FICO Score

How Is My Credit Score Used in the Mortgage Process?

Your credit score plays a significant role in the mortgage purchase and refinance processes.

Your middle representative credit score influences the mortgage options that may be available to you, and it influences your interest rate and documentation requirements. Learn more about your credit score using the resources below.

About Your Credit Score

Your credit history is rated using a numerical score. Each of the three major credit bureaus – Experian, TransUnion, and Equifax – provide their own proprietary credit scores. For underwriting purposes, the middle score among the three is used. This credit score is a representation of your credit history, estimating your default risk and your likelihood of repayment.

What Does Your Credit Score Mean?

Most homebuyers’ credit scores fall in the range of 300 to 850. This score is based on a number of different criteria, from payment history to credit inquiry volume. Each item is weighted differently and is used to calculate a final mathematical score, which reflects your ability to repay. Credit scores are dynamic and change constantly depending on changes in your payments, balances, accounts, and acquisition of new credit.

The factors that influence your credit score are:

  • Payment history.

    Have your payments been made in a timely manner? Have any late payments been reported? The more recent the derogatory information is, the greater it will influence your score.

  • Credit card balances.

    What is the current balance on your credit cards compared to the total credit line available? As your balances increase, your score will be impacted.

  • Credit history.

    What accounts have you maintained over time? How long have you had them?

  • Credit types.

    What types of credit have you obtained? Is your credit installment debt or revolving?

  • Credit inquiries.

    A credit inquiry refers to a request to look at your credit file and generally falls into two types:

    • Hard Inquiry – Typically made by lenders when you are applying for credit and will impact your credit score.
    • Soft Inquiry – Inquiries that do not impact your credit score and are generally pulled by existing account lenders, for prescreening by prospective lenders, and when you request a copy of your personal credit report.