As you can see, there are some differences but most industry references to the FICO® Score versions commonly used in mortgage lending will have the appropriate version 5, 2 and 4 version number to the corresponding credit bureau listed. Your FICO Score is calculated by the data analytics company Fair Isaac Corporation, and it's based on data from your credit reports. Which score do lenders use for mortgages? While the FICO ® 8 model is the most widely used scoring model for general lending decisions, banks use the following FICO scores when you apply for a mortgage: FICO ® Score 2 (Experian) But, a key difference is that while FICO requires at least six months of credit history before it provides a score, VantageScore calculates a credit score after one month of credit history. Like FICO, VantageScore is often used by landlords, banks, and mortgage lenders to calculate the risk involved in lending someone credit or money. The 3 most known credit reporting agencies (Equifax, Experian and TransUnion) calculate your credit score according to the FICO scoring system, and these credit reporting agencies decide whether you are eligible for a credit card or credit through this type of score. According to FICO, more than 90% of top lenders use FICO® scores. I also heard that what you pull from the 3 bureaus is not what the banks see at all. This 1.589% savings in APR may seem negligible. They help lenders like credit card companies, mortgage lenders, and auto lenders decide how reliable of a borrower you’re going to be. But it means saving about $260 per month on your mortgage, or $3,120 per year and roughly $93,600 over the lifetime of the loan. The lender then compares the middle score between the two borrowers, choosing the lower score for qualifying purposes. Lenders have identified a strong correlation between Mortgage performance and FICO Bureau scores (FICO score). FICO 8/9 are used for lines of credit. Lending a huge amount of money is risky business. How do my FICO® scores affect my ability to get a mortgage? Mortgage lenders typically use FICO Scores 5, 2 and 4 when determining whether or not to approve a loan. Mortgage lenders check your FICO score -- a number between 300 and 850 -- which each of the three major consumer reporting agencies, or bureaus, generate. When they say they use the “collective results,” it doesn’t mean they take the average credit score of the applicants. Your credit score is a three-digit number that indicates your creditworthiness in a nutshell. To the best of my knowledge of all the lenders on this board which have been asked about over the years, only one was a portfolio (meaning they hold the loan) lender using FICO 8. Mortgage lenders will go by the lower of the two borrower’s middle credit scores. FICO ® Score 2, FICO ® Score 4 and FICO ® Score 5 are used in the majority of mortgage-related credit evaluations. If you have a 700 on Experian, 680 on Equifax and 660 on TransUnion, the 680 score would be used. While most lenders currently use FICO Score 8, it’s important to note that a FICO Score 9 does exist and it is technically newer. CNBC Select may receive an affiliate commission when you click on the links for products from our partners. Yes, they do. Lenders started using FICO® scores, created by Fair Isaac Corporation, in 1989, and the scoring models have been updated several times since. FICO and VantageScores, the two most familiar brands in the credit-scoring world, use different algorithms to arrive at your score. They use the middle of three FICO scores to determine eligibility. According to Darrin Q. English, a senior community development loan officer at Quontic Bank, mortgage lenders pull your FICO score from all three bureaus, but they only use one when making their final decision. "We'll use that median score as the qualifying credit score," says English. This means 43% of your income can be used to cover your non-mortgage debts as well as your mortgage. FICO® scores. It can impact everything from taking out a mortgage, to buying a car, renting an apartment, or even refinancing your student loans. They can obtain your credit report from three bureaus – Experian, TransUnion and Equifax.With your credit reports in hand, lenders can use credit scoring models such as the FICO credit score or VantageScore. Mortgage lenders understand that credit bureau information is not as consistent or identical as it should be. When you apply for a mortgage with your spouse, the lender compares your middle score to your spouse’s score. It is used by creditors to assess the risk of lending money to a potential borrower. Experian IdentityWorks℠ Premium monitors all three of your reports to make you aware of activity including score changes, new inquiries and accounts opened in your name, changes to your personal information and suspicious activity detected. Do mortgage lenders use FICO® Score 8 from all three credit bureaus or FICO Score 8 from one and FICO® Score 5 from another? How do lenders calculate your mortgage score? And, in a process that only exists in mortgage lending, the lender bases its decision not on your highest credit score, not on your lowest score, but rather on the middle numeric score. What are FICO® scores, and how do I get mine? And in 1989 the most widely adopted credit score was created by the Fair Isaac Corporation and is now most often referred to by its acronym—FICO®. That's because FICO tweaks and tailors its scoring model to best predict the creditworthiness for different industries and bureaus. Banks use a slightly different credit score model when evaluating mortgage applicants. Since then, only a few lenders have adopted it. When you apply for a mortgage, lenders consider your credit score to assess whether you're a risk for a mortgage. Mortgage lenders use the FICO credit score calculated according to this credit scoring system. Here's what, and here's what you can do about it. I’ll save you the suspense. And if you are applying for a mortgage with another person, such as your spouse or partner, each applicant's FICO 2, 4 and 5 scores are pulled. They help lenders like credit card companies, mortgage lenders, and auto lenders decide how reliable of a borrower you’re going to be. Which FICO Score Do Mortgage Lenders Use? If you apply for a mortgage with another person, that’s six credit scores they may be able to use. The bank identifies the median score for both parties, then uses the lowest of the final two. Your score is the major deciding factor in whether you qualify for a credit card or loan, and what your interest rate will look like. Here's how the free and paid plans compare, 3 tips for refinancing your mortgage, even with a bad credit score, Minnesota residents have the highest average credit score—here's how other states compare, This is the average credit score for someone with a credit card balance, The average FICO Score reached a record high in 2020—here’s the average credit score in every state. Hope this provide some clarity. FICO Scores are updated regularly to reflect changes in consumer behavior and lending practices. While the FICO® 8 model is the most widely used scoring model for general lending decisions, banks use the following FICO scores when you apply for a mortgage: As you can see, each of the three main credit bureaus (Equifax, Experian and TransUnion) use a slightly different version of the industry-specific FICO Score. 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