You check your credit score through an app, your bank or your credit card account.

720.

Great! You're feeling pretty good about buying a house.

Then you talk with a mortgage lender, they pull your credit and tell you a different number.

Wait...WHAT? 😳

Before assuming something is wrong, there's something every home buyer should know:

The credit score you see online may not be the same credit score your mortgage lender sees.

Why Are My Credit Scores Different?

One of the biggest misconceptions about credit is that each person has one universal credit score.

You don't.

There are multiple credit scoring models designed for different purposes. The score provided by a free credit-monitoring service, bank or credit card company may use a different scoring model than one used during the mortgage lending process.

So seeing two different numbers doesn't automatically mean someone made a mistake.

You Have More Than One Credit Report

The three major credit bureaus are:

  • Equifax

  • Experian

  • TransUnion

The information reported to each bureau isn't always identical or updated at exactly the same time.

One account may have been updated with one bureau before another, for example.

Because the underlying information can vary, your scores can vary too.

Mortgage Lending Has Its Own Requirements

When you're applying for a mortgage, your credit score is important — but it isn't the only thing your lender evaluates.

Depending on the loan program and lender, they may also consider things such as:

  • Income

  • Employment

  • Existing monthly debts

  • Debt-to-income ratio

  • Assets and available funds

  • Down payment

  • Credit history

  • Property type

  • Loan program

That's why we don't recommend deciding whether you're ready to buy a house based solely on the number displayed in a credit app.

What If My Mortgage Score Is Lower Than I Expected?

First: don't panic.

A lower-than-expected score doesn't automatically mean you can't buy a home.

Talk with your lender about what the score means for your specific situation.

Depending on your circumstances, you may already qualify for a mortgage program. If you don't, your lender may be able to explain what needs attention before you're ready.

Sometimes the conversation isn't:

“No, you can't buy a house.”

It's:

“Not yet. Here's what we need to work on.”

And we'd much rather have that conversation early than discover it after you've fallen in love with a house.

Be Careful About Making Credit Changes on Your Own

This is important.

If you're preparing to apply for a mortgage, don't automatically start closing credit cards, opening new accounts or paying off everything you owe because you think it will improve your score.

Something that sounds logical may not have the effect you expect.

Before making significant changes, talk with your mortgage professional about your specific situation.

What About Credit Score Apps?

Credit-monitoring apps can still be useful.

They can help you keep an eye on your credit, watch for unexpected changes and become more aware of the information being reported.

Just remember:

The score you're watching is a helpful piece of information. It isn't necessarily the exact score a mortgage lender will use.

When Should I Talk to a Mortgage Lender?

Earlier than most buyers think.

You don't need to have a house picked out first.

If you're considering buying in the next several months, having an early conversation can give you time to understand your financing options and address potential issues before you're ready to make an offer.

You may discover you're ready sooner than you thought.

Or you may leave with a plan that puts you in a stronger position a few months from now.

Either outcome is better than guessing.

Thinking About Buying a Home in Central Wisconsin?

Don't let a number on an app make the decision for you.

A mortgage professional can help determine where you actually stand financially, while we can help you understand the buying process, your local market and what happens once you're ready to start looking.

Buying your first home can feel overwhelming when you don't know what comes next.

That's exactly why you don't have to figure it all out by yourself.

Lakes Region Team | Terra & Jim
Weichert, Realtors®

We live here. We work here. We love it here.