately 35% of the score. This category reflects whether past credit accounts have been paid on time, noting any late payments, collections, or bankruptcies.

The second most influential factor is the amounts owed, which makes up about 30% of the score. This assesses the total debt you carry and, importantly, your credit utilization—the amount of available credit you are using. A lower utilization ratio generally contributes to a better score.

The length of your credit history accounts for approximately 15% of the score. This considers how long your credit accounts have been established and the average age of all your accounts.

New credit inquiries and recently opened accounts represent about 10% of the score. Opening multiple new credit accounts in a short period can indicate increased risk and may temporarily lower your score.

Finally, the types of credit you use, or credit mix, contributes the remaining 10%. This category evaluates the variety of credit accounts, such as credit cards, installment loans, and mortgages, demonstrating your ability to manage different types of credit responsibly.

Obtaining Your Mortgage Credit Scores

Accessing the specific FICO scores that mortgage lenders use can differ from checking the common free scores often provided. Many free credit score services offer a VantageScore or a general FICO Score 8, which may not be the exact versions (FICO Score 2, 4, and 5) that mortgage lenders pull. It is important to recognize that scores can vary between different credit bureaus and scoring models.

To get a clearer picture of the scores lenders see, you may need to obtain reports directly from the three major credit bureaus: Experian, TransUnion, and Equifax. Some financial institutions, including banks and credit card issuers participating in the FICO Score Open Access program, provide free FICO scores to their customers. Paid services, such as myFICO.com, also offer access to the specific FICO score versions commonly used in mortgage lending.

Lenders typically pull a tri-merge credit report, which combines data from all three bureaus and provides a FICO score from each. Checking your scores from each bureau is a prudent step, as slight variations in the data reported to each bureau can result in different scores. While the VA does not set a minimum credit score, lenders will still look at a borrower’s overall financial profile, including credit history, when assessing eligibility.