Many consumers are now utilizing one of the many online credit monitoring services such as Credit Karma, Identity Theft, My Fico, etc.  Equifax, Experian and Transunion all offer their own monitoring services as well.  These services help to ensure the accuracy of what is on your credit history and alert you to any fraudulent activity.  In most cases these services also give consumers access to their credit score.  However, what they don’t realize is that the score they are being shown is not the same as the scores used by mortgage lenders.


What Scores Do Banks Use?

Mortgage lenders typically use the mortgage FICO scores generated by one of the three major credit bureaus.  The three major companies are:

  1. TransUnion
  2. Experian
  3. Equifax.

But an individual does not have just one FICO score.  There are many different FICO models.  For example, FICO sells several versions (8.0, 9.0, classic, etc.) as well as separate models for auto lenders, mortgage lenders, credit card banks, etc.  And to make matters more confusing, FICO is just one of many brands of scores out there.  The credit bureaus and other companies have developed alternative score models such as Vantage Score, NextGen Score, Pinnacle, and Delphi scores.   Somewhere in the fine print when you enroll for online monitoring you are told which score you will be getting.  Some companies spell out the version of score they are giving you pretty clearly and others tend to bury the details in a long disclosure that is overlooked by many.  Upon researching multiple services I have found they are most likely providing the score for FICO 8 or the Vantage score.  None of the services that I have investigated have provided the same version that mortgage lenders use.


Why Are There So Many Different Numbers?

Each scoring model has the research of millions of credit profiles behind it.  The credit report data is sorted via a very complex algorithm.   The algorithm determines how certain factors impact a borrowers likelihood to repay a debt on time.  Each of the scoring models weighs certain relevant factors slightly differently.  The major factors considered are:

  • The length of time account(s) have been opened
  • Frequency of late payments
  • Amount of available credit
  • Number of collection accounts
  • Other major derogatory events

Thus even when the exact same data is put into all three scoring models, they will likely all be given a different score.  In addition, not all creditors report their data to all three credit bureaus so this can also cause a significant variation in credit scores.

The score range for Vantage or FICO 8 scores are from the low 500’s-950 while mortgage FICO scores range from 300-850.  Thus when you obtain your own score from a service, it is important to expect your score with the bank to be lower.  Generally speaking the score given by monitoring services will be between 20-50 points higher than those provided by a mortgage lender.

Why Is My Score So Important?

Since 10 years ago when the market crashed, credit scores have been being used to a greater degree in loan approval decisions and in setting interest rates.  Lenders now rely on a multi-tiered system where score and loan-to-value (% of down payment) are weighted together to determine the risk of the loan, and thus the rate.   Consumers who have a score of 740+ will fall in the “top tier” and are eligible for the best conventional rates offered.  For every 20 points below the top tier the rate will increase slightly.


Paying attention to what is on your credit report is suggested and using one of these monitoring services is a great way to keep up on it.   The score they provide can be helpful as  a general guide but keep in mind that the score you see is different than the one the bank will see.


Jessica Brate
Homeowners Advantage

Written by Inglenook Realty, Inc. guest blog contributor Jessica Brate of Homeowners Advantage.  For your mortgage financing needs, contact Jessica at (518)505-1304.