It's not a complete snapshot of your overall financial picture, but lenders look at it when evaluating you for credit cards, loans and mortgages. But like all things in the financial world, credit scores are nuanced. There are actually multiple versions of your credit score, and they all mean different things to lenders.
For the majority of general lending decisions, such as personal loans and credit cards, lenders use your FICO Score. VantageScore , another scoring model, is a well-known alternative. If you're planning to apply for a mortgage, be aware that the credit score you see on your application might differ slightly from the one you're used to. It might even be different than what comes up when you monitor your credit , or even when you apply for a car loan.
Banks use a slightly different credit score model when evaluating mortgage applicants. Below, we go over what you need to know about credit scores you're looking to buy a home. That's because FICO tweaks and tailors its scoring model to best predict the creditworthiness for different industries and bureaus. You're still evaluated on the same core factors payment history, credit use, credit mix and age of your accounts , but the categories are weighed a little bit differently.
It makes sense: Borrowing and paying off a mortgage arguably requires a different mindset than keeping track of credit card balances and using a credit card responsibly.
And while FICO has partnered with some banks and lenders to share specific FICO scores with customers, another loan company might use an entirely different version in their decision-making. For Webb, the Utah resident, the difference in scores meant that he and his wife had to revise their plans. Instead of buying an existing home, they plan to purchase a new house that won't be ready for another nine months or so.
Webb hopes to improve his score between now and then so he can lock in the best interest rate possible before they go to settlement. Soon after Webb's disappointing experience, the disparity in his scores was explained to him in a personal finance class at the University of Utah, where he's working on both a bachelor's degree in human family and community development, and a certified financial planner designation.
Bingham, the credit expert, was there as a classroom guest to explain to students the differences among credit scores. For its part, Credit Karma does provide information on the differences between credit scores on its website. And in emailed comments to CNBC, a Credit Karma vice president, Dana Marineau, said it's "unlikely that a consumer will get the same credit score that his or lender is using at the time of a loan application. Nevertheless, some experts question how helpful it is to provide a credit score if it's unlikely to be the one used the next time you apply for a loan or credit.
Skip Navigation. Key Points. FICO and VantageScores, the two most familiar brands in the credit-scoring world, use different algorithms to arrive at your score. One recent mortgage applicant discovered a difference of more than 40 points between his scores from those two models.
The trouble comes if you open too many accounts or get too many loans at once. This is the case if you have a single new inquiry. You can also feel free to call one of their Home Loan Experts at Rocket HQ and CardRatings may receive a commission from card issuers. Credit 4-minute read October 12, As a consumer, you know just how important your credit score is in landing you the best credit card offers, car loans and making you an attractive potential tenant.
But how can it affect how much your mortgage costs you? Credit 3-minute read October 15, Which errors on a credit report could impact your score, and how do you fix credit report errors?
Below, read about the top errors you should look for on a credit report and how to check for them. Credit minute read June 28, For those who are inexperienced, establishing good credit can feel daunting. Check out our guide on how to build credit and create healthy financial habits. For the purposes of calculating DTI, your minimum credit card payment is used.
Credit Scores The other piece that lenders get when they pull your credit, in addition to looking at your credit report, is your credit score. Late payments hurt your score while a history of on-time payments will help.
Focus on taking care of the most important things, such as paying your bills on time, paying down debt, and only applying for credit when you need it.
Stay in the know with our latest home stories, mortgage rates and refinance tips. I would like to subscribe to the NextAdvisor newsletter. See privacy policy. The Marijuana Industry Is Booming. Flat Cash Back Vs. Before you go, sign up for our newsletter to get NextAdvisor in your inbox.
Credit Cards. Car Insurance. Next Advisor Logo. Share Share on Social Media.
0コメント